Opinion of the editor
European politicians, Transparency International, Global Witness, the Guardian, and many other outfits ideologically antipathetic to the granting of citizenship or residence permits on the basis of merit have characterized CIPs as a security threat, a money-laundering mechanism, a corruption risk, and a “backdoor to Europe”.
The same institutions and individuals have concluded that such programs need “phasing out” and devoted a great deal of effort, time, and money to that end. Ignoring these programs’ socio-economic benefits, they have authored reports and press articles focusing on imagined bogeymen and a vanishingly minuscule number of instances of (subsequently corrected) missteps on the part of program authorities.
Their campaign is disingenuous, and demonstrably so.
Here’s why: If the true motives for Europe’s detractors of citizenship by investment were the prevention of security breaches, money-laundering, and corruption, they would not focus their energy on the category of immigration that is the least voluminous and, simultaneously, the most closely controlled.
Can you imagine the World Health Organization prioritizing the curing of myasthenia (an extremely rare but treatable illness) over the prevention of heart disease (the cause of 17% of deaths worldwide)? The analogy is imperfect because the presence of CIP citizens, unlike a disease, actually improve the conditions of those countries “afflicted” by them.
Between 2014 and 2017, according to Eurostat, EU countries naturalized more than 3.5 million new citizens. Of these, 5,021 came through CIPs. That’s 0.14% of the total. Incidentally, that’s about the same number of EU citizens who enlisted in the Islamic State army during the same period. I need not, perhaps, mention that none of those jihadists got EU citizenship via CIPs.
Now, I am not saying that just because CIP citizens are a microscopic fraction of EU naturalizees they should be exempt from scrutiny; God (Allah?) knows that 5,000 determined individuals can cause a lot of damage.
But the irony of the EU/Transparency International focus on the CIP “threat” is that, beyond being the smallest category of naturalization, it is also the most closely watched.
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When someone naturalizes in an EU country through a CIP, they must undergo a series of stringent vetting procedures. Under the Malta IIP, for example, a “four-tier” process applies:
- Tier 1
The first tier is the standard KYC due diligence done by both the IIP Unit and the Agent through databases such as World-Check.
- Tier 2
The second level is the clearance obtained from the Police Authorities following thorough checks through a number of databases, such as Interpol, Europol and others. Any issues encountered at this stage are reported back to the IIP Unit. It has to be pointed out as well that to be able to visit Malta, Third Country Nationals (TCNs) have to go through the standard Schengen screening procedures.
- Tier 3
The IIP team takes care of the third tier of due diligence. There are two stages at this level. The first is that of completeness and correctness of the application. This in itself would identify anomalies in the application form that highlight any potential risk. Every kind of accompanying documentation submitted to the IIP Unit is checked to ensure that it has been filled in correctly and that the documents are submitted in the proper format, correctly translated, and apostilled or notarised as the case may require. Where documents are missing or not in the correct format, or errors are identified, a request for submission is made to the agent representing the family applying for Maltese citizenshiup and the application process is paused until everything is in order. The second stage is that of a thorough and in-depth online due diligence check and verification of documents submitted. These checks involve checking with international databases for sanctioned individuals and companies. Searches are conducted on all the members of the family applying for citizenship, their corporate affiliations, any significant one-time transactions, donations, or inheritance, and any significant business partners or very close associates.
- Tier 4
The fourth level is conducting outsourced due diligence. Two reports are commissioned from international companies on every family to ensure that as much ground as possible is covered and no stone remains unturned. These checks would include verification of all the information submitted, checks with databases, both international and local, in each of the family’s country of residence, and even discreet on the ground interviews with individuals who know the family.
Which due diligence processes did the other 99.9% go through? Precious few. In most cases – although each member state has its own rules – you’ll need documents like birth certificates and police records, but generally there are no World-Check controls, few Interpol/Europol/State Department/CIA checks, no bank statement/tax record requirements, and certainly no third-party outsourced due diligence, which costs thousands of dollars per applicant.
In an opinion piece last year, I pointed out four reasons why citizenship by investment isn’t a security threat to Europe and is, in fact, the least risky category of immigration:
- No citizen’s background is scrutinized as thoroughly as those participating in a CIP
- There are many easier and cheaper ways for dangerous people to get into the EU
- Citizenships can be – and have been – revoked post hoc
- It is in the interest of CIP-countries themselves to keep out bad people
You can argue against CIPs from an ethical standpoint. You can attempt to argue against it from an economic standpoint. But to argue against CIPs from a security standpoint is preposterous.
In a sane world, CIPs would get (at most) 0.14% of the attention. But they get way more than that. The ostensible reason, the (patently absurd) concerns about a “security threat”, is but a smokescreen. Such concerns are logos-based arguments on the surface but are used to disguise a primarily pathos-driven campaign.
The real reason, I suspect, is that CIPs, at their core, deal with rich people and the privileges money can buy. Western Europe, along with Latin-America, harbors a fundamental, limbic system-based and politician-encouraged distaste for anything that smacks of inequality. Eastern Europe, China, and Southeast Asia – having witnessed first-hand what happens when you try to impose equality by decree – seem inoculated against that mentality. For the moment.
Commissioner Jourova, the chief anti-CIP campaigner in the EU, has herself conceded that she does not believe in exchanging citizenship for investment. Her opposition to it, then, is rooted not chiefly in security concerns but in ideology; money shouldn’t be able to buy you citizenship. In other words, Jourova made up her mind about CIPs a priori and then looked around for practical arguments – security threats and money laundering – to justify her position.
But money launderers and terrorists don’t use the “backdoor” to Europe. It has metal detectors, sniffing dogs, and iris scanners. They prefer the front door, where security controls are rudimentary and perfunctory.
If you want the investment migration industry to take your concerns about the backdoor at face value, come back when you’ve got something more than a windscreen on the front door.
Illustration by Manuela Lence
Christian Henrik Nesheim is the founder and editor of Investment Migration Insider, the #1 magazine – online or offline – for residency and citizenship by investment. He is an internationally recognized expert, speaker, documentary producer, and writer on the subject of investment migration, whose work is cited in the Economist, Bloomberg, Fortune, Forbes, Newsweek, and Business Insider. Norwegian by birth, Christian has spent the last 16 years in the United States, China, Spain, and Portugal.