The EU’s meeting with Caribbean officials in Dominica at the end of January highlighted how detached the EU’s perception of citizenship by investment (CBI) is from reality.
A major point of discussion was the EU’s suggestion that the Caribbean Citizenship by Investment Programs (CIPs) substantially raise their minimum investment thresholds to ensure the program’s integrity. The EU’s overstepping – telling other countries how much their citizenship is worth – is a telling sign of something everyone already knows: The EU doesn’t like CBI.
The EU’s proposition is both irrational and impertinent.
How would raising the minimum investment amount protect the programs?
Raising the minimum investment amount isn’t a logical measure to shield CIPs from criminal applicants. Forget for a moment that applicants with criminal records do not pass the Caribbean’s robust due diligence process; how would more money improve the background and compliance checks? In short, it wouldn’t.
Higher prices would only serve to minimize the applicant pool. But for the sake of argument, let’s say that out of every 100 who apply, 10 are criminals (who get rejected anyway). Reducing the client pool to ten people means one will be a criminal, who will also be rejected. If you raised the price drastically, you would simply eliminate 91 legitimate applicants with clean criminal records because the criminals will be rejected either way.
The EU suggested the price hike would also sustain revenues at lower application volumes. This, in theory, could work if the Caribbean programs operated in a vacuum on a standardized market basis, but reality is different. The Caribbean CIPs have competitors. They do not have a monopoly on citizenship by investment, and investors may look toward more affordable options.
To some investors, moreover, $100,000 is a reasonable price for second citizenship while, to others, it’s their entire life savings. They may spend it anyway because they need to. Not all markets are the same, and the Caribbean has done an incredible job at finding a balance that works on a global scale. The EU’s suggestion would demolish all that good work.
Raising the minimum investment requirement would only alienate many clean, authentic applicants.
Another issue is the value of money. If a person launders money they obtain from criminal activity, that money won’t have the same value to them as it would to someone who earned it the hard way. Raising the minimum would only lower the number of legitimate applicants, while those with ill-gotten gains and nefarious intentions won’t mind the higher prices.
For all we know, and as some have suggested, the EU’s focus on raising the minimum investment amount may be part of an agenda to make CIPs undesirable altogether. But even if we assume they consider CBI an acceptable way to raise FDI, raising the price will not do anything to address the EU’s professed security concerns.
And if the EU’s concerns are about safety and due diligence, they should work with the Caribbean CIPs to enhance their due diligence processes (if they can find anything to put their finger on).
The EU has much more advanced and plentiful investigative resources than the Caribbean. If it really cares about Caribbean CBI integrity, it should offer help rather than issue underhanded threats veiled in polite diplomacy. The Caribbean governments have shown that they are open to enhancing what is already one of the world’s most competent due diligence systems after their meeting with the US last year.
If the EU’s concerns were genuine and not just the pretext for punitive action they appear to be, the approach would have been different. The EU could have requested more transparent and immediate access to applicant backgrounds, rejected cases, and more. With an open line of communication and a flowing stream of information, nothing would get past the EU, especially with the new ETIAS system coming.
The EU can take various approaches to ensure Caribbean CIPs address the Union’s concerns regarding CBI, but raising minimum investments is not among them. The idea is a bad one; it doesn’t work, and it won’t help anyone.
The EU’s insistence on fixing something that isn’t broken by breaking it is astonishing. Real solutions are available, and the Caribbean is open to working together. It is a shame that the EU Commission doesn’t have the same proactive, logical attitude.