Virginia, US

On Monday 5 March, the Organized Crime and Corruption Reporting Project and Transparency International launched a report on global investor migration programmes.

The report alleges that citizenship and residence through investment schemes are vulnerable to abuse and ‘undermine the fight against corruption in the European Union and neighbouring countries … selling access to the Schengen visa-free travel area, and even EU citizenship, to foreign investors with little scrutiny, transparency or due diligence. The report discusses programmes in a number of jurisdictions and calls on the European Commission to act.

The Commission is already active in this area and examining investor migration programmes across Europe. Nonetheless, the report serves as an important learning tool which the young and evolving industry takes very seriously, and is a warning of the absolute importance of enhanced due diligence throughout the application process for those offering such programmes or looking to move into this space. Globally, regulatory regimes are rightly tightening towards higher standards of compliance and increasing levels of diligence in all aspects. As restrictions tighten, the vast majority of investor migration clients are moving in synchronisation. They increasingly and rightly value best practice standards as the norm. The industry itself is demanding the highest internal standards and learning the lessons of controversy and, under the governance of the Investment Migration Council, the industry will continue to grow in best practice standards.

A balance of course must be struck between due diligence and due process, and whilst programmes must operate to the highest of ethical standards, applicants are also entitled to due process and to a fair determination of their applications.   Malta is subject to criticism in the report, but it should be observed that applicants to the Individual Investor Program must submit to rigorous due diligence processes. Applicants must demonstrate a clean criminal record, with checks being conducted with the International Criminal Court, INTERPOL and various other authorities and sources. Police certificates are mandatory, as is increasingly the case across the globe. Most programmes will have grounds for exclusion that usually include individuals indicted before an International Criminal Court or who appeared at any time before an International Criminal Court; those who have at any time had pending charges related to crimes of terrorism, money laundering, funding of terrorism, crimes against humanity, war crimes, or crimes that infringe upon such protection of human rights and fundamental freedoms; those convicted of serious criminal activity and those whose assets have been frozen or blocked within the EU.

The report demonstrates that work is still to be done within the industry to achieve best practices, rigorous standards and reputational integrity – improvements can of course always be made and constructive dialogue will remain key.

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