A Year of Pivotal Change in the Caribbean
The past year has witnessed significant changes in the Citizenship by Investment (CBI) programmes across several Caribbean nations. These reforms aim to address the concerns of international partners and critics, notably under the influence of the EU’s regulatory reach, described as the “Brussels Effect.”
Introduced in 1984 in St. Kitts and Nevis to diversify economic reliance away from the sugar industry, CBI programmes have spread across the Caribbean, offering visa-free travel to the EU and the US. However, these programmes have raised international concerns regarding their due diligence and transparency
International Pressure
“It is unfortunate that the sector remains largely unregulated, with only a handful of countries having established an independent regulator to oversee the operation of their programmes. All those working in the field of investment migration – within or outside of Europe – should join the IMC’s efforts and work together to put an end to the abuse of investment migration initiatives and maintain high standards for the industry.”
Bruno L’ecuyer, IMC’s CEO
US legislative attempts to exclude CBI nations from the visa-waiver programme did not pass, but the US continues to press for reforms. Meanwhile, the UK has imposed visa restrictions on Dominica and Vanuatu, citing risks of misuse, hinting at broader EU measures.
The European Commission has proposed simplifying the suspension of visa-free access for countries offering CBI schemes, arguing they pose security risks. In response, Caribbean nations have tightened their programmes. St. Kitts and Nevis, for instance, enhanced due diligence and introduced the Sustainable Island State Contribution (SISC) as a new investment option. Similarly, Dominica and Grenada have implemented mandatory interviews and stricter due diligence.
Recent Developments
Recent adjustments include increasing the cost of citizenship—doubling previous rates in some cases – and eliminating discounted citizenship routes. Despite these changes, the EU and US continue to advocate for the discontinuation of such schemes due to ongoing concerns about corruption and money laundering.
The Organisation for Economic Co-operation and Development (OECD) criticises these programmes for facilitating fraud, urging punitive measures against persisting states. In 2023 alone, Caribbean nations issued 88,000 Golden Visas, highlighting the scale and impact of these programs.
Economic Impact and Future Outlook
CBI schemes are vital for smaller economies, providing a significant portion of national GDP. For example, Antigua and Grenada derive about 5% of their GDP from these programs, with Dominica and St. Kitts reaching up to 50%. Such programs help fund essential services and contribute to economic resilience, particularly crucial during global crises like the pandemic.
Experts from leading migration consultancy firms argue that investment migration acts as a lifeline for economies reliant on tourism and trade, providing essential liquidity during economic downturns. These programs also enhance global mobility, enabling skilled individuals to make significant contributions to their new countries.
Kristin Surak from the London School of Economics notes that these schemes are often the primary economic drivers in some microstates, suggesting that their cessation could force these nations to seek alternative financial solutions, possibly from institutions like the IMF.
EU’s Role in Shaping the Future of Investment Migration
The EU faces a crucial opportunity to balance security concerns with economic support for smaller, vulnerable economies. Properly regulated, these programmes can foster economic growth and development, particularly in less affluent regions. The future will likely hinge on the EU’s ability to implement effective oversight and maintain a cooperative approach that recognises the economic benefits of investment migration.
While investment migration presents challenges, it also offers significant economic opportunities for host countries and benefits for migrants. The ongoing evolution of these programmes will be crucial in balancing economic benefits against security and ethical considerations.
Greater Scrutiny as the Way Forward
As EU institutions, such as the European Commission, have discussed implementing stricter regulations for residency programs, the Investment Migration Council (IMC), a global body that establishes standards, qualifications, and conducts research in the field of Investment Migration (IM), welcomed the FATF and OECD report in a statement issued late in 2023.
Led by CEO Bruno L’ecuyer, the IMC is calling for the standardisation of due diligence practices and specialised training to address concerns while still maintaining the economic advantages of IM. Bruno emphasises the urgent need for effective oversight to prevent any potential misuse while still preserving the economic benefits of IM.
“If the EU tightens regulations on IM, CBI, and RBI programmes, smaller nations with fragile economies like Caribbean states will bear the brunt. These countries already struggle with climate change, often exacerbated by wealthier states – a truly ironic situation.”
“It is unfortunate that the sector remains largely unregulated, with only a handful of countries having established an independent regulator to oversee the operation of their programmes. All those working in the field of investment migration – within or outside of Europe – should join the IMC’s efforts and work together to put an end to the abuse of investment migration initiatives and maintain high standards for the industry.” – Concluded the CEO of IMC.