Tag Archives: St. Lucia

IMF Staff Recommend St Lucia CIP Revenues be used Primarily to Reduce Debt

Alicia Nicholls

In the  Concluding Statement of their 2017 Article IV Mission to St. Lucia released February 6, 2017, International Monetary Fund (IMF) Staff recommended that revenues from the island’s Citizenship by Investment Programme (CIP)  be used primarily to reduce the island’s high public debt and that limits  be placed on the amount of CIP revenues used to finance high-priority expenditure. The recommendations were based on a country mission undertaken by IMF Staff during January 16-27, 2017 pursuant to Article IV of the IMF’s Articles of Agreement. The IMF’s Concluding Statement outlines the preliminary findings made by IMF Staff during their mission.

In their commentary on St. Lucia’s macroeconomic performance, IMF Staff noted that although tourism activity was weak,  unemployment continued to fall. The Staff highlighted the economic reforms programme currently in the process of being rolled out by the Government. The Staff expect positive but moderate short-term growth. However, they cautioned that the island’s high public debt, which currently stands at 82% of GDP, and its “delicate fiscal situation”, require prompt attention. They also made suggestions on how the fiscal package  announced could better achieve its targets.

St. Lucia’s CIP

In January 2016, St. Lucia became the fifth Caribbean country to offer a CIP as an alternative tool for attracting foreign direct investment (FDI), joining fellow Caribbean CIP countries: Antigua & Barbuda, Dominica, Grenada and St. Kitts & Nevis. St. Lucia’s CIP offers four investment options: a monetary contribution to the National Economic Fund (NEF), a real estate investment, a Government bond investment or an Enterprise Project Investment, with qualifying investment amounts set for each type of investment. In an effort to add exclusivity to the programme, the number of applications which could be approved by the Board had been capped at 500.

This was the IMF Staff’s first Article IV country mission to St. Lucia since the CIP’s first full year in operation. In their 2017 Concluding Statement, the IMF staff noted that the island received “relatively few applications in 2016” and that “the [St Lucian] authorities expect that the recent easing in the requirements and lowering of the costs to qualify for this program will encourage an increase in revenues.”

Changes to St. Lucia’s CIP Regulations – 2017 

Effective January 1, 2017, an Amendment to the Citizenship by Investment Regulations No. 89 of 2015  introduced several sweeping changes to St. Lucia’s CIP in an effort to boost its competitiveness. This includes, inter alia, a reduction in the qualifying contributions required, making it the most affordable programme in the Caribbean and the removal of the 500-application cap. A summary of the regulatory changes may be found on CIP St. Lucia’s website here.

However, while the Government’s desire to make its CIP more competitive is understandable, some have legitimately argued that these changes may undermine the programme’s exclusivity and may lead to a “race to the bottom” in terms of competition on price and ease of accessibility among Caribbean CIPs. Indeed, with the number of CIPs in the Caribbean now at five and several other countries around the world also offering CIPs or some form of immigrant investor programme, Caribbean CIPs face stiff competition both inter se and abroad.

As such, as I have argued before, increased cooperation among Caribbean CIP countries will be needed to ensure that high standards are maintained and that countries do not undercut each other in terms of price and robustness of their programmes. There seems to be some support for the need for greater cooperation, as St. Lucia’s Prime Minister, Allen Chastanet, earlier this year called for a joint OECS approach to CIPs.

Moreover, while I strongly believe that CIPs can be legitimate tools for development once managed well through raising revenue, encouraging FDI, infrastructural development, job creation and attracting  High Net Worth Individuals (HNWIs), they should be used as an adjunct and not the main propeller for economic growth and development.

IMF Recommendations

In the Concluding Statement, the IMF Staff made several recommendations aimed at minimising St. Lucia’s risk of fiscal dependence on its CIP revenues, which can be volatile, and to reduce the impact of the global rise in interest rates. These recommendations included:

  • Using CIP revenues primarily to reduce the high debt.
  • Using a capped amount of CIP revenue for investment projects of primary importance
  • The importance of “transparency, appropriate governance, and careful due diligence” to reduce risks of sudden stops in CIP revenue inflows.

More detailed information will be known when the full Staff Report is produced and released at a later date.

The full IMF Staff Concluding Statement may be viewed here.

Alicia Nicholls, B.Sc., M.Sc., LL.B., is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

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In defence of Caribbean Citizenship by Investment (CBI) Programmes

Alicia Nicholls

A  60 Minutes Special aired by American network, CBS, on January 1, 2017 has added fuel to the fiery debate on the legitimacy of Caribbean countries’ economic citizenship programmes. Whether intended or not, the segment entitled “Passports for Sale” cast a shadow of iniquity on the programmes which certain Caribbean countries, and to which an increasing number of countries are turning in order to stimulate their economies and attract much needed foreign investment.

Last year, St. Lucia joined four other Eastern Caribbean countries: Antigua & Barbuda, Dominica, Grenada and St. Kitts & Nevis by offering a direct citizenship programme. Economic investor programmes fall into two broad types: residency programmes (which only offer investors the right to reside) and citizenship programmes (which confer citizenship, either directly or after a period of residency).

Caribbean CBI programmes fall into the category of direct economic citizenship programmes which entitle qualifying investors and their qualifying spouse and/or dependents (e.g: children or elderly parents) to citizenship of the host country upon making a qualifying investment under that particular programme. Depending on the programme, a qualifying investment could be a monetary contribution of at least a certain amount to a special fund, the purchase of real estate of a minimum value or the purchase of government bonds in some cases. Investors and their co-applicants must also pass stringent due diligence procedures and pay the prescribed fees.

The reporting on the Caribbean CBI programmes was reduced to simply the “sale of passports” without taking into account the rationale behind the operation of these programmes. CBI programmes are not only about raising revenue through foreign investment for cash-starved Caribbean countries, but have wider development goals. These include helping to improve infrastructure, creating jobs and  attracting investors who are the “best of the best”, that is, persons with know-how and skills and networks which could redound to the benefit of the host economy. It is for this reason that an increasing number of countries, including Western countries, have either implemented economic investor programmes or are thinking of doing so.

CBI programmes not limited to small states

Indeed, missing from the CBS segment was that economic investor programmes are not unique to small countries like those in the Caribbean or the EU small state of Malta whose programme has a one-year residency requirement. Economic investor programmes are offered by a growing number of countries around the world. For example, the United States has its EB-5 Immigrant-Investor Programme where eligible investors may obtain a green card once they “make the necessary investment in a commercial enterprise in the United States; and plan to create or preserve 10 permanent full-time jobs for qualified U.S. workers”. Several European countries offer Golden Visa programmes, while a number of Canadian provinces offer Provincial Entrepreneur Programs whereby qualifying investors can attain permanent residence once a qualifying investment is made.

As I argued in a recent article I wrote for Henley Partners’ Global Residence and Citizenship Review Q3 2016, once carefully managed, CBI programmes can be tools of development. A prime example is St. Kitts & Nevis, which at one point had been among the world’s most indebted countries, and has seen its economic fortunes turned around.

Focuses on missteps and not changes

The 60 Minutes Special focused almost exclusively on the missteps made under some of the CBI programmes, while comparatively little was said of the changes made to the programmes to increase the robustness of the due diligence processes. For instance, St. Kitts & Nevis undertook a revamp of its programme amidst concerns raised by the US and Canada.

The CBS 60 Minutes Special also harped on the fact that some unsavoury characters had managed to obtain passports through CBI programmes. This is regrettable, no doubt, but “shady”characters have managed to earn residency in western countries which have much greater due diligence capability than do small states. The CBS Special did not mention, for instance, that Caribbean CBI countries maintain a list of restricted nationalities. Nationals from Afghanistan, Iran and Syria are not eligible under St. Kitts & Nevis’ programme, as an illustration.

Moreover, when oligarchs from Russia and the Middle East set up homes in western countries, no one (and rightfully so) questions their intention. Yet, why is a nefarious light cast on a Russian or Middle Easterner who obtains citizenship via a Caribbean CBI programme? Why the double standard? Or better yet, why are Caribbean countries constantly being held to a higher standard? Or is it because Caribbean CBI programmes, just like our much maligned offshore financial services sectors, are one area in which Caribbean countries can actually go toe to toe with developed countries?

Growing demand for secondary passports

One of the biggest falsehoods about CBI programmes is that secondary passports are sought primarily by persons with nefarious intent or as the CBS Special put it “scoundrels, fugitives, tax cheats, and possibly much worse”. This is far from the case. The growing class of High Net Worth Individuals (HNWIs), which includes a growing number of persons from emerging economies, increasingly see second passports as an “insurance policy” against instability or economic uncertainty in their home countries. Moreover, simple things like travelling for business or taking one’s family on vacation can be burdensome if one comes from a country with limited visa-free access to other countries. A good quality passport, therefore, brings mobility benefits.

However, it is not only HNWIs from emerging economies which have sought secondary passports. Many, particularly those living abroad, are renouncing their American citizenship not because they necessarily want to dodge their tax duty, but because of the onerous and costly reporting requirements and the fact that American citizens may be liable to pay tax on income earned abroad to the Federal Government even if they have been resident in another country for years. Added to this, ever since the passage of the Foreign Account Tax Compliance Act of 2010 which requires foreign financial institutions to report to the US Inland Revenue Service on assets owned by US citizens, Americans have been renouncing their citizenship in record numbers.

The demand indicators for secondary citizenship are all trending in the right direction, which is yet another reason why countries are turning to economic investor programmes. The election of President-elect Donald Trump in the US led the Canadian Immigration Department’s website to crash on election night as Americans increased online enquiries about moving to Canada, while the UK’s impending withdrawal has spurred demand by UK nationals for second EU passports.

Additionally, investors who acquire citizenship under Caribbean CBI programmes do not only come from “questionable countries”. The St. Lucia Times reported in December that among the 38 citizenships which were granted in St. Lucia, “there were seven applicants from the Middle East, three from Russia, two from Asia, two from North Africa, two from South Africa, one from North America and one from Europe.”

Attractiveness of Caribbean passports

There is also the erroneous belief that Caribbean CBI programmes’ popularity stems from their  purported corruption or because of the perceived negligible due diligence.  Caribbean passports are attractive for a multiplicity of reasons. Holders of Caribbean passports enjoy visa-free access to a growing number of countries, which tick off the mobility box for investors. The high standard of living and political stability in the Caribbean appeals to those investors in search of a lifestyle change.

CBI Caribbean countries’ citizenship laws  recognise both citizenship by birth (jus soli) and citizenship by descent (jus sanguinis) meaning that investors can pass on their citizenship to their children (born after the investor’s acquisition of citizenship) whether they are born in the host country or not.Moreover, Caribbean countries allow for dual citizenship so they do not have to renounce their current nationality.

Another factor is that the lack of residency requirement reduces the time it takes to acquire citizenship than through naturalisation. There are other factors such as Caribbean countries’ access to international business hubs through frequent flights to international gateways, their tax-friendly climates and their network of tax treaties and investment treaties with third states.

Conclusion

For the above reasons I found the CBS 60 Minutes Special’s “Passports for Sale” segment to be extremely unbalanced. I also question why except for a nominal reference to Malta at the beginning, Caribbean CBI programmes were singled out and why so much attention was devoted to some of the mishaps but little was said of the steps taken to prevent a recurrence. An online petition by One people, One Caribbean has sought to set the record straight and also calls for the retraction of the segment.

That being said, I do believe that robust and honest debate on the functioning of Caribbean countries’ CBI programmes is an important exercise once it is objective and not skewed. For example, the lack of transparency on the number of citizenship approvals granted under CBI programmes and to whom is a problem I have mentioned before. Although some countries have started to release some of their statistics, more data should be released and in a more timely manner.

What is needed as well is greater cooperation among Caribbean CBI countries. Some critics of CBI programmes raise the legitimate fears that increased competition both among Caribbean CBI programmes and with extra-Caribbean CBI programmes may lead to a race to the bottom in order to remain competitive. Perhaps what needs to be done is harmonisation of Caribbean countries’ CBI due diligence requirements so that an investor who fails the due diligence requirements of one Caribbean programme cannot gain access to another’s. Another option could be to harmonise CBI countries’ restricted countries’ lists. I am under no illusion that this would be an easy task but it is perhaps worth considering.

There is some support for greater OECS collaboration on this issue. The Prime Minister of St. Lucia, Allen Chastanet, has called for an OECS approach to CBI programmes through an OECS initiative based at the OECS Secretariat. However, it should be noted that a pan-OECS initiative may be problematic as not all OECS countries are supportive of such programmes. Additionally, CBI programmes must be free of political influence and interference.

Cooperation with the wider Caribbean Community (CARICOM) is also needed. Non-CBI CARICOM countries have raised concerns about reputational and security implications for their own countries. Under the Revised Treaty of Chaguaramas, the broad definition of “Community National” means that an individual who attains citizenship of a CARICOM country would qualify as a community national and be entitled to those benefits.

As I argued before, CBI programmes are not a panacea. Continued monitoring and upgrading of the programmes is needed to ensure that they meet their objectives of contributing to national development, while also ensuring the strictest of due diligence standards.

Alicia Nicholls, B.Sc., M.Sc., LL.B., is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

St Lucia’s Citizenship by Investment programme officially opens for business

Alicia Nicholls

As of January 1st of this year, St. Lucia’s Citizenship by Investment programme is officially open and taking applications by interested investors. Late last year, Prime Minister, The Hon. Dr. Kenny Anthony formally launched the programme at the Global Citizen Forum held in Monaco. St. Lucia joins St. Kitts & Nevis, Grenada, Antigua & Barbuda and Dominica to become the fifth Caribbean State to offer a citizenship by investment programme.

A citizenship by investment programme (CbI) offers qualifying investors (as well as their spouse and dependents once they meet certain criteria) citizenship in exchange for an investment in a qualifying activity, for instance, investment in real estate, a special fund or government bonds. In a world of dwindling access to financial resources, a growing number of States internationally are currently offering some form of citizenship by investment programme as a way to raise much needed finance, including for development objectives.

This phenomenon is not limited to developing countries. Several metropolitan countries such as the US and its EB-5 Immigrant Investor Programme, offer some form of citizenship by investment scheme. Other States offer residency by investment programmes, which grant the qualifying investor certain residency benefits. A Caribbean example is Barbados’ Special Entry and Reside Permit (SERP), while Spain’s Golden Visa is an international example.

The market for second passports is growing and is an attractive option for high net worth individuals (HNWIs), particularly business persons who come from countries  whose passports are subject to visa restrictions, making it difficult to travel to, and conduct business in major markets unimpeded. For HNWIs from those few countries like the US where personal income tax is levied based on nationality as opposed to residency,  renouncing one’s citizenship and obtaining citizenship of another State through a CbI programme is also increasingly seen an attractive option.

Some quick facts about St. Lucia’s programme

Basic Eligibility Requirements

  • Age Limit: Under the Citizenship by Investment Act No. 14 of 2015, a person who is 18 years or over may apply for citizenship of St. Lucia.
  • Dependents: Qualifying dependents include a spouse and a child and/or parent of the applicant or of his/her spouse once the child or parent meets certain criteria provided for in the Act.
  • Net worth: The applicant must have financial resources of at least US 3,000,000

In addition to these basic requirements, the applicant must fill out an application form, accompanied by the requisite information, documentation and fees and is subjected to due diligence checks.

All of this will be explained by the Authorised Agent. Authorised agents are licensed by the St. Lucia Financial Services Regulatory Authority and are authorised to act on the applicant’s behalf  in relation to the application for citizenship by investment.

Qualifying Investments: On approval of the application, the potential investor will be required to make the qualifying investment proposed in his or her application. Under Schedule 2 of the Citizenship by Investment Regulations Statutory Instrument No. 89 qualifying investments are:

  • Investment in the St. Lucia National Development Fund, with the level of minimum investment required depending on whether the applicant is applying alone, with a spouse and/or with dependents. For an applicant applying alone, the minimum threshold is US$ 200,000.
  • Investment in an approved real estate project. The minimum threshold is US$300,000.
  • Investment in an approved enterprise project. The minimum investment required depends on whether it is one or more than one applicant investing. For an applicant applying alone, the minimum investment is US$ 3,500,000 (plus no less than 3 permanent jobs).
  • Investment by purchasing Investment by purchase of non interest bearing Government bonds (5 years holding bond). For an applicant applying alone, the minimum threshold is US$ 500,000.

Benefits of St. Lucia Citizenship

  • St. Lucia allows for dual citizenship which means the investor is not forced to renounce his or her citizenship of another State.
  • The Citizenship by Investment Board is only allowed to grant a maximum of 500 applications annually which adds an element of exclusivity.
  • A St. Lucia passport allows for visa-free travel to over 90 countries, including the Schengen Area (26 European countries), as well as visa-free travel within the Caribbean Community (CARICOM) and the  other rights of which CARICOM nationals benefit under the Revised Treaty of Chaguaramas.

For further information on St. Lucia’s Citizenship by Investment programme, please contact the St. Lucia Citizenship by Investment Unit.

For a general overview of CbI programmes across the Caribbean, please feel free to read my earlier article: Economic Citizenship by Investment Programmes in the Eastern Caribbean: A Brief Look.

DISCLAIMER: Please note that the information presented in this Article is for general information only and is not intended to be, nor should it be construed as, investment or legal advice. The Author is in no way affiliated with the St. Lucia Citizenship by Investment programme or any of the relevant authorities. The information is taken from sources deemed to be accurate at the time of publication and the Author of this article accepts no liability or responsibility for any errors which may be contained herein or any actions suffered as a result of reliance on the information presented.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

 

 

St. Lucia and Grenada ratify WTO Trade Facilitation Agreement

Alicia Nicholls

Just a week shy of the commencement of the WTO’s 10th Ministerial Conference in Nairobi, Kenya, St. Lucia and Grenada became the first states of the Eastern Caribbean Economic Union (ECCU) to ratify the World Trade Organisation’s Trade Facilitation Agreement.

The TFA, which has the potential to increase global merchandise exports by up to $1 trillion per annum (according to the World Trade Report 2015), aims to expedite the movement, release and clearance of goods, including goods in transit and to provide measures for effective cooperation between customs authorities. It is the first WTO agreement to link implementation to countries’ capacity to implement.  In November 2014, WTO members adopted a Protocol of Amendment to insert the TFA Agreement into Annex 1A of the WTO Agreement. Both countries have already notified their Category A commitments pursuant to the Agreement.

St. Lucia and Grenada also join Trinidad & Tobago, Belize and Guyana to make it a total of five CARICOM states which have ratified the Agreement so far. Late last month Guyana became the 53rd state to ratify.

For the TFA to enter into force, ratification by two-thirds of the WTO’s membership of 162 is required.This week Cote de Ivoire and Kenya also ratified the Agreement, becoming the fifth and sixth African countries to do so. This brings the number of ratifications to 57 states, which is more than half the number needed for the Agreement to enter into force.

The ratification by St. Lucia and Grenada are a welcomed development and it is hoped more CARICOM states will follow suit. My article on the benefits of the TFA for small island developing states can be accessed here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. Please note that the views expressed in this article are solely hers. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

 

Economic Citizenship Programmes in the Eastern Caribbean: A Brief Look

Alicia Nicholls

In a world of eroded preferences for traditional Caribbean exports, the small island states of the Eastern Caribbean have had to find non-traditional ways to bolster their small open economies. There is growing global demand for alternative and second citizenship by mobile High Net Worth Individuals (HNWIs), a phenomenon on which an increasing number of states have sought to capitalise. At the Global Citizen Forum 2015 in Monaco last week, Prime Minister of St. Lucia, the Hon. Dr. Kenny Anthony announced his country’s intention to become the latest Caribbean state to offer economic citizenship. St. Lucia will join four other Caribbean countries: St. Kitts & Nevis, Antigua & Barbuda, Dominica and Grenada which operate direct citizenship by investment programmes. This article explores the current programmes in the Eastern Caribbean and whether the offering of economic citizenship is worth the risks involved.

The concept of citizenship, that is, the status of holding the nationality of a State, is imbued with a whole package of legal, political and other rights and duties. All states of the English speaking Caribbean have citizenship on a jus soli basis, that is, the right to citizenship by virtue of being born in the territory, as well as citizenship through descent and naturalisation. Those states which offer economic citizenship stretch the notion of citizenship to give qualifying investors the right to full legal citizenship and the right to hold a passport for themselves and their families through making a qualifying investment into the local economy.

Many of these mobile HNWIs are from China, the Middle East and Russia, seeking economic and political security, a more favourable tax climate, and the benefits of hassle free travel a good second passport could bring. According to The Wealth Report 2015, “it is estimated that 76,200 Chinese millionaires emigrated or acquired alternative citizenship over the 10 years to 2013”. Additionally, the US’ system of nationality based taxation and the onerous reporting requirements under FATCA have caused many Americans living abroad to renounce their American citizenship in record numbers (1,335 in the first quarter of 2015 according to this article).

Economic citizenship and residency programmes are not unique to the Caribbean. Several countries such as Malta and Cyprus operate direct Citizenship by Investment programmes. Some countries offer Immigrant Investor Programmes which use the prospect of citizenship or permanent residence to attract highly skilled HNWIs. The US’ EB-5 visa is a prime example. Similar programmes are also offered by the United Kingdom, Australia and New Zealand. Outside of this, there is a whole wealth and tax planning industry which has built up around advising HNW clients and their families on how and where they can get the best passport for their buck.

As countries known for their high standards of living, democratic principles, political stability, respect for the rule of law and healthy reputations internationally, it is little wonder several Eastern Caribbean countries have sought to leverage these pull factors and seek to get their share out of the second passport pie. The expected benefits to the host economy include foreign direct investment through purchasing real estate, funding for infrastructure development and the other economic benefits to be derived from HNWIs and their families spending in the economy.

The investor must meet the application requirements and go through stringent application procedures and invest in one of the options available which differs by country. In return, investors which take advantage of economic citizenship offered by one of those Eastern Caribbean states gets visa free travel to over 100 countries, a second passport, no requirement for residency, as well as second citizenship for themselves and their spouse and dependents. They also can take advantage of the tax benefits offered by a low tax jurisdiction, including no capital gains, wealth or inheritance taxes.

Below is a brief description of each programme:

St Kitts & Nevis – It is the oldest continuously operating citizenship by investment programme and has been in existence since 1984. Two options for investment: (1) making a non-refundable donation to the Sugar Industry Diversification Programme of a minimum of US$250,000 plus processing fees or (2) by investing in an approved real estate project worth at least US$400,000 plus registration and other costs.  While the investment in real estate is recoverable, the investor must hold the property for a minimum of 5 years. The next buyer also qualifies for citizenship. For further info: http://stkitts-citizenship.com/

Antigua & Barbuda – Three methods of investment: (1) Investment of at least US$400,000 in  an approved real estate project to be held for a period of no less than five years, (2) contribution of at least US$200,000 in the National Development Fund, (3) An investment of a minimum of US$1,500,000 directly into an eligible business as a sole investor or a joint investment involving at least 2 persons in an eligible business totalling at least US$5,000,000 and each of those persons individually invests at least US$400,000. For further info: http://cip.gov.ag/citizenship/

Dominica – Dominica’s programme requires the smallest minimum investment. Citizenship can be obtained through investment either in the Government Fund or the Real Estate Option. According to the website of the CBIU, the generated funds are utilised for public and private sector projects where a need is identified. To qualify for citizenship under the Government fund there are four investment categories with different contribution amounts, based on the number of dependents included in the application. For a single applicant, there is a non-refundable contribution of US$100,000 required. The contribution required increases where a spouse and dependents are involved. To qualify for citizenship of Dominica under the Real Estate Option under the Citizenship by Investment Program, an applicant must purchase authorized real estate to the minimum value of US$200,000 plus government fees which dependent on whether a spouse is included and number of dependents. For further info: http://cbiu.gov.dm/

Grenada – After a thirteen year hiatus, Grenada restarted its Citizenship by Investment programme in 2014. Application is by invitation only. Citizenship can be obtained by investment of a minimum of US$ 350,000 in an Approved Real Estate project plus fees and costs. The investment is subject to a minimum holding period of four (4) years. The second option is a non-refundable donation to the Island Transformation Fund which is not yet open. For further info: http://www.citizenship.gd/ 

St Lucia – St Lucia has indicated its programme will begin from January 2016 and details about the programme are not yet available.  It has stated that they expect significant economic benefits from the programme.

There is little data publicly available on the success of Caribbean CbI programmes. It would be interesting to know the number of applications received and approved on a yearly basis, the countries from which most applicants have come, and what have been the tangible benefits to the host countries. However, the IMF Staff Report  on St Kitts & Nevis noted the citizenship by investment programme in St. Kitts & Nevis, the region’s most successful CbI programme, is bearing fruit. It notes as follows:

Continued rapid inflows under the Citizenship-By Investment (CBI) program have led to a surge in construction activity, and supported a large increase in government and Sugar Industry Diversification Fund (SIDF) investments and spending, including on the People Employment Program (PEP). These factors, together with the ongoing recovery in tourist arrivals fueled rapid GDP growth of about 6 percent in 2013 and 2014.

Entangled in the notion of economic citizenship are a whole set of moral and legal issues. For one, the definition of ‘spouse’ in the legislation of these Caribbean countries still means either of a man or woman who are married to each other. In light of competition from other CbI programmes, will this definition eventually be amended to allow gay HNWIs and their spouses to take advantage of these programmes?

There are also regulatory and national security implications, including concerns about the potential use of second passports to facilitate money laundering, organised crime and terrorist activity. Of course, there are stringent screening methods, including requirements of police certificates of character. After all, all countries prefer to attract investors of good character who are self-sufficient, and willing to make a significant economic investment to the country in which they are seeking citizenship. Under the Antigua & Barbuda programme for example, a person can be deprived of citizenship in several instances e.g: fraud, conviction or failure to spend at least 35 days in Antigua & Barbuda during the period of five calendar years after his registration. There is the potential for attracting ‘undesirables’, even with a rigorous programme.

A few countries worldwide have found that the potential investment inflows were not worth the risk or they could not cope with the volume of applications. Canada cancelled its Immigrant by Investor Programme, while Hong Kong has suspended its CIES programme. Barbados has clearly stated that for policy reasons it will not go the route of economic citizenship. It currently offers the Special Entry and Reside Programme (SERP) for qualifying HNWIs and their spouses/dependants. In order to qualify as an HNWI in Barbados, the investor must have assets of at less than US$ 5 million. In spite of this, Eastern Caribbean CbI programmes not only have to compete amongst themselves but also face increased competition globally from potentially more attractive CbI and residency programmes worldwide.

Moreover, countries which offer economic citizenship programmes do open themselves to reputational risks, especially if other States have doubts about the rigor of their screening procedures. The US Treasury has accused persons obtaining St Kitts & Nevis passports for financial crime  and Canada imposed visa requirements on St. Kitts & Nevis nationals on November 22, 2014. The merits of these actions are debatable. However, these are the kinds of risks which countries operating these programmes face. Moreover, they may result in holders of those passports, including natural born citizens, being blacklisted or subject to more scrutiny by foreign jurisdictions, which may redound to more harm than good for that State and undermine the very programme itself.

In light of the foregoing, any Caribbean state considering a Citizenship by Investment programme must not only consider the possible investment inflows but weigh them carefully against the potential reputational, security and other risks, as well as the sustainability of such a programme.

Disclaimer: This article is NOT intended to provide investment advice and the Author is not accountable to anyone who relies on the information in this article. The information was taken from sources deemed to be accurate and correct at the time of publication. For further information on the respective CbI programmes stated above, please contact the relevant authorities in the respective countries.

Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international trade and development consultant with a keen interest in sustainable development, public international law and trade.