IM Yearbook 2020/21

The reports argue that both RBI and CBI programmes
should implement the same due diligence standards
based on a five-step process. However, there is
no supranational body regulating the investment
migration industry, and it falls on governments to
ensure that minimum standards are met. What are
your thoughts and opinions on this matter? Will we
see greater harmonisation in the years ahead?
JS: While there may not be a supranational body regulating the industry, there have
been some significant developments regulating how “golden visa” applicants should
be treated. The 5th EU Anti-Money Laundering Directive stipulates “Golden Visa”
applicants should be classified as “high risk” which in turn, requires enhanced due
diligence. This is an important step in institutionalising the level of due diligence
that needs to be applied. But ultimately, what would really move the needle is
industry self-regulation. We should use the recent scrutiny on the industry to selfpromote
the importance of uniform application of due diligence across agents and
governments. We will only address the criticism through standardization, otherwise
lax controls in certain programmes will adversely affect the whole industry.
SW: The agents and banks processing the application payments and opening
applicants’ accounts in many jurisdictions already need to follow Anti-Bribery and
Corruption (ABC) and Anti-Money Laundering (AML) regulations and apply the
verification procedures under their Know-Your-Customer (KYC) policies. These,
however, vary from one jurisdiction to another and so cannot be fully relied upon
by the investment migration sector. Because of the legal implications of citizenship
or residency status as independent state matters, the industry needs to rely on
standards driven by associations such as IMC. The lack of supra-national oversight
is somehow replaced in the sector by the scrutiny and attention that the press, NGOs
and civil society give. This, in turn, drives an increased reputational and political
risk for those governments who do not adhere to risk management best practices.
EL: The programmes with which we work all demand a high level of documentation
and substantial paperwork to support the application process. We apply the same
degree of due diligence to all CIUs and pride ourselves in our professionalism and high
standards. There is scope to introduce a minimum standard across the board, but the
responsibility also lies with the due diligence provider to highlight any areas lacking that
will result in ineffective due diligence, on a case by case basis. Technology could offer
some effective solutions to harmonise some areas, including standardising forms and
templates and allowing for digital IDs and security features to be built in at an early stage.
The lack
of supranational
oversight is
somehow
replaced in the
sector by the
scrutiny and
attention that the
press, NGOs and
civil society give.
Silvia Wolos
LA: Regulation of minimum due diligence standards, both at the agent and
government levels, remains a challenge and topic for further discussion. At the
agent level, similar to the banking industry, there is the possibility of implementing
measures such as fines and/or bans, but without an industry-specific regulatory agency,
infractions are difficult to investigate, and enforcement is seemingly impossible.
The question of enforcement and regulation becomes significantly more difficult
at the government level, as the autonomy and decision-making ability of the nation
states is an undeniable factor. Industry regulation and compliance is ultimately
possible, but it is going to take further exploration and solution-seeking.
Ultimately though, the agents and government programmes that choose to
subscribe to the minimum standards outlined in the reports will also hopefully follow
guidance from the reports around increased levels of transparency, which serves to
better the security and reputation of the industry. Regardless of the regulation in
place, all stakeholders in this industry have a vetted interest in its continuation and
success, and it is our desire that these reports serve as a catalyst for industry progress.
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Investment Migration Yearbook 2O2O/2O21