IM Yearbook 2020/21

As enhanced data privacy
restrictions are enacted
in jurisdictions around the
world, due diligence processes will
have to adapt accordingly, and, in
some jurisdictions, it will be necessary
to find alternate legal methods of
obtaining meaningful intelligence.
Laura Austin
LA: The changes implemented in light of Covid-
19 showcase the adaptability of the CIUs, and
in many ways are another great example of
positive progress emerging from the pandemic.
From a due diligence perspective, the more
comprehensive information and documentation
we have at the start of an investigation, the
better and more comprehensive the output
will be. However, this is in no way positing
that comprehensive and high-quality due
diligence cannot be conducted without the
comprehensive set of required documents
in hand. In reality, due diligence, when
conducted properly, only partially relies on
the documents and information reported,
while equally relying on intelligence and
information that was not disclosed.
Additionally, it is worth noting that to
date, we have not seen a significant number of
files submitted to us with missing documents.
Certain of the documents we have received
have not been notarized, as notaries in many
countries were not available during lockdown
periods, but with the exception of a few
jurisdictions, the lack of a notary stamp does
not typically impact our ability to confirm the
document with official in-country sources.
There is rightfully a concern on some
level about an impact to the due diligence
process if, for example, a significant number of
documents are absent at the time the diligence
is initiated, but this has not been our experience
to date, and we are confident that the CIUs
will continue to apply adequate standards
when it comes to the documents received and
the initiation of the due diligence process.
EL: We support the adoption of technology
to assist both applicants and the CIUs.
Whilst supplied documentation is, of course,
fundamental to the process, it does not tell
the full picture and our checks online and
in-country enable corroboration of genuine
information and discovery of false or
misleading information. We work alongside
the CIUs when conducting verification, and
if a perceived issue or threat is identified,
we would always liaise with the relevant
CIU and request further documentation to
alleviate concerns. As technology develops,
we believe that the application process
can be streamlined and, potentially, allow
for verification to be more transparent.
How do you expect the due diligence
practice to develop in the next five years?
SW: I think there will be further significant improvements
in the process of risk assessment and lower-risk application
vetting, driven by technology and automation. As more data
becomes available in digital format and Machine Learning
and Artificial Intelligence tools become smarter and more
available to practitioners, the vetting process will become
faster and more seamless, particularly for low-risk applicants.
However, where the risks remain high—either because of lack
of transparency, lack of documentation, remote location in highrisk
perceived countries—local and human based intelligence
will remain the sine qua non of effective due diligence.
JS: Hopefully we will start to see a more uniform adoption of
due diligence for agents and governments across the industry.
This is especially critical for the Western European residency
programmes that deal in high volumes but seemingly do very
little due diligence. Ideally, these Golden Visa programmes
would adopt the minimal due diligence standards outlined
in the IMC-coordinated reports, publicly outline what level
of vetting takes place at the applications stage and what
risk-based approach is taken when making decisions.
LA: Technology will continue to play a significant role in
the evolution of the due diligence industry, both in internal
process enhancements and end-user offerings. We expect
significant advancements in internal technology solutions that
allow for added efficiencies in record retrieval, analysis and
reporting, leading to improved turnaround times, increases
in capacity, and more sophisticated levels of risk-based
analysis. For end-user solutions, we also expect enhancements
to risk rating and post-investigation monitoring tools.
External to enhancements from providers, the next five years
promise to bring additional data privacy measures in a number
of jurisdictions, including increased use of anonymization
and pseudonymization in records. As enhanced data privacy
restrictions are enacted in jurisdictions around the world,
due diligence processes will have to adapt accordingly, and,
in some jurisdictions, it will be necessary to find alternate
legal methods of obtaining meaningful intelligence.
EL: With ever greater scrutiny on programmes by the media and
policymakers, it has become vital to ensure that every application
has been checked and all sources verified. Digital passports
and IDs will change the way we all verify our identities, both at
home and when travelling. That will inevitably alter the way in
which verification for citizenship takes place and should allow
for better initial checking. We also support the IMC’s work to
establish best practice in due diligence and that will help to allay
the fears of some on the quality of citizenship granting.
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Investment Migration Yearbook 2O2O/2O21