IM Yearbook 2020/21

DON’T BE THE LAST TO KNOW: THE IMPORTANCE OF
MONITORING
Residency- and citizenship-by-investment (RCBI) programmes have to meet the challenge of not
only weeding out unsuitable applicants at the time of application, but also identifying those who
could bring disrepute after they go through the application process and receive approval. Meeting
this challenge involves employing a multi-pronged approach of enhanced due diligence along with
real-time, ongoing monitoring, writes Karen Kelly, Exiger’s Director of Strategy and Development.
The need for thorough, professional,
enhanced due diligence on
applicants to RCBI programmes
is a standard highlighted regularly by
industry advocates and programmes
themselves. The risks of not implementing
a comprehensive due diligence process
have become evident in cases where
applicants with ties to criminal activity
and corruption have been named publicly
and programmes were subsequently
forced to re-examine their procedures and
consider options for revoking citizenship
or residency. However, even programmes
with otherwise robust due diligence
processes can be caught unaware by
serious events that impact an approved
applicant after an approval is granted.
Applicants can and do experience
material changes to their circumstances
in the months or years following their
approval. External factors, such as
sanctions programmes that target new
jurisdictions or sectors, would be near
impossible for an RCBI programme to
predict. Likewise, yet to be announced
investigations against applicants or
future suspect business dealings present
a challenge when due diligence can only
reasonably (and realistically) examine what
has already transpired or is in progress.
Red Flags
By monitoring subjects through a
technology platform for adverse
developments in the months and years
after initial due diligence, one observes
that sometimes smaller red flags can
precipitate more serious adverse
findings in the future. Such red flags may
include pending litigation, judgments,
investigations, or regulatory actions
against a subject or their businesses.
The following examples are relevant to
the investment migration industry:
u A retired state official with a high
net worth that far exceeds reported
income and investments. Media
outlets report an investigation into
his financial activities has started,
but law enforcement cannot confirm
or deny such rumours at the time
of due diligence. Five months later,
the individual is charged with
financial crimes and detained.
u A business owner who heads a group
of companies had a recent falling out
with his companies’ shareholders and
left his position as a result of related
litigation, which has not yet progressed
through the courts. He is later charged
with multiple violations of local Anti-
Money-Laundering and Anti-Terrorism
Financing regulations and is already
thought to have fled the jurisdiction.
u Individuals with large personal or
business debts due or judgments
rendered around the time of
application, already residing in a
new jurisdiction in anticipation
of avoiding payment.
u Individuals whose political exposure
and relationships have changed
over time as new government
officials take office, or as they
enter new roles and industries.
RCBI programmes make decisions
regarding prospective applicants based on
the information available at the time of
the application. Holding off on decisions
where an applicant is involved in an active
legal case that could have a serious impact
on the applicant’s reputational, legal, or
financial standing can mitigate the risk of
pending outcomes. But in cases without
black and white findings, programmes
assess the risks using the information at
hand and make decisions accordingly.
A Proactive Response
Ongoing, real-time monitoring of
applicants, after the initial due diligence
report has been delivered, is fast becoming
a standard tool for an RCBI programme
to ensure it is alerted should serious
findings come up after an applicant is
processed. It is in a position to proactively
respond, rather than scrambling to react
to media reports and public pressure.
Ongoing monitoring also presents a
learning opportunity when applied
to applicants that were not accepted
or are still being considered, as it can
validate the programme’s risk assessment
framework and identify patterns to
look out for in future applications.
Monitoring across an applicant
population does not need to be a heavy lift
for a programme. Artificial intelligencepowered
monitoring can scan thousands
of sources in multiple languages in real
time, eliminating false positives, and
continuously refining an applicant’s
risk profile. The right technology can
be leveraged to scan for specific types
of events and red flags for which a
programme wants alerts, such as ties to
sanctions or criminal proceedings. RCBI
programmes that add technology-enabled
monitoring to their toolbox for assessing
applicants, and that are transparent
about its implementation, have an added
deterrent against bad actors. A combined
approach of third-party due diligence
and ongoing monitoring makes it more
difficult for those looking to escape
future consequences and strengthens a
programme’s reputation for accepting
only the highest-calibre individuals.
Karen Kelly is Director of
BIO Strategy & Development for
Exiger Diligence, focusing
on the Immigration, Citizenship,
and Visa (ICV) Practice. She
has 12 years’ experience that
includes managing due diligence
services for residence- and
citizenship-by-investment (RCBI)
programmes, financial institutions,
and corporations, and developing
specialised due diligence
training programmes. She also
participated in a large-scale RCBI
programme review focusing
on policies and procedures,
workflow, operational support,
and system implementation.
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