Understanding Risks and Mitigating Financial Crime in Citizenship and Residency by Investment (CBI/RBI) Programs

Citizenship and residency by investment (CBI/RBI) programs are governmental initiatives designed to expedite or bypass standard immigration procedures, granting citizenship or residency to foreign investors. While these programs have the potential to stimulate economic growth through increased foreign investment, they’ve also become magnets for individuals seeking to exploit loopholes for criminal activities, laundering large sums of illicitly acquired funds estimated in billions of dollars.

Responding to the call by FATF Ministers in April 2022 for intensified anti-corruption efforts, the FATF collaborated with the Organisation for Economic Co-operation and Development (OECD) to delve into the money laundering and financial crime risks linked to CBI/RBI programs. This exploration encompassed threats involving foreign bribery, fraud, corruption, and their adverse effects on public integrity, taxation, and migration.

“Countries granting citizenship and residency to affluent investors through ‘golden’ passport and visa programs can potentially stimulate economic progress. However, these avenues are increasingly exploited by criminals and corrupt entities aiming to launder money, obscure identities, or engage in further unlawful activities. This report urges governments overseeing these programs to implement stringent safeguards for a risk-sensitive administration,” highlighted FATF President T. Raja Kumar.

While properly managed CBI/RBI programs offer advantages to host nations and participants, the reality is that they carry significant risks of money laundering, fraud, and various forms of exploitation.

The report underscores how CBI programs facilitate global mobility for criminals, enabling them to conceal identities and illicit activities behind shell companies in different jurisdictions. It also sheds light on vulnerabilities inherent in these intricate international investment migration programs, citing the frequent involvement of intermediaries, collaboration among multiple government agencies, exploitation by professional facilitators, and the absence of robust governance of CBI/RBI programs.

“Criminal exploitation of citizenship and residency programs constitutes a multi-billion-dollar enterprise for laundering the proceeds of corruption and fraud, evading justice, or gaining access to other countries. Our joint FATF-OECD endeavor identifies risks and vulnerabilities in golden visa schemes, offering a suite of mitigation measures to guide policymakers and program operators, including rigorous due diligence, transparency, and integrity mechanisms,” emphasized OECD Secretary-General Cormann.

The report presents a series of recommendations and exemplifies best practices to assist policymakers and those responsible for managing investment migration programs in addressing these risks. These encompass comprehensive analyses of how criminals exploit CBI/RBI programs and strategies for incorporating risk-mitigation measures, such as intricate due diligence, into program designs. It underscores the heightened risks of financial crime, not solely related to the applicants but also involving professional facilitators and intermediaries. Consequently, clarifying roles and responsibilities across all involved parties in RBI/CBI programs is crucial to detecting fraudulent activities.

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