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Harry Cassin
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Due diligence warning about ‘golden passport’ countries

The Organization for Economic Cooperation and Development published a list of “golden passport” schemes from 21 countries that are high risk and “required to be  taken into account” during due diligence.

The Paris-based OECD said the programs it listed “can potentially be misused to misrepresent an individual’s jurisdiction(s) of tax residence.”

Those programs offer low rates of personal tax on money earned abroad and don’t require individuals to spend much time in the country.

The OECD analyzed over 100 residence- and citizenship-by-investment schemes. It found programs in 21 countries where foreign income may not be reported.

The programs “potentially pose a high-risk to the integrity” of due diligence KYC checks, the OECD said.

The OECD flagged three European countries — Malta, Monaco, and Cyprus.

Malta is popular because its passport holders can live and work anywhere in the EU, the Guardian said. The country has sold citizenship to more than 700 people since 2014 — “most of them from Russia, the former Soviet bloc, China and the Middle East.”

In the last ten years, EU countries have gained about 100,000 new residents and 6,000 new citizens through golden visa programs, according to a report (pdf) from Transparency International and Global Witness.

Golden passport and visa programs can attract legitimate investments from outside. But the NGOs said corrupt officials and others can use the programs to flee prosecution or launder money through big real estate investments.

The cost of a golden visa or passport is anywhere from around $150,000 (Saint Kitts and Nevis) up to $12 million (Austria) or more, according to the NGO report.

These are the countries and programs the OECD flagged that create high due diligence and KYC risks:

Antigua and Barbuda – Antigua and Barbuda Citizenship by Investment, Permanent Residence Certificate

Bahamas – Bahamas Economic Permanent Residency

Bahrain – Bahrain Residence by Investment

Barbados – Special Entry and Residence Permit

Cyprus – Citizenship by Investment: Scheme for Naturalisation of Investors in Cyprus by Exception, Residence by Investment

Dominica – Citizenship by Investment

Grenada – Grenada Citizenship by Investment

Malaysia – Malaysia My Second Home Programme

Malta – Malta Individual Investor Programme

Malta – Malta Residence and Visa Programme

Panama – Friendly Nations Visa, Economic Solvency Visa, Reforestation Investor Visa

Qatar – Residence Visa for Real Estate Owner

Saint Kitts and Nevis – Citizenship by Investment, Residence by Investment

Saint Lucia – Citizenship by Investment Saint Lucia

Seychelles – Type 1 Investor Visa

Turks and Caicos Islands – Permanent Residence Certificate via Undertaking and Investment in a Home, Permanent Residence Certificate via Investment in a Designated Public Sector Project, Permanent Residence Certificate via Investment in a Home or Business

United Arab Emirates – UAE Residence by Investment

Vanuatu – Development Support Programme, Self-Funded Visa, Land-Owner Visa, Investor Visa

The OECD said it will publish practical guidance to help financial institutions spot and prevent tax avoidance through the golden passport and visa schemes.


Richard L. Cassin is the publisher and editor of the FCPA Blog.

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