The CBI Index asks industry experts to weigh in on the challenges of implementing tighter controls to safeguard the future of the industry.
JEAN-FRANÇOIS HARVEY is an expert in immigration law and the Founder and Managing Partner at Harvey Law Group. With a wealth of experience in providing comprehensive immigration law services to corporations and HNWIs, Jean-François has extensive experience in commercial law, including many high-value due diligence and merger and acquisition activities for a broad range of international and multinational industries.
KAAN BEYLEN is a well-respected Turkish lawyer with a wealth of experience in prestigious law firms in both London and Istanbul. Co-Founder of Turk Fortune, a company that provides legal and business-related consultancy to foreigners, Mr Beylen specialises in CBI programmes, corporate, tax and real estate law, as well as digital assets.
SARA SOUSA REBOLO is one of the founders of Prime Legal and has been practising for over 10 years in the areas of Real Estate Law, Foreign Investment, Labour and Corporate Law. She is certified in investment migration by the IMC, Co-Founder of PAIIR (Portuguese Association of Immigration, Investment and Relocation), and has been recognised as one of the top 25 lawyers by Uglobal Immigration Magazine.
For some time, the CBI Index has spotlighted the need to tighten up applicant vetting procedures to ensure the long-term sustainability of the citizenship solutions industry. It is a need born out of the importance for CBI countries to better understand to whom they are bestowing citizenship, as well as to ensure citizenship investors do not pose any threat to the countries they gain access to.
However, for many governments and regulatory bodies, the industry’s response has not been fast or comprehensive enough. In Europe, both real and perceived failures of due diligence were what brought down the Cypriot and Bulgarian CBI programmes in 2020 and 2022 respectively, with the two EU member states ultimately falling foul of EC authorities. Other examples include Montenegro, which recently ended its programme due to the unfeasibility of reconciling CBI activities with wider ambitions of acceding to full membership of the EU, and Malta, which remains embroiled in a lawsuit with the EU as part of the latter’s clamp down on Europe-wide CBI programmes.
The industry’s latest regulatory impasse, however, centres on the ‘Caribbean Five’, which face continued pressure from both the EU and the US State Department whose concerns pertain to the potential of alternative citizenship holders to exert undue influence on CBI governments.
To shed light on the challenges the industry faces in the current climate of regulatory ultimatums and how these developments could shape the future of CBI, the CBI Index invited three leading investment migration experts to share their insights.
“The current push to improve the standard of due diligence in the industry could ultimately lead to a situation where, as seen in the US, only regulated law firms will be permitted to offer investment immigration services.” – JEAN-FRANÇOIS HARVEY
Q: WHAT IMPACT WILL A TIGHTENING REGULATORY LANDSCAPE HAVE ON THE CBI INDUSTRY?
Jean-François Harvey: The current push to improve the standard of due diligence in the industry could ultimately lead to a situation where, as seen in the US, only regulated law firms will be permitted to offer investment immigration services.
I believe that the industry will come to that in the near future as part of efforts to weed out unqualified actors for the good of all stakeholders. With more stringent requirements, due diligence, source and path of funds, and KYC controls increasing and becoming more complex year on-year, the absolute need for experienced, licenced legal entities, which also closely follow national immigration law, is essential.
Kaan Beylen: We are seeing a major increase in regulatory pressures, but what is not being pointed out is that the very nature of the industry means there will always be calls to increase due diligence, vetting, and a general questioning of CBI programmes’ legitimacy. This is because with elections taking place every four years in democratic countries and political discourse becoming more polarised, CBI programmes face the potential threat of being targeted by opposition parties or political entities internationally.
As a result, in-demand programmes often become the victims of their own success.
Moreover, with the trend of ‘globalisation’ in decline, a more discriminatory climate is finding a foothold and foreigners can sometimes be easy targets, and this includes citizenship investors. As a result, CBI programmes must enhance application and due diligence processes to ensure national security, and to minimise the impact of future political charges or confrontations. Even though certain programmes may close in the next five years, there are more and more countries looking to start their own programmes.
Sara Sousa Rebolo: The CBI and RBI industries and the immigration sector in general are still some way from having a sufficient legal framework to address industry challenges.
It is a sector that involves multiple jurisdictions and cultural challenges, in addition to underlying different motivations for the associated mobility. It is normal for governmental entities to feel the need to create and impose tighter rules whenever certain phenomena are perceived, either by excess (mass movements), abuse of grey areas, or illegal motivations.
At the same time, despite the current consensus around the need for tighter controls, the introduction of new rules is a positive for the investment immigration industry, provided it is done with proportionality, equality, and objectivity. This means that they must strive to create a safer industry while ensuring basic legal and cultural principles of the destination countries are protected – not least to avoid preconceptions against the (economic) immigrants.
Undoubtedly, the professionalisation of the sector, as well as the development of compliance systems is a necessity, not only for the sustainable growth of the industry, but also for the protection of the interests of candidates and communities in the host countries. We believe that this trend is in the interest of the providers because, indirectly, it also has an impact on the evolution and importance of their services for those interested.
