A recent report from the Financial Action Task Force (FATF) in collaboration with the Organisation for Economic Co-operation and Development (OECD) highlights the exploitation of citizenship and residency by investment programs for money laundering and other illicit activities. The joint project investigates irregularities associated with Citizenship and Residency by Investment (CBI/RBI) schemes, addressing concerns related to fraud, corruption, public integrity, tax evasion, and migrations.
The report emphasizes that while these programs hold the potential for economic growth, they are increasingly being used by criminals and corrupt individuals seeking to launder money, conceal assets, and engage in further unlawful activities. The criminal exploitation of these programs, according to the report, constitutes a “multi-billion-dollar business,” providing a mechanism for the laundering of corruption and fraud proceeds, evasion of justice, and access to third countries.
FATF President T. Raja Kumar acknowledges the economic potential of these programs but stresses the need for governments operating them to implement safeguards. He notes that, unfortunately, these programs can be exploited by those with criminal intent, using them as a means to launder money, hide identities, or commit additional crimes. The report calls for risk-sensitive administration of these programs and the implementation of various safeguards.
Secretary-General Mathias Cormann of OECD underscores the significant risks and vulnerabilities associated with golden visa schemes, describing them as a multi-billion-dollar avenue for laundering proceeds from corruption and fraud, evading justice, and gaining access to other countries. The joint FATF-OECD work identifies these risks and proposes mitigation measures, including appropriate due transparency, diligence, integrity mechanisms for policymakers and program operators.
Verdict
Despite the potential economic contributions of properly managed CBI/RBI schemes, the report notes that they often pose heavy risks of illicit activities such as tax evasion, corruption, and money laundering. It emphasizes the importance of effective management to ensure benefits for both host countries and individuals while mitigating the risks associated with these programs. The report also points out weaknesses in these schemes, including the use of involvement of various government agencies, intermediaries, and potential misuse by professional facilitators.
