FATF – Misuse of Citizenship and Residency by Investment Programmes
itizenship and Residency by Investment (CBI/RBI) programs, which offer citizenship or residency to foreign investors, potentially accelerate economic growth but also attract criminals and corrupt officials seeking to launder money and evade justice. In April 2022, the Financial Action Task Force (FATF) Ministers emphasized the need to focus on corruption, leading to a joint project with the Organisation for Economic Co-operation and Development (OECD) to examine the risks these programs pose, including foreign bribery, fraud, corruption, and impacts on public integrity, tax, and migration.
FATF President T. Raja Kumar acknowledged the economic benefits of ‚golden‘ passport and visa programs but warned of their exploitation for money laundering, identity concealment, and further criminal activities. The report urges governments to implement safeguards for a risk-sensitive administration of these programs.
The FATF-OECD report underscores the dangers associated with CBI programs, such as enabling criminal global mobility, identity concealment, and the use of shell companies. Vulnerabilities include the use of intermediaries, involvement of multiple government agencies, professional enablers‘ abuse, and lack of proper governance.
OECD Secretary-General Cormann highlighted the multibillion-dollar criminal exploitation of these programs for laundering fraud and corruption proceeds, evading justice, or accessing third countries. The joint work identifies risks and proposes mitigation measures, such as due diligence, transparency, and integrity mechanisms.
The report suggests actions for policymakers and program operators to address these risks, like conducting in-depth analyses of how criminals exploit CBI/RBI programs and incorporating multi-layered due diligence. It emphasizes that the risks extend beyond the applicants to include professional enablers and intermediaries, underscoring the need for clarity on the roles and responsibilities of all parties involved in RBI/CBI programs to effectively detect fraudulent activities.