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Caribbean, Europe, Latitude in the news, News feed Date: 01 November, 2023

Golden Passports: The Good, the Bad, and the Ugly

Golden Passports: The Good, the Bad, and the Ugly

The concept of “golden passports” has been making headlines. But what exactly are golden passports, and why are they in the news?

In this article, we’ll explore the world of golden passports. You’ll read about the good, the bad, and the ugly aspects of this phenomenon.

What Are Golden Passports?

The Definition

Golden passports are also known as Citizenship by Investment (CBI) Programmes. Certain countries give individuals citizenship in exchange for a significant financial investment.

Become a citizen by donating to the country’s government, for example. Or by buying a property or making a business investment.

Check out our timeline of golden passports.

A Potted History

Ask investment migration professionals which country issued the first Golden Passport. You’ll receive a uniform answer: the Caribbean country of St Kitts and Nevis.

While St Kitts and Nevis Citizenship by Investment dates back to 1984, the concept is older. As Jelena Džankić explains in The Global Market for Investor Citizenship.

This includes “a historical snapshot of the development of citizenship and “passports for sale” in ancient Greece, ancient Rome, during the Middle Ages, and during the Renaissance,” writes reviewer Andrej Přívara.

A Growing Trend

It’s true that Citizenship by Investment has been around for millennia. Another fact is that golden passports have never been more popular than they are today.

Our North America Managing Manager Jon Green smiles in recollection. He remembers the confusion when Latitude launched Stateside.

“Entrepreneurs asked us why they would invest in citizenship elsewhere,” he describes.

“They were of the impression they had no need for a second citizenship. That is less of a majority view now.”

The Good

Consult our Golden Passports Index.

Economic Benefits for Countries

Golden passports are a force for good. They bring economic benefits to small countries.

These programmes can secure significant amounts of foreign investment. This capital injection boosts the local economy and creates jobs for natural-born citizens.

The Caribbean region once relied on tourism as its main contribution to GDP. CBI programmes have helped islands to diversify.

When travel shut down thanks to COVID, Citizenship by Investment became the breadwinner. Caribbean governments have distributed profits from the programmes as pandemic relief payments.

Ensured Stability

Investors worry about the longevity of CBI programmes. True, they come and go but many have stood the test of time.

Christopher Willis is our Managing Partner in the Caribbean region. He points out that “the CBI programmes in the Caribbean are continually evolving to ensure they meet all international standards.”

“Although we see adjustments such as investment levels, investment options, definitions of dependants, and additional procedures, such as interviews, the constant is that they remain in place.”

“Even with new governments, it’s understood that the value of the CBI programmes to the Caribbean countries is significant and must be sustained.”

Switching from Plan A to Plan B

There’s a common misconception that investors in citizenship are more conservative than liberal. This is in part driven by polemic Influencers peddling conspiracy theories. The truth is somewhere in-between.

Our Executive Chairman Eric Major reveals the 50-50 split in North American clients.

“As many Democrats hire our services as Republicans,” he discloses.

“Recent political developments have triggered some Americans to search for greener pastures abroad.”

“What makes the bucket tip varies from person to person, but many from both political persuasions have reached a tipping point and have decided they want out as a result.”

Increased Global Mobility

Another advantage of golden passports is the increased global mobility they offer. With a second passport, individuals can travel more. They access a wider range of countries without the need for a visa.

Our Managing Partner in Malta, Ryan Darmanin, champions the Maltese passport. You become eligible for this after acquiring Citizenship by Investment.

“A passport of Malta guarantees visa-free travel to 180+ countries,” he outlines.

“This is beneficial for investors who need to travel for work. It can also be a valuable asset for those who want to retire and travel for leisure.”

A Path to Dual Citizenship

For some individuals, obtaining a golden passport can be a way to gain dual citizenship. This can reduce your tax liabilities.

Many countries have double taxation treaties. These agreements prevent you from having to pay tax in both jurisdictions.

The Bad

Potential for Corruption

One of the main criticisms of golden passports is the potential for corruption. Critics argue that dubious individuals can exploit these programmes.

Those with questionable backgrounds can get citizenship. As well as a passport, this buys them access to sensitive data.

Lack of transparency and due diligence can muddy the waters. This makes it easier for individuals to hide their true intentions or sources of wealth.

There is the flip slide of this. Golden passports are a weapon against corruption. That’s the view of The Golden Passport: Global Mobility for Millionaires author, Dr. Kristin Surak.

“We usually think foreigners have fewer rights than citizens, but this is not always the case, especially under authoritarian regimes, ” she argues.

“If you are a Vietnamese citizen, for example, who has been successful in business you don’t know if the government will try to seize your assets or money.”

“However, if you are a foreigner, you can attempt to claim access to international arbitration and move your case outside the domestic court system, which might be corrupt.”

Security Concerns

Another concern is the potential security risks associated with golden passports. Global terrorism and money laundering are on the rise. There are fears that these programmes could aid illegal activities.

There is a perception that a lack of thorough background checks and vetting procedures makes it easier for criminals to get a second passport. They can use this new citizenship to evade justice.

Yet, Caribbean countries have addressed these security concerns. They have added an extra layer of protection to their multi-tier due diligence. Applicants now have to attend a mandatory interview. Elsewhere, Maltese due diligence is among the most stringent in the world.

The Hon. Phillip Joseph Pierre, Prime Minister of St Lucia was a speaker at September 2023’s 78th Session of the UN General Assembly. He reiterated the “foundational principles which guide” his country’s CBI programme. These are “integrity, transparency, accountability, and efficiency.”

The Ugly

Undermining the Concept of Citizenship

The traditional idea of citizenship is that you earn it through birth or naturalization. It is often tied to a sense of national identity and belonging.

With golden passports, however, you can buy citizenship. This leads to concerns that it is becoming a commodity rather than a privilege.

Allow us to pour cold water on that traditional idea. Leading athletes have switched national allegiances at will. This allows them to compete for the country of a relative’s birth rather than their own.

Even if you don’t have natural sporting talent, Citizenship by Descent is still an option. Or as the Romans called it, jus sanguinis, where you claim citizenship based on the nationality of your parents and grandparents.

Exacerbating Global Inequality

These programmes are often only accessible to the wealthy. This means that those who can afford to buy a second passport have an advantage over those who cannot.

This can create a divide between those who have the means to access better opportunities and those who do not. Goldden passports further perpetuate existing inequalities.

But as we have already shown, golden passports enrich smaller, poorer countries. They redistribute wealth to benefit citizens born and bred in that country.

The world is not only open to immigrant investors either. There are other programmes available to those looking for citizenship. These include compassionate and humanitarian routes.

Understand the world of golden passports better with this Latitude guide.

Is a Golden Passport Right For You?

The whole concept of golden passports is complex. We’ve given you a simplified guide to understand it better.

Reading this balanced article could trigger an interest in Citizenship by Investment. If so, don’t delay and contact us today to talk about how you can get a tailor-made golden passport.

Golden Passports: The Good, the Bad, and the Ugly

Date: 01 November, 2023

Posted in: Caribbean, Europe, Latitude in the news, News feed