The tarnish on golden visas

I have mentioned before the concept of “golden visas” and passports-for-sale.  In today’s politically uncertain world they are becoming ever more popular, and last month Transparency International published a report called “European Getaway: Inside the Murky World of Golden Visas”.  Put aside, if you will, the dislike tinged with envy that is often engendered by those who flit into the country on a leather-lined private jet and select (or instruct their lackey to select) the most appropriate travel document from the sheaf at their disposal.  We’re bigger than that, AML-ers.  From a money laundering perspective the main danger is – as noted by TI in that report – the lack of due diligence: “Though most countries that trade in visas and passports assert that they uphold the highest standards, audits performed in a number of countries in recent years have identified serious deficiencies.”  In 2014 several Portuguese government officials were detained after allegations that their golden visa programme had fallen prey to “corruption, money laundering and influence peddling”, while in March 2017, “the Hungarian golden visa scheme was suspended following revelations that the right to sell residency bonds on behalf of the government was awarded to eight companies without any public procurement process – seven of the chosen companies were registered outside of Hungary, and there was little to no information about their real owners in the public domain”.

However, the country I find really interesting in all of this is Canada.  Canada’s federal Immigrant Investor Programme (launched in 1986) was once rather popular – after all, the Canadian passport is widely accepted, and it’s rather a nice country in which to live, politically stable, with good scenery, and the maple syrup is (almost literally) nectar.  It was not a cheap or easy option: applicants had to have a minimum net worth of C$1.6 million [about £750,000 in 1986] and invest $800,000 in an interest-free loan to the Canadian government (to be repaid after five years), as well as offering at least two years of managerial experience.  Despite this, it was a great success, with an estimated 100,000 Chinese millionaires settling in Vancouver alone (a city of only 600,000 at that time).  The local population had mixed views: luxury developments sprang up all over town, priced beyond the reach of many natives, and even suburban property was snapped up – and much of it was left empty, seen simply as an investment.  When Vancouver came second in a poll entitled Most Unaffordable City In The World for the fourth time, the Canadian government decided enough was enough: the IIP was halted in February 2014.  65,000 pending applications (70% of them Chinese) were cancelled and refunded – although (as the IIP website still notes) the returned application fees did not have interest added, and no refund at all was made for “language tests, financial audits, bank charges [or] representative fees”.

Announcing the thinking behind the cancellation of the scheme, the federal budget of 2014 said that “there is little evidence that immigrant investors as a class are maintaining ties to Canada or making a positive economic contribution to the country.  Overall, immigrant investors report employment and investment income below Canadian averages and pay significantly lower taxes over a lifetime than other categories of economic immigrants.”  In other words, it’s not financially worth it to the government.  And this may eventually be the death-knell for all such schemes: the money.  If a government works out that its golden visa scheme costs it more – in lost reputation, lost genuine business and lost tax revenue – than it earns from it, the doors will close.

This entry was posted in AML, Due diligence, Legislation, Money laundering and tagged , , , , , , , , , , , . Bookmark the permalink.

4 Responses to The tarnish on golden visas

  1. Sometimes I’m scared by the level of my own influence – announced in today’s news (6 December 2018 – a week after this blog post): Tee hee! I promise to continue to use my powers for good.

  2. And then on 11 December 2018 they decided to suspend the suspension. Honestly, you’d think the UK government was in chaos, when there’s little evidence of it to the outside world…

  3. And now (23 January 2019) this report on “golden visas” from the EU:

  4. If you’re in the UK, there’s a telly documentary coming up about the UK’s own “investor visa” scheme: Monday 22 July 2019, 8pm, Channel 4:–2-million-passport—welcome-to-britain-dispatches/

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