A Commonwealth publication has revealed that the Citizenship by Investment programme (CBI) is a vital source of income, accounting for 16 per cent of total government revenues in some countries.
The paper, Weighing Up Second Passport Power in Small States: A SWOT analysis of the citizenship by investment industry, is part of the Commonwealth’s latest Small States Matters series. The paper takes a practical and balanced approached to assessing CBI industry as a source of economic activity.
The publication explores the strengths, weaknesses, opportunities and threats of the industry, more commonly known as a SWOT analysis.
The CBI industry is particularly popular among small states, as two-thirds of the countries offering this programme have a population of fewer than 1.5 million people.
While this industry is growing in breadth and depth, with record numbers of applications made and more countries offering this programme, it is still considered “controversial”.
The publication shows positive economic and social benefits of this industry as well as opportunities to diversify the economy and invest in climate action.
However, it reports that the industry is vulnerable to fraud, mismanagement and reputational risks. It also shows that the industry has attracted increased scrutiny from international regulators and competing jurisdictions which threaten its economic benefits.
The Commonwealth’s head of economic policy and small states, Travis Mitchell, said: “Citizenship by Investment is clearly an important yet controversial industry for many Commonwealth small states. Indeed, it continues to be critical to financing Dominica’s recovery from Hurricane Maria.
“We believe the Commonwealth can work with member countries to support the good governance and integrity of the programmes.”
The publication argues that cooperative measures for strengthening due diligence checks and for improving governance can help overcome the weaknesses and the threats of the industry.
The Commonwealth’s technical research officer, Heather Cover-Kus, who led the groundwork for the publication, said: “The Commonwealth believes there is much to be gained from an effective dialogue between CBI jurisdictions themselves and with regulators, the European Commission.
“To help encourage cooperation, the Commonwealth plans to hold discussions to bring all the relevant actors together to air concerns in a constructive manner and work toward developing a mutually agreed due diligence and governance system.”