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1 1 (April 27, 2021)

handle is hein.crs/govedcw0001 and id is 1 raw text is: $ Cnrsiona REsac Seric S April 27, 2021 International Immigrant Investment Programs: Illicit Finance Risks Immigrant investment programs (IIPs), sometimes referred to as golden visas or passport programs, are immigration programs in which applicants make a financial contribution to the host country and, in exchange, are offered legal residency (residency-by investment, RBI) or citizenship (citizenship-by investment, CBI, also known as economic citizenship). IIPs may appeal to governments as a significant source of investment. See CRS In Focus IF11344, The Changing Landscape of Immigrant Investment Programs, by Jennifer M. Roscoe, for more information on IIP-related trends and background. The United States operates an IIP, the EB-5 Immigrant Investor Program, which includes fraud-related risk assessments and case adjudications administered by U.S. Citizenship and Immigration Services. See CRS Report R44475, EB-5 Immigrant Investor Visa, by Holly Straut-Eppsteiner for a discussion of the U.S. IIP. As the number of international IIPs has grown in recent decades, some observers have expressed concerns that these programs may facilitate financial crime. While the scope of these risks is uncertain and many international IIP participants may not have criminal motivations, some participants may seek to use the programs for tax and sanctions evasion and money laundering by conducting business under an easily obtained secondary residency or dual nationality. Congress has sought to strengthen U.S. responses to illicit finance by appropriating funds for U.S. government entities that address financial crimes and by requiring reporting on anti-money laundering issues in foreign countries. Members have also called attention to international IIPs that they have viewed as particularly troubling through statements and in hearings. How might international liPs enable illicit finance? While international IIPs typically include requirements designed to prevent participation by would-be criminal actors, some programs reportedly exhibit lax standards or enforcement. In 2021, the Department of State's (DOS's) congressionally mandated International Narcotics Control Strategy Report (INCSR) Volume II: Money Laundering cited examples of current or recent international IIPs with selection processes that were advertised as fast and inexpensive, did not require an interview, and raised concerns about attempts to evade law enforcement or facilitate illicit finance. Once individuals become citizens or residents of a host country, they may attempt to store ill-gotten funds, circumvent tax requirements, or evade sanctions by relocating assets to the host country or conducting business via their new residency or citizenship. Using a secondary https://crsrepc residency or citizenship may complicate due diligence efforts or the blocking of sanctioned assets, as they may not trigger sanctions alerts or the enhanced scrutiny sometimes applied to citizens of certain countries. Secondary passports may also enable international travel, including through visa- free arrangements, that an individual would not have access to under their primary passport. Secondary residency or citizenship may also be used to avoid tax obligations. Which countries' programs have come under scrutiny? While various international IIP programs may be vulnerable to illicit finance, U.S. and inter-governmental reporting have identified certain countries of particular interest, often in relation to specific typologies of illicit finance. In 2021, the INCSR identified 79 major money laundering jurisdictions, defined by the Foreign Assistance Act §481(e)(7) as those whose financial institutions engage in currency transactions involving significant amounts of proceeds from international narcotics trafficking. The 2021 INCSR referenced current or recent IIPs as vulnerabilities in 5 of the 79 identified jurisdictions (A in Figure 1). The Organisation for Economic Co-operation and Development (OECD) has also identified countries with RBIs and CBIs that represent a potentially high risk to the integrity of its Common Reporting Standards (CRS), which are designed to foster information exchange to prevent tax evasion (B in Figure 1). Figure I. Countries with IIPs Identified as Vulnerabilities or Potentially High Risk by the INCSR and OCED. A Antigua and Barbuda Malta Bahamas Saint Kitts and Nevis Bahrain Saint Lucia F Barbados Seychelles Cyprus Turks and Caicos Islands Dominica £ United Arab Emirates Grenada Vanuatu Notes: A indicates countries whose liPs were referenced in the 2021 INCSR. B indicates countries that are listed on the OECD's website as of April 2021. The OECD countries are limited to those that have signed on to the CRS (the United States has not signed on). How have jurisdictions with IlPs responded to allegations of illicit activity? In response to criticism and scrutiny, some foreign governments have cancelled citizenship or residency for certain individuals and made reforms to their IIP processes, though the effectiveness of certain reforms remains in question. Cyprus and Malta, for instance, have reportedly instituted reforms for their IIPs in recent years, including )rts.congress.gov

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