Blog / Oct. 5, 2017

Red notice on golden visas

We need to talk about Golden Visas. Remember these? They’re the nifty schemes where the wealthy can invest lots of cash in return for residency rights and, sometimes, a second passport. 

Global Witness has been worried about the corruption risks in these schemes for a while now because we see first-hand how the corrupt operate – and we know that buying access to a safe bolt hole is a desirable part of the corruption arsenal.

CS Global

Image: CS Global

First you steal the money, then you hide it (usually in offshore bank accounts), and then you spend it. And how do you spend it? Well, election-buying and patronage are a ‘must-have’ to maintain power, but after that you can turn your attention to some of the finer things in life. A private school education for the kids, a luxury mansion, some fast cars …oh, and a Plan B for if things turn sour. Buying citizenship or residency in another country via golden visas is part of that Plan B. Sure it’s expensive, but it’s an investment and gives you and you’re your family permanent security if things get too hot to handle at home. After all, if the passport makes you a citizen of a country that has a non-extradition treaty with your country and enjoys strong rule of law you can sleep safe and sound in your luxury home.

So, we weren’t surprised when last week the Guardian newspaper exposed how golden visa schemes across Europe are at risk of abuse. Their investigations showed that business executives implicated in the controversial Brazilian ‘Car Wash’ scandal, relatives of an Angolan politician accused of bribery,  and billionaire Russian oligarchs and Ukrainian elites accused of corruption have acquired EU citizenship through the Portuguese and Cypriot schemes. A sprightly European Commission responded to tell us they’re working on it. But in the meantime, what can be done? 

GV

Image: Business Insider, Courtesy of Jade Mountain

Well, in the short term there’s an easy policy solution – make sure that all EU countries offering golden visas carry out in-depth checks on applicants and the source of their funds. The EU is currently negotiating the 5th Anti-Money Laundering Directive and the European Parliament is backing an amendment that would make Member States do just this. 

But will that fix the problem? It’s certainly a good starter for ten but will only go some of the way. The problem is that these schemes aren’t just limited to Europe. There’s a global golden visa industry with schemes running in at least 25 countries, including the U.S., Australia, and Canada, as well as island nations such as Antigua & Barbuda, Dominica, and Vanuatu. So if you raise standards in the EU, the corrupt will probably just switch tack and apply elsewhere. 

In other words, we need to jointly set a common global standard for these schemes or we risk putting the problem on hold. But how? Experience suggests that asking industry self-regulation doesn’t cut it, so we need governments to take a stand. 

The G20, for example, has long held a commitment to deny visas to corrupt officials. Setting common standards for golden visas is one of the ways they can make good on their promise. The Financial Action Taskforce – the international body that sets anti-money laundering standards for banks and lawyers – also has a role to play here by bringing golden visa businesses within their scope. And the UK government can lead by example by committing to address problems in its own golden visa scheme when it publishes its anti-corruption strategy later this year. The impetus must come from governments as they are responsible for the market in citizenship not the various law firms and brokers who sell it to the international rich.

 Global Witness isn’t into the business of crystal ball gazing – we prefer facts – but in this case we feel pretty confident predicting that unless something is done to sharpen up checks on applicants, the Guardian revelations will be the opening volley in a long line of scandals. Governments and industry should take notice. 

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