Our Opinion: 2019
Citizenship for sale
The global market in passports is booming. Thirteen countries now treat passports as a new global asset class, selling them on the open market. For just a one-time $100,000 contribution to the Antiguan Treasury, you can get a passport which gives visa-free access to more than 100 countries.
The Caribbean island of St Kitts has been completely transformed by its trade in passports. In 2005, it issued just six passports. Thanks to the efforts of the government, and a partner firm, Henley & Partners, this has now increased to more than 2,000 a year. The fees paid for these have amounted to 13% of GDP, and the increased investment in the country as a result has sparked an economic boom.
The island is now filled with ambitious projects of questionable viability. Henley & Partners, haven’t done badly out of the deal either. Since the St Kitts government was unable to pay them upfront, it agreed to pay them $20,000 for each passport sold. Henley has since expanded its business to the neighbouring island of Dominica, forcing St Kitts to cut its fees for a passport (to $150,000). Henley & Partners also now works for the Maltese government, helping the country set up a scheme that has raised more than €509m from selling citizenship, equating to more than €1,000 for every person on the island”.
The idea of selling a citizenship repels some people, and governments and brokers should do more to weed out undesirables, who want a new home to hide funds that come from questionable sources. However, many of those seeking another passport are just people wanting to avoid endless hassles or looking for insurance against instability or persecution. With a third of rich Chinese in one survey saying they would like a foreign bolthole, it doesn’t look like the market in passports is going to come to an end anytime soon.
Of course, just because you can buy another passport doesn’t mean that it’s always a good idea. The Antiguan government was recently shamed into cancelling the passports of three successful applicants for lying on their application form. Canada also recently cancelled Antigua’s visa-free access to the country due to concerns, with the EU Schengen countries likely to follow suit.
Residence planning is a vital part of financial advice for High Net Worth international clients. It is more important than ever to work with the right, independent advisers to ensure action is focussed around an individual’s unique needs in a complex environment. Buyers need to be aware. They may not get what they pay for.
14th June 2019