In 2017, the Iranian businessman Ali Reza Monfared was arrested at a beach resort in the Caribbean, according to media reports. Monfared was accused of embezzling millions of dollars in his home country of Iran. The story seemed straightforward enough: corruption and an international effort to stop it. Instead, it had twist.

At the moment of his arrest, Monfared had a passport from the Commonwealth of Dominica, a small island country in the Caribbean. In fact, he held a diplomatic passport. He was actually appointed Dominica’s ambassador to Malaysia.

This incident brought negative attention to the “Citizenship by Investment” (CBI) programs in Dominica and various other countries. Monfared had acquired Dominica’s citizenship after a series of investments in the island and when his arrest was announced, people started asking questions about the transparency and requirements of these programs.

Cases like this one, maintain a shadow over the otherwise beneficial CBI programs across the Caribbean. We at Relocate continue to pay significant attention to every issue of relocation and global human mobility. That is why we want to go beyond the headlines to understand this issue.

What is Citizenship by Investment? What are the benefits and requirements for applicants? How Caribbean countries use this revenue to fund and diversify their economies?

Citizenship by Investment: What is it? Where it came from?

It was a Caribbean country, St. Kitts and Nevis, the first in establishing a CBI program. In 1984, the year when the program was established, the island’s economy was in rough shape. The traditional sugar cane industry was in decline and the country was increasingly relying on tourism to earn foreign exchange. Precisely, the CBI program was built with the intention of attracting foreign investment through wealthy individuals in need of facilitating international mobility with a stronger passport.

Since then, more than 20,000 applicants have received their passportsin St. Kitts and Nevis. Today, multiple locations in the Caribbean have similar programs. Antigua and Barbuda, Dominica, Grenada, St. Lucia and Curacao among the most prominent ones.

But what is citizenship by investment?

The term is self-explanatory. Citizenship by investment is the process of acquiring a second citizenship through the investment of significant resources into a country’s economy. This option is usually directed to wealthy or high net worth individuals. In many cases, applicants can acquire their citizenship after buying real estate but almost every country offering this program also has the option to invest directly into government projects and funds.

The requirements vary depending on the jurisdiction. For example, Antigua and Barbuda has a minimum investment amount of US $100,000, while Curacao’s reach US$280,000. At the center of CBI’s value proposition is the question of how many countries you can enter visa-free as a holder of your new passport? If you’re an investor from a developing country or a heavily sanctioned country, you often find that not even money can solve your mobility issues.

That’s when CBI can be of great help. Favorable wealth management regulations and taxation regimes often play a role as well when deciding about second passports in Caribbean jurisdictions. By the way, CBI is a global phenomenon and even some European countries offer it; however, that’s a topic for another post.

What’s in it for receptive countries?

It’s clear now why people from around the world would like to hold a second passport from one of these Caribbean countries: favorable tax regimes, visa-free travel to 120+ countries –in the cases of Curacao and St. Kitts and Nevis you could travel to 174 countries and 156 countries respectively –and we haven’t even talked about beautiful beaches under the Caribbean weather.

But what’s the benefit for these countries that open the door to its citizenships? Though it is challenging to obtain consistent data on the matter, just in the case of Dominica in 2016 revenues from CBI reached almost 20% of the island’s GDP. Just to put that into context, In 2020 agriculture contributed to a little bit more of 15% of Dominica’s GDP while industry was 12%.

Those funds are usually used for infrastructure development, to create resiliency funds in order to prepare for tropical storms and other natural disasters or simply to contribute to governments budgets without the need to issue bonds or go into debt.

Even when these programs get bad reputations in certain areas, the truth is that they represent win-win situations for both receptive countries and applicants alike. And yes, sometimes bad actors abuse them, but in a moment when immigration policy has been tightening in so many places and the narrative about migration is increasingly toxic, any effort to facilitate human mobility should be celebrated and understood in all its aspects.

We hope to bring the Relocate Community more information on Citizenship by Investment routes and perspective countries.

Jürgen Pretsch is a professional researcher and consultant, but first and foremost, he is a "serial expat" and contemporary "digital nomad". Having lived in nearly a dozen countries, Jürgen has produced extensive research for major private institutions and governments. At the moment, Jürgen is pioneering work relating to expatpreneurship, and will continue to provide resourceful articles in the global mobility space.

Connect with Jürgen today to learn more about his Advisory & Consulting services.