The 2021 CBI Index: Reflections and predictions for 2022

So far, 2021 has proved to be a remarkable year for citizenship by investment (CBI), with both the implementation of new programmes and the closure of longstanding and infant programmes alike. Trends have included family inclusiveness, sustained emphasis on due diligence, and growing oversight of real estate projects available for investment under certain CBI programmes.

Family inclusiveness seems to have reached an apex in the Caribbean, where Grenada in 2019, Dominica and St Lucia in early 2020, and St Kitts and Nevis and Antigua and Barbuda in late 2020, expanded their definition of ‘dependant’ to include siblings. 

Malta’s Granting of Citizenship for Exceptional Services Regulations were drafted to be wider than the regulations for Malta’s Individual Investor Programme (IIP),  but only slightly, allowing adult children to apply with their parent investor up to the age of 28, instead of 26. 

There have  been some improvements in Bulgaria for spouses, but with Egypt also allowing spouses to only obtain citizenship well after the main applicant, questions have been raised as to whether spouses in these jurisdictions can count as true ‘dependants.’ Indeed, this year’s CBI Index is more nuanced than in previous years, penalising countries where family members do not receive citizenship with the main applicant.

Some CBI nations have been enhancing their due diligence practices for many years. Malta, for example, whose due diligence operations under the IIP already required a hefty €7500 fee from the investor, now utilises two (and not merely one) external due diligence firms – requiring an even more substantial €15,000 fee.

Vanuatu is also upgrading its due diligence, having mandated in 2020 regulations that checks be carried out by an “international specialist firm” and requiring an extra US$3000 per application for its due diligence — a substantial addition to the the previous US$2000. However, although Vanuatu checks applicants against the databases of reputable due diligence firms, it does not appear that the country is working with a third-party firm to conduct stringent on-the-ground checks of applicants.

Against the background of mounting scrutiny by multilateral bodies and international organisations, it is expected that increased emphasis on due diligence will continue into 2022, and there is hope that the industry may move closer to harmonised standards. More should be done, however, by Middle Eastern nations. Although lower due diligence barriers to entry are often a feature of newer CBI programmes, there is little to suggest that improvements to applicant vetting and due diligence processes are being prioritised, even as their programmes become better established. As demonstrated by the abolition of the Cyprus Investment Programme, failure to implement comprehensive due diligence processes in time can come with grave consequences, including permanent damage to a programme’s reputation.

This year has seen growing awareness of the risks associated with, and consequent oversight of, real estate investment options. In St Kitts and Nevis, for example, as of March 2021, new and existing developers must submit a payment schedule to the St Kitts Investment Promotion Agency. This will govern the way a project is financed, improving the administration of funds provided to real estate developments under the Programme and increasing the likelihood that developments will be completed successfully and at pace.

Turkey also tightened its real estate rules. In March 2021, the country decided that a property that has been used to obtain citizenship (whether through a title deed transfer or preliminary sales contract) could no longer be used in another CBI application. The change limits the risk that a real estate ‘bubble’ will form, and ensures property is not recycled by CBI applicants. 

Real estate controls are being applied in CBI jurisdictions across the globe and show no signs of being relaxed, and it is expected that CBI nations will continue to work to enhance the integrity of their real estate offerings.