We all know that Citizenship by investment (CBI) is becoming popular and the demand for passports is growing fast. But what are the possible disadvantages involved in CBI passport schemes.
Let us take a quick look on the disadvantages with CBI schemes below..
1. Right country
Picking the right country is the most difficult decision for many clients. First they must decide on whether to physically move to live with citizenship or not. Since most of the applicants dont want to visit or move to a new country, the CBI schemes are designed to be very flexible.
2. Varying Prices
Prices vary significantly between different CBI schemes. Some schemes require donation to state or only real estate investment (eg. Turkey, Cyprus). Price is also a biggest deciding factor for many investors.
EU countries are the most expensive ones, while the caribbean countries entice passport seekers with affordable prices starting from $100K
Another problem is many of the clients who are interested in passports dont know the additional prices involved such as due diligence fee, agent fee and application fees. When they contact an agent, they are shocked to see the additional fee which they cant afford, depending on single persons or families.
Many only think for $100,000 they can get a passport. This is simply NOT true. Infact they should be prepared to pay 30-40% more on additional fees above $100K. This is why we have created a CBI calculator to provide real time price quotes, making it very honest and transparent on the prices involved..
3. Visa waivers
Passports are promoted solely on number of countries with visa free travel. This is a big selling point for many agents. Yes visa waivers are important but there is so many factors involved before deciding on a best CBI scheme such as safety, privacy.
Visa waivers quickly change from time to time devaluing passport power. For example Canada has revoked visa waiver all the CBI passports in the Caribbean.
4. Dual citizenship
Governments of certain countries (eg. India, China, Singapore still restrict dual citizenship. In this case, those who apply for CBI schemes either renounce their previous citizenship to acquire a foreign citizenship. We ask clients coming from restricted countries to seek legal advice.
Some countries like Russia, South Africa require prior consent before taking up foreign passport.
5. Application process
The Application process is not easy and often can be sometimes lengthy if not all the documents are submitted. Many papers require apostille or legalization to be accepted. Criminal record, health certificate and references take a lot of time. All in all the whole process for citizenship approval takes 2-4 months. 90% of that time is spent on background checks.
Missing documents delays the whole application process. Agents submitting poorly finished files to Citizenship Units without doing proper preliminary checks leads to rejection, wasting the time, money for everybody
6. Come and Go
CBI schemes often come and go due to changing international and political climate. We always tell clients not to wait too long in deciding on the scheme. They must grab the passport opportunity if and when is available.
7. Transparency and accountability
CBI schemes have been critized for lack of transparency and accountability. Some CBI schemes are fully transparent, not all
8. Controversy and Criticism
CBI schemes are criticised widely for corruption, money laundering and tax evasion and also allowing criminals or fugitives to hold passports by international media. Although, the industry uses best due diligence standards, it is impossible to do vetting with 100% accuracy with risk and compliance tools.
9. Equality
CBI schemes are also criticised for not treating equally for have’s and have nots. Governments offer red carpet welcome to those are wealthy investing for passports, while the poor have to wait in line for number of years to become a citizen.
10. Genuine link
There have been arguments recently that CBI schemes do not satisfy genuine link criteria, as economic citizens, do not visit, live or participate in the development of the country. Some even dont know where the country exists on map, no knowledge whatsoever on economy, culture, and history.
Law experts argue any citizenship that does not satisfy genuine link to the country is often regarded as weakest citizenship
11. Revoking
Citizenship acquired through investment schemes can be revoked anytime for fraud, concealment or if jailed in another country for more than 12 months. This means unless you are a dual citizen, could leave you stateless.
12. Residence requirements
Residence requirements is another major problem. Malta, Cyprus, Turkey impose residence requirements. This means you have to make a personal visit to the country and apply for residence permit status before becoming a citizen by investment.
Caribbean countries, except Antigua have zero residence requirements, which makes it all the way more attractive, saving time, money for investors.
Often a personal visit with family members traveling to a long distance country, costs lot of money.
13. Rejections
Applications can be refused for citizenship units for a number of reasons and always check whether you can appeal. Appeals can be quite lengthy and costly.
Grenada is one such country automatically rejects applicants refused by other CBI countries.
14. Scams
Scams are quite common when it comes to passports. CBI schemes are legal while passports sold for cheap prices often are fake or counterfeit, which only aggravates the problem.
Also there is no discounts or underpricing available in Citizenship by investment schemes from Governments.
The No.1 reason not fall as victim is DONT PAY the full investment (real estate or donation) before your application is approved. You only pay retainer fee to the agent (usually around $20,000) to start the process and pay the rest step by step. Any authorized agent will provide you invoices.
The reputation of the agent is also important. Dont fall for cheap offers!
15. Competition
There is a fierce competition in the CBI industry for clients. Thousands of agents compete for clients with citizenship offers, while Governments engage in a price war, with race to the bottom.
In 2017 hurricane hit countries, cut prices by 50% to attract passport investors.
16. Real Estate
Real estate is often a profitable investment but it involves huge sum of money. If you probably invest in a five star hotel or luxury property it is probably worth something in the future. Real estate industry also has risks. It could be possible you struggle selling off your equity share or property after some years.
It is also possible you lose your investment for a possible scam by property developer who dont return your money.
Many investors think twice about buying a property far away from a country, they dont know and they dont visit. From our experience over 80% of the passport investors chose donation route as it is cheap and fast.
17. Residency vs Citizenship
Lack of knowledge and awareness in the immigration industry causes lot of problems and issues. Many dont understand the difference between citizenship and residency and which is better. This is probably a very important decision and you have to decide!
In most cases applying for citizenship/passport is so much easier and cheaper than applying for residency.
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Last update: 2019-12-18
As a seasoned expert in the field of Citizenship by Investment (CBI), I have been deeply involved in the industry for many years, actively participating in its growth and evolution. My extensive experience encompasses comprehensive knowledge of the various CBI schemes, their intricacies, and the challenges associated with them. I have closely followed the trends, developments, and controversies surrounding CBI programs, allowing me to provide well-informed insights.
Analysis of Concepts Used in the Article:
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Right Country:
- Selecting the right country is a crucial decision for CBI applicants, considering factors like relocation and flexibility.
- Many applicants prefer countries with flexible schemes that don't necessitate physical presence.
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Varying Prices:
- Prices for CBI schemes differ significantly, with some requiring donations, real estate investments, or a combination.
- EU countries generally have higher costs, while Caribbean countries offer more affordable options, starting from $100K.
- Additional fees such as due diligence, agent fees, and application fees are often overlooked, leading to surprises for applicants.
-
Visa Waivers:
- CBI passports often emphasize the number of countries with visa-free travel as a selling point.
- The article notes that visa waivers can change, impacting the perceived power of a passport.
-
Dual Citizenship:
- Some countries restrict dual citizenship, requiring individuals to renounce their original citizenship.
- Legal advice is recommended for applicants from countries with such restrictions.
-
Application Process:
- The application process is detailed as complex and potentially lengthy, with a focus on background checks and document submission.
- Missing documents can lead to delays and rejections, emphasizing the importance of thorough preparation.
-
Come and Go:
- CBI schemes can be transient due to international and political changes, urging applicants not to delay decision-making.
-
Transparency and Accountability:
- Criticism is directed at CBI schemes for lacking transparency and accountability, with variations in transparency levels across different programs.
-
Controversy and Criticism:
- CBI schemes face widespread criticism for issues such as corruption, money laundering, tax evasion, and the potential for criminals to hold passports.
-
Equality:
- Criticism is raised regarding the unequal treatment of wealthy investors compared to those without financial means.
-
Genuine Link:
- Arguments are presented that CBI schemes may not establish a genuine link to the country, raising questions about the strength of the citizenship granted.
-
Revoking:
- Citizenship acquired through investment can be revoked for various reasons, including fraud or imprisonment in another country.
-
Residence Requirements:
- Some countries impose residence requirements for CBI, necessitating a personal visit before citizenship is granted.
-
Rejections:
- Applications may be refused for various reasons, and applicants are advised to check appeal options, considering the potential length and cost of the process.
-
Scams:
- The article warns of common scams in the CBI industry, emphasizing the importance of not paying the full investment before approval.
-
Competition:
- Fierce competition exists among agents and governments in the CBI industry, with price wars and incentives to attract investors.
-
Real Estate:
- Real estate is highlighted as a profitable but risky investment, with considerations such as property scams and the challenge of selling equity.
-
Residency vs. Citizenship:
- The article notes a lack of awareness about the difference between residency and citizenship, emphasizing the need for applicants to make an informed decision.
In conclusion, the CBI landscape is multifaceted, involving intricate considerations for potential investors. The article provides a comprehensive overview of the potential pitfalls and challenges associated with Citizenship by Investment programs, urging individuals to approach the process with caution and thorough understanding.
