Golden passports and visas are losing their shine

In today’s Finshots we tell you why countries are cracking down on programs that offer citizenship and residence permits in exchange for cash.

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Let’s dive into it now.

The story

Money can’t buy happiness, but it can buy you a brand new citizenship, which will likely give you visa-free access to over 150 countries in the world! It gives you a newfound freedom to travel like you’ve never done before.

And that’s pretty close to happiness, don’t you think?

We are talking about golden passports and golden visas.

If you can spend anywhere from $100,000 to $1 million, there are plenty of countries lining up to take your money as a ‘donation’ or as an investment in real estate or infrastructure. And voila, you become the proud owner of a new passport or a residence permit in another country. You don’t even have to live in that country to enjoy the benefits.

Indians love this too. Nearly 10% of applications for golden visas and passports come from Indians. Every year, thousands of Indians flock to give up their navy blue passports in exchange for other passports: the US, Australia, Portugal and Malta.

And we’ve already told you why they might do this: easy travel, the ability to settle elsewhere for a better quality of life, and access to countries to more easily set up businesses. It’s quite an attractive prospect if you have the money.

But you might be wondering: what’s in it for countries?

In most cases it’s about the money. Yes, even for the US. Their government website states that the country created the golden visa program in 1990 “to stimulate the U.S. economy through job creation and capital investment by foreign investors.”

Sure, the US might not make much money from this plan. But in other cases it is a big money spinner.

Take the example of the Caribbean island of Saint Kitts. The country became independent from the British in 1984. And then discovered that it didn’t have much money left to run the country. It had to import everything and didn’t have many natural resources to sell. And it thought the way out would be to exchange its citizenship for money.

Today, the scheme accounts for more than 50% of the government’s $377 million in revenue.

So you could imagine that this also gained popularity around the world. More than 80 countries in the world had a similar arrangement.

But in recent years, some countries have also become increasingly concerned about these arrangements.

The European Union believes there is a ‘trade’ in gold passports going on under their noses.

A few months ago they looked at the island of Dominica in the Caribbean, which sells citizenship to people who have $100,000 to spare. And they found that for a country of only 70,000 people, Dominica was quite generous in welcoming foreigners. They had issued 34,500 passports, which was four times more than what the government itself had declared.

That’s pretty fishy, ​​isn’t it? Why would a country even underreport these numbers?

And then the EU realized that people from areas they considered very safe because of corruption were siphoning off citizenship. We are talking about countries like Iran, Russia, China, Nigeria and Libya. These people would be granted a certain number of days of visa-free access to most EU countries each year. They could travel in and out as they pleased. And the EU also started to worry about organized crime and money laundering. But it wasn’t just that. Because people who have adopted this citizenship could then change their names and identities and avoid border controls and any sanctions or arrest warrants, this would become an even greater threat.

And if you want an example of that, think of India’s own Mehul Choksi, the founder of Gitanjali Gems.

He allegedly defrauded the Punjab National Bank (PNB) of millions of rupees. And then ran away to the island of Antigua and Barbuda, where he had taken citizenship. So India couldn’t bring him all the way back to the country for justice.

So yes, this kind of thing happens.

And to combat that, the EU wanted a power – the power to suspend visa waivers for countries that sell citizenship to buyers who have no “real connection” with the country. Let them go through the hassle of submitting all their information.

Or in their words: “Visa-free access to the EU should not be used as a commercial good to be sold and bought.”

And as criticism has increased in recent years, countries have tightened the screws.

Montenegro and Cyprus have ended the citizenship-by-investment route. Some Caribbean islands and Greece have increased the minimum amount that must be invested. And others in Europe, such as Britain and Spain, have ended their Golden Visas.

Maybe money alone can’t buy happiness anymore, huh?

Until then…

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