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Abuse of C'bbean citizenship programmes on the rise — report

Saturday, May 24, 2014    

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WASHINGTON, USA (CMC) — While economically-pressed Caribbean countries are selling citizenship to mostly Middle Eastern, Asian, and Russian applicants as an easy revenue source, reports here say abuse of the programme is on the rise.

According to the Christian Science Monitor, the twin-island federation of St Kitts and Nevis, of roughly 55,000 people, grants citizenship in exchange for either a contribution of US$250,000 or more to its Sugar Industry Diversification Foundation or the purchase of approved real estate worth a minimum of US$400,000.

"Selling passports is a way for the cash-strapped nation to raise money and has helped transform an economy once dependent on sugar cane," said the paper on Friday. "But, as the programme has grown, so have allegations of abuse."

The Monitor noted that just last month the US Treasury Department raised concerns that St Kitts had issued passports to three Iranian men who were using the documents to allegedly help Iranian banks launder millions of dollars.

"The negative attention has some calling for better regulations, or even an end to the programme," it said.

Nevertheless, the paper said the money St Kitts has made from the programme has spurred other countries — from Malta to Bulgaria — to start their own.

In the Caribbean, the Monitor said Antigua and Barbuda, Dominica, and Grenada have followed St Kitts and Nevis' lead, adding that others are considering similar programmes.

Citing economic headwinds, such as lower tourism and high energy prices, the paper said St Lucia's Prime Minister Dr Kenny Anthony announced last month that he was open to the idea.

"I think we cannot close our eyes [to selling citizenship], because it's an option we may have to consider," it quoted Anthony as saying.

Nuri Katz, president of APEX Capital Group, a US consultancy, estimates that between 15,000 and 20,000 people apply annually for second passports.

Pushed by political turmoil, or seeking a passport that requires fewer travel visas, the Monitor said applicants come from around the world, especially Russia, the Middle East and Asia.

Dwyer Astaphan, a former St Kitts and Nevis minister of national security who now works as a citizenship lawyer, estimates the programme generates tens of millions of dollars for the country.

But Astaphan conceded that "we don't know where the money goes."

Still, the investment "is an economic vitamin b-12 shot for a country our size," he told the Monitor.

Earlier this week, the US Treasury's Financial Crimes Enforcement Network (FinCEN) office advised international financial institutions to more closely review dealings with clients using a St Kitts and Nevis passport, stating that certain

foreign individuals are abusing

the Citizenship-by-Investment programme to obtain passports for the purpose of engaging in illicit financial activity.

"While many countries offer programmes similar to the

SKN Citizenship-by-Investment programme, the SKN programme is attractive to illicit actors because the programme, as administered, maintains lax controls as to who may be granted citizenship," FinCEN said.

While the SKN Government has publicly pledged to improve these controls, FinCEN said it believes that "they remain ineffective".

Prime Minister Dr Denzil Douglas, however, told a recent press briefing: "We are evaluating what, if any, changes should be made to our global programme."

At the same time, Astaphan told the Monitor that he feared such scandals "are hurting the country's reputation and that eventually European countries will say, 'we have to review these visa agreements.'

"And that will ruin it," he said.

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