ee
Table of Contents
LIST OF ACRONYMS
5
SETTING THE CONTEXT
6
EXECUTIVE SUMMARY
8
INTRODUCTION
11
BACKGROUND TO CITIZENSHIP BY INVESTMENT PROGRAMMES
13
Reasons for seeking Citizenship by Investment
13
Country Benefits
14
Risks
16
EXISTING CIP’S
17
Dominica
17
St. Kitts & Nevis
18
Austria
20
A MODEL FOR CONSIDERATION
21
General Provisions
21
Investment Options
21
Investment Qualifications
22
Features of the Passport
22
Eligibility Requirements
22
Fees
23
Special Areas: Resort Districts
24 Page 2 of 59
LEGISLATIVE AMENDMENT/FRAMEWORK
27
DUE DILIGENCE
28
Documentation
28
In-House vs. Outsourcing
30
Due Diligence Criteria
31
Interview Panel
31
Potential Providers of Due Diligence Service
32
SPECIAL ADVISOR
35
ECONOMIC IMPACT
37
Real Estate Option
40
Business Option
42
National Development Fund
42
Charitable Fund
43
A Desirable Out-come Philanthropy
44
INSTITUTIONAL SETTING Process Flow Citizenship by Investment Agents
45 48 50
Criteria for Granting of C.I. License
50
The Procedure for Obtaining a License
51
CONCLUSION
53
SUMMARY OF RECOMMENDATIONS
54
Features of Citizenship by Investment
54
Eligibility Requirement
54
Investment Qualifications for Citizenship
55 Page 3 of 59
Revocation
55
Fees
56
Special Areas: Resort Districts
56
Due Diligence
56
Institutional Setting
57
ANNEX 1
58
Page 4 of 59
LIST OF ACRONYMS
Page 5 of 59
SETTING THE CONTEXT Since 2009, Antigua and Barbuda has struggled with the challenge of a declining economy that has contracted due to the global economic and financial crisis as well as systemic domestic imbalances and shrinking revenues. The country has long needed a public investment programme, which would secure resources for development. In the recent past, Antigua and Barbuda, and countries all around the globe have confronted grave challenges in their efforts to satisfy the expectations of the citizenry. External factors have played a pivotal role in determining the success or failure of our small island developing states. The enduring impact of the global economic and financial crisis continues to constrain Government’s ability to ensure high levels of employment, to provide critical social services, and to undertake much needed infrastructural development. While the Government and people contend with the reality of economic stasis, traditional funding sources have virtually disappeared for countries such as Antigua and Barbuda which is ranked as “high” on the Human Development Index, positioned as 60 of 187 countries. Moreover, Official Development Assistance (ODA) to Small Island Developing States increased more than 30% over the period 2006 – 2008, but for Antigua and Barbuda it fell 71%. Through building on bilateral relations with developed and emerging states, the Government has secured concessionary financing for several projects. However, these arrangements are generally executed at the behest of the donor. Even as we register our appreciation for the support received from these generous states, we must endeavour to chart a course for greater self-determination which empowers us to more fully direct the pace, impact and outcomes of our development initiatives. Historically, countries such as ours have adopted, in many instances, a reactive stance to Foreign Direct Investment. We have been proactive in facilitating the investor at the point of his proposal but we have not always adopted a strategic, targeted and programmatic approach to how this development would unfold.
Experience has
demonstrated, without question, that sustainable economic development is best achieved Page 6 of 59
by adopting an integrated and holistic approach.
The Citizenship by Investment
Programme is one such facet of this approach. Our adoption of a Citizenship by Investment Programme is based on our confidence that it will: •
Promote economic growth, bolster job creation and fuel entrepreneurship;
•
Attract developments which create ongoing and sustained tax revenues and other forms of income;
•
Generate significant capital injection annually into the national economy;
•
Support the development of infrastructure. and
•
Ensure that nationals continue to have access to affordable lands.
In the CIP as currently constructed, an investor may apply for citizenship through four mechanisms: •
The Real Estate Option which allows him to purchase property in Antigua and Barbuda with a minimum value of US$400,000.00 in a designated resort zone.
•
A contribution of minimum US$200,000.00 to a National Development Fund.
•
A contribution of minimum US$200,000.00 to an approved Charitable Fund
•
A business investment of no less than US1.5 Million as a single investor or of US$4 million in which two or more persons contribute at least US$400,000.00 .
Individuals who successfully undergo the rigorous due diligence and interview process and who make the required investment will be granted citizenship. The Government is well aware of the value of the Antiguan and Barbudan passport and how passionately and with what great esteem the people of our twin-island nation regard this document. We are resolute that the Citizenship by Investment Programme should in no way jeopardize the integrity of the national passport. As such, we have structured the Citizenship by Investment Programme to meet the most incisive scrutiny and to ensure that applications received by the CIU undergo the most rigourous review by the international Due Diligence Service Providers selected by the CIU.
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EXECUTIVE SUMMARY The Government of Antigua and Barbuda is exploring the possibility of embarking upon a Citizenship by Investment Programme (CIP). A Taskforce consisting of members of the public and the private sector was convened in June 2011, to examine the feasibility of the programme and make recommendations. This report documents its findings and recommendations.
A Citizenship by Investment Programme can greatly complement the residential tourism product and contribute to economic and social development. Given the experience of other jurisdictions, the Task Force recommends the establishment of a Citizenship by Investment Unit under the portfolio of the Prime Minister. However, the Task Force strongly advocates that the staff selected for this Unit should be highy committed and dedicated individuals who will act as watchdogs to protect the country’s reputation and mitigate the potential risks and any threat to the integrity of the Antigua and Barbuda passport.
A key component of the CIP is the Due Diligence Process. The country should therefore capitalize on the knowledge and experience of specialized agencies such as Kroll, Ernst and Young and Bishops Services Inc., Risk Advisory Group, IPSA, etc. by outsourcing these services to them.
Citizenship by Investment programmes have the potential of exerting a powerful inflationary effect on land prices, if left unchecked. In order to ensure that the price of land ownership remains within the reach of the average Antiguan and Barbudan, only properties located in specially designated zone termed, Resort Districts, would qualify.
In order to qualify for Citizenship under the programme, four options are offered:
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1.
Real Estate: Applicants for citizenship must acquire property valued at least US$400,000.00.
2.
National Development Fund: Contributions to the National Development Fund (NDF) in the amount of US$200,000 for a single applicant.
3.
Charitable Fund (CF) Contribution: Contribution to approved non-profit charitable institutions focused on education, health and environment in the amount of US$200,000 for a single applicant.
4.
Investment in a Business: Business investment starting at US$1.5 million. Investment in a business can be with multiple Investors who jointly invest at least US$4million. The minimum investment to be made by a single investor is US$400,000.00.
-
Funds will be paid into an escrow account held by a bank or a well recognized accounting firm as escrow agent before citizenship is granted
-
All government fees and Due Diligence fees apply in addition to the investment
The National Development Fund (NDF) route to citizenship by investment is a strategic capital mobilization measure aimed at funding government sponsored schemes to promote
public sector projects that will generate income; and or innovation in private
sector entrepreneurship.
Additionally, there should be a charitable option to enable
applicants to make a contribution to registered non-profit organizations approved by the Minister that deliver services
in Education, Health, Sports, Youth Development
and
Environmental management.
The National Development Fund (NDF) is to be administered by means of a Special Fund established under section 42(2) of the Finance Administration Act, 2006. The Act authorizes the Minister of Finance to make provisions for the administration of the Special Fund. Given the extremely controversial positions that exist in relation to the administration and use of such a fund, specific recommendations have been drafted. Page 9 of 59
In the medium term, the CIP can yield US$228 million in annual inflows to the country. This is based on five hundred successful applicants per year, starting in year four.
The Task Force strongly recommends that the Government moves with haste and thoroughness to initiate a Citizenship by Investment Programme.
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INTRODUCTION The Taskforce for the consideration of a Citizenship by Investment Programme was convened by the Antigua and Barbuda Investment Authority on June 9, 2011.
The
membership of the Taskforce was drawn from the private and public sector, more specifically:
•
Permanent Secretary, Ministry of Foreign Affairs, Sandra Joseph
•
Ministry of National Security, Chief Immigration Officer – Lt. Col. Ivor Walker
•
Min. of National Security, Immigration Dep., Station Chief (St. John’s) – Joycelyn Hughes
•
Office of National Drug and Money Laundering Control Policy – Lt. Col. Edward Croft
•
Caribbean Developments (Antigua) Ltd. – Gaye Hechme
•
Bar Association – Arthur Thomas, President (who succeeded Kelvin John)
•
Antigua and Barbuda Investment Authority – Fitzmaurice Christian
In October 2011, the following members were added: •
OBM Ltd. – Brian D’Ornellas
•
Hill and Hill Chambers – Radford Hill
The Terms of Reference for the deliberations are noted hereafter: i.
To identify the best strategic options available to support investment and residential tourism.
ii.
To identify the risks and necessary safeguards that should be in place to maintain the integrity of the Antigua and Barbuda passport.
iii.
To examine the economic benefits which may result from citizenship by investment/permanent residency.
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iv.
To determine the legislative and regulatory amendments required for the recommended course of action.
v.
To establish an institutional framework to manage the programme.
Meetings were held throughout the months of June and early July however, due to demands on members, no meetings were convened in August and September. Regular meetings resumed in October 2011.
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BACKGROUND TO CITIZENSHIP BY INVESTMENT PROGRAMMES Citizenship by Investment is the granting of citizenship status to an individual (and immediate family members) contingent upon a specified and quantifiable investment in the country. Alternatively, residency rights may be offered, in which case this is referred to as an immigrant investor programme.
While many countries offer residency visas
to investors and wealthy individuals, there
are only a few countries now which have clear provisions in their laws to grant citizenship by investment and without residency requirements. The USA, Canada, Australia, Austria, Switzerland and Great Britain are among the countries which offer residency and a fastrack to citizenship to wealthy individuals for their investment in their country.
Why do individuals value/seek out citizenship opportunities?
The benefits of dual or multiple citizenship range from ease of movement; where there is political strife in one’s own country and investment planning and personal security.
i.
Convenience: High net worth citizens of some countries spend considerable amounts of time
obtaining visas from other countries. In addition to the time
involved in the process, and the uncertainty, is the fact that some countries only offer single entry visas. Where travel may be required on short notice, access to another passport may be crucial such as in the case of civil unrest. Additionally, a second passport may afford the holder visa-free travel to jurisdictions not available to his country of birth. ii.
Tax Planning: Several countries levy income tax on non-resident citizens. Alternative citizenship has therefore become increasingly important as an effective tool for international tax planning. As a national of two or more states, Page 13 of 59
an individual generally has more planning options as well as more privacy in banking and investment. iii.
Personal Security: Citizenship and a passport from a small, peaceful country is considered by some as a form of protection when travelling, particularly in times of political unrest, civil war, terrorism or other delicate situations. Many international business executives consider an alternative passport as the best life insurance.
iv.
Investment in the Future: In a dynamic political and economic environment, acquiring a second citizenship may be considered an investment for the future and in many instances, there is no need to give up one’s present nationality while one, along with his family, enjoy the benefits of a legal second passport.
Country Benefits
The implementation of a Citizenship by Investment Programme can be a mutually beneficial arrangement for applicants and the host country. Among the gains to the country are:
i.
Economic Development: Antigua and Barbuda is considered a middle income country and hence unable to access official development aid at concessionary rates. The country is also heavily indebted with very little fiscal space for infrastructure and investment in education, health, sports, youth development and environmental management.
ii.
Economic Diversification: The island is heavily dependent on tourism (over 70% of GDP). However, potential entrepreneurs are often confronted by a financial services industry that is risk averse. The National Development Fund will provide a catalyst to create venture capital fund to support the next generation of business ideas to sustain lasting economic growth and diversification.
iii.
Capital mobilization: The revenue stream generated by investments and processing fees can be considerable. This is projected to be over US$32 million Page 14 of 59
(EC$86 million) in Year 1, US$104 million (EC$283 million) in Year 3 and US$282 million (EC$615 million) annually by Year 5. iv.
Liquidity Replacement: The failure of British American Insurance led to the exodus of over EC$300 million from the local financial system. Fees and investment in the NDF, Real Estate Investment, and the Charitable Trust will help to replace the liquidity lost by the system.
v.
Improve Foreign Reserve Position: The CIP is denominated in United States currency. All the fees, investments etc. collected will help to provide hard currency for Government and businesses to meet their external obligations. This is especially critical in an environment of stagnant visitor arrivals and financial crises in our major source markets.
vi.
Increased foreign direct investment (FDI): Apart from the initial investment for property purchase or other investment vehicles, opportunities for business investment in communities may be pursued. Citizens by Investment are usually very high net worth individuals who bring skills, resources and a network of relationships ideal for business development.
vii.
Increased economic activity: If applicants select the real estate option, this is likely to
generate significant economic activity in construction, retail, insurance,
property management, utilities, infrastructure, legal services and Government taxes such as land transfer taxes, property taxes, ABST and import duties as well as other services in the private sector. viii.
Investor Confidence: A popular model for hotel development is the condo hotel. In this model, condo units are purchased before commencement of construction by the investor and on completion placed in a pool under a hotel management contract. The Citizenship by Investment policy will make the country more attractive both for the developer and the investor because of the added incentive of citizenship.
ix.
Impact on tourism: There is a requirement that each successful applicant spends at least 15 days in the country each year for the first five years to qualify for a renewal of his passport. This should provide a much needed boost to the tourism market and result in the diversification of the tourism product as homes bought Page 15 of 59
by citizens by investment may be made available for use by their family, friends and their business associates. x.
Impact of presence of a network of high net worth individuals: Considerably wealthy individuals may be encouraged to support community projects and worthwhile initiatives through charitable contributions and the establishment of foundations.
Risks
While the implementation of a Citizenship by Investment Programme can offer significant benefits to the host country, there is need to assess and weigh the risks associated with such an initiative. Among these risks are:
i.
Management and employee selection, agent selection: The integrity of the programme hinges largely on the personnel charged with its promotion and administration.
ii.
Deviation from established policies and procedures: It is the intention of the Taskforce and the Government of Antigua and Barbuda to develop and implement the most rigorous screening and administrative protocol to ensure that the programme is not compromised. It is therefore critical that a thorough system of checks and balances complement the service delivery component of the CIP.
iii.
Undetected fraud: There is the probability that an undesirable individual, despite the CIP Unit’s best efforts, may acquire a passport.
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EXISTING CIPs Existing Citizenship by Investment Programmes with formal legislative framework exist in Dominica, St. Kitts and Nevis and Austria. The following reviews the general provisions of these programmes.
Dominica
Dominica’s Citizenship by investment Programme is administered by the Financial Services Unit in the Ministry of Finance.
In 1993, the concept of Citizenship by
investment was introduced by way of an amendment to the Citizenship Act which waived the residency requirement.
This amendment to the Citizenship Act meant that for a
stipulated investment, persons could apply for Dominican citizenship. Investment Options •
Family Option - Cash Investment: Under this option, the investor-applicant pays US$200,000 which qualifies the investor, spouse and two (2) children under eighteen for citizenship by investment. An additional US$15,000 per child is required for children who have turned 18 years but are less than 21 years old. Also, a cash contribution of US$25,000 is required for any additional child over twenty-one (21).
•
Single Option - Cash Investment: A Single Option application is defined as one where the investor (whether single or married) is the sole applicant for citizenship by investment. Under this option the "Single" investor would be required to make cash investment of US$100,000 which would be directed towards public sector financing.
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Other Applicable Fees: •
Processing fees - US$1,000 per investor (Non-refundable)
•
Processing Fee - US$200 per applicant (Non-refundable)
•
Naturalization Fee - US$550 per applicant
•
Stamp Fee - US$15 per applicant
Citizenship is guaranteed for life and the passports are valid for ten years in the case of adult holders and five years for children. Holders of the Dominica CIP passport enjoy tax free status on foreign income; capital gains; gift, wealth and inheritance taxes.
St. Kitts and Nevis The Citizenship-by-Investment Unit (CIU) is the Government Authority which handles all matters concerning citizenship by investment in the Federation of St. Kitts and Nevis. The Citizenship-by-Investment Programme was established in 1984, making it the longest established programme of its kind in the world.
The programme was reformed
substantially in 2007, when Henley & Partners was mandated by the Government to advise on and implement such reform, and thereafter globally promote the program. Since then, the St. Kitts and Nevis program has become the most successful program of its kind in the world. The Government of St. Kitts and Nevis utilizes this programme to attract investors of good character to make a substantial contribution to the development of the Federation. These investors are then given the opportunity to apply for citizenship and passports within the strict guidelines of the law and the relevant regulations. The Programme operates on constitutional, legislative and regulatory foundations. Under current regulations, to qualify for citizenship of St. Kitts and Nevis under its Citizenship-by-Investment Program, the Government requires an investment in one of two designated programmes. The first of these is investment in real estate with a value of at least US$ 400,000 plus payment of various registration and other fees. Only villas and Page 18 of 59
condominium units from an approved developer qualify an applicant for citizenship. Alternatively, a contribution to the Sugar Industry Diversification Foundation (SIDF) - a public charity - of an amount between US$250,000 (includes Government fees) and US$ 500,000, (includes Government fees) depending on the number of dependants included in the application, is another medium by which an applicant may become eligible. . The SIDF offers four categories: a.
Single applicant: a non-refundable contribution of US$250,000.
b.
Applicant with up to three dependants (i.e. one spouse and two children below the age of 18): a non-refundable contribution of US$300,000.
c.
Applicant with up to five dependants (i.e. one spouse and four children): a nonrefundable contribution of US$350,000.
d.
Applicant with up to seven dependants: a non-refundable contribution of US$450,000 is required
In each of these categories, the amounts include all Government and due diligence fees. In the case of unmarried dependent children who are older than 18 but younger than 25, they can also be included in the same application provided an additional fee of US$35,000 is paid to the Government. With the real estate option, in addition to the investment requirement, the following processing and due diligence fees are payable to the Government of St. Kitts and Nevis: •
US$50,000 for the main applicant
•
US$50,000 for the spouse
•
US$25,000 for any dependent children below the age of 18
•
US$50,000 for any dependent and unmarried children older than 18 but younger than 25. Children over 18 years but below 25 must be in a full time learning institution and fully supported by parents.
•
US$4,000 due diligence fee per person older than 16 included in the application
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Austria Austria offers a form of citizenship-by-investment programme, albeit extremely expensive and not a certainty.. The applicant is required to actively invest in the Austrian economy in order to create jobs. A minimum investment of at least â‚Ź2million is mandatory. Passive investments in bonds and real estate do not qualify. Additional fees of â‚Ź250,000 or more apply, depending on the applicant.
Having examined several models, the Task Force developed its own structure for the proposed Antigua and Barbuda model.
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A MODEL FOR CONSIDERATION The Task Force recommends that the framework for the proposed Citizenship by Investment Programme should meet the criteria which allows for: 1.
Promoting economic growth, local entrepreurship and job creation
2.
A model based on existing similar global programs
3.
Attraction of developments which would stimulate economic activity, new tax revenues and other forms of income which would be ongoing and sustained
4.
Generating significant resources annually of
direct capital injection into the
national economy 5.
Development of infrastructure – roads, sewage treatment plants etc.
6.
Attracting developers with financial competence and experience
7.
Ensuring nationals continue to have access to affordable lands
General Provisions of the CIP •
The Citizenship by Investment Programme should in no way jeopardize the integrity of the national passport
•
That there be no dislocation or disenfranchisement of nationals particularly with respect to the ability to purchase and own lands
•
Properties to be purchased will be in designated zones approved by the Government.
INVESTMENT OPTIONS Applicants to the CIP can choose from any of the following investment offers: •
Property purchase
•
Business investment
•
Contribution to National Development Fund (NDF)
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•
Charitable contribution to a registered and regulated non-profit organization which provides services in education, health care, sports, youth development and environmental management.
INVESTMENT QUALIFICATIONS:
•
Applicants for citizenship must acquire property of at least US$400,000.00.
•
Contributions to the National Development Fund and Charitable Fund would be US$200,000 for a single applicant.
•
Business investment for citizenship would start at US$1.5M.
FEATURES OF THE PASSPORT
•
The passport would be valid for a period of 5 years
•
The right to vote is not automatically conferred through becoming a citizen under the CIP. The provisions of the Representation of the People’s Act will apply.
ELIGIBILITY REQUIREMENTS
•
On completion of the necessary due diligence process and receipt of a favourable report, applicants may be required to attend an interview at the CIU.
•
A certificate of good health must be presented by applicant.
•
Individuals convicted of the crimes listed hereafter would not be eligible for consideration:-crimes against humanity, drug trafficking and related offenses, sexual offenses, capital offenses, money laundering, terrorism and its financing, human trafficking, migrant smuggling and piracy.
•
There would be no automatic disqualification of specific jurisdictions. Page 22 of 59
•
Applicants must deposit 100% of the contract sum after due diligence is completed.
•
A beneficiary of a CIP passport through property purchase must retain ownership of property for a minimum of five (5) years. During the five years, the, property may be sold as long as the CIP citizen acquires another property for at least US$400,000.
•
Purchase of a previously held property in a designated zone would not confer automatic eligibility for citizenship.
•
There will be a residency requirement of minimum 15 days annually or 75 days over a 5 year period. Where upon application for renewal of a passport it is determined that the CIP citizen has not fulfilled the residency requirement, he would be required to comply prior to renewal.
•
Applicants may be 18 years or older
•
Dual (multiple) citizenship is allowed.
FEES Table 1: Fee Structure
Fees Processing fee - Principal Applicant Processing fee - Spouse Processing - Dependent child aged 0-11 Processing - Dependent child aged 12-17 Processing - Dependent child aged 18-25 Processing- Dependent parent aged over 65 Due diligence fee - Principal Applicant Due diligence fee - Spouse Due diligence fee - Dependent child 0-11 Due diligence fee - Dependent child 12-17 Due diligence fee - Dependent child 18-25 Due diligence fee - Dependent parent aged over 65 Biometric Passport ($ 355 each) Promotional fees to Authorised Persons/Service Providers
US$ $50,000 $50,000 $25,000 $25,000 $50,000 $50,000 $7,500 $7,500 $0 $2,000 $4,000 $4,000 $355 $20,000
All fees are paid by applicant. US$5,000 of processing fee is non-refundable.
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SPECIAL AREAS: RESORT DISTRICTS
The Task Force strongly recommends that only designated zones be considered eligible for consideration under the real estate component of the CIP.
Investment and
developments in these areas must form the subject of a scheme of development agreement which defines the deliverables by the developer and their expectations of the Government. The areas recommended in Antigua and Barbuda can be found in Appendix 1.
The objectives of the zoning are as follows:
1.
To attract development in areas of Antigua and Barbuda that provides economic opportunities for Antiguans and Barbudans and create new tax streams and other forms of income. The projects must generate continuing economic opportunities, tax revenues and other forms of income that will help to improve the quality of life for the people of Antigua and Barbuda.
2.
To facilitate the development of infrastructure facilities such as roads, underground electrical networks and sewage treatment plants associated with world class resorts.
3.
To attract financially qualified developers with proven experience and success to ensure that world-class resort developments and associated investments take place.
4.
To facilitate the granting of financial incentives through concessions in order to achieve the above stated objectives.
5.
To ensure that lands outside the designated areas remain affordable to Antiguans and Barbudans.
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Developments could include: •
Luxury hotels
•
Championship level or executive golf courses
•
State of the art Marinas
•
Resort related amenities
•
Resort residential developments
•
Resort commercial villages
Conditions for a Development
•
A Project that meets the objectives of the Programme
•
Property which is subject to purchase, sale, transfer, lease, license to a resort developer for resort and related residential development through a scheme of development agreement
•
An existing resort that generates economic returns to the Government in the form of transfer taxes, property taxes and capital gains tax.
•
A proposed resort that is anticipated to generate significant employment, educational, career development and/or economic opportunities for the people of Antigua and Barbuda
•
The resort developer is to construct the necessary infrastructure, utilities and facilities to service the resort project
•
The resort developer demonstrates that he/she has the capability, financial capacity and other qualifications needed to accomplish the resort development
•
Resort developer commits to taking appropriate initiatives and supports Government’s efforts to achieve sustainable development including best practices of environmental management.
•
Agreements may include improvement to Government property, lease or purchase of Government owned lands for development.
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Designation of Resort Districts
Resort District may encompass: •
A particular resort
•
Properties of the developer that are currently owned by the developer that are covered by the scheme of development agreement
•
Properties to which the resort district may be extended under the terms of a development with the consent of the Antigua and Barbuda Investment Authority and prior approval of the Cabinet
•
Any property that is designated by a resort developer, not owned by him, which is incorporated into the resort development with the written consent of the owner.
•
Geographic area subject to the scheme of development agreement
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LEGISLATIVE AMENDMENT/FRAMEWORK While Antigua and Barbuda may derive significant benefits from a Citizenship by Investment Programme, these advantages will not be maximized unless it amends its Income Tax Act, more particularly Part 111 Section 5 which reads in part “Income tax shall … be payable … upon the income of any person accruing in or derived from Antigua and Barbuda or elsewhere and whether received in Antigua and Barbuda or not…“. This is termed taxation on worldwide income. As a result, any person who holds our passport is potentially liable to pay tax on income earned inside or outside of Antigua and Barbuda. The Task Force recommends an amendment to the legislation.
The Task Force is of the view that the legislative framework for the CIP programme should be contained in a new Act of Parliament entitled the Antigua and Barbuda Citizenship by Investment Act. The following Acts of Parliament will touch upon and have a bearing on the new Act: •
Antigua and Barbuda Citizenship Act, Cap. 22
•
Representation of the People Act. Cap 379
•
The Finance & Administration Act, 2006
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DUE DILIGENCE Due diligence represents the most important aspect of any Citizenship by Investment Programme. The reputation of the Citizenship by Investment Programme will largely be determined by the integrity of the bearers of our passport.
This has significant
implications for the visa free travel currently enjoyed by our nationals as well as our relations with other states
The most important steps within the due diligence processes are the background checks and interviewing. Background checks ensure that there is no criminal history, validates the identity and source of wealth, reputational check, physical health and the
financial
condition of the applicant. Many firms which provide due diligence services offer automated solutions but these are confined to countries of the West e.g. Europe and North America which have established strong public disclosure laws due to a long history of democratic tradition. However, there is a strong requirement to have an established and trusted information network that pierces the veil into emerging economies where there is less disclosure requirement. This is critical for countries and regions such as Brazil, Russia, India, China, the Middle East and Africa.
Documentation As part of the background screening process, the Government would require applicants to provide the following: a.
Certified
1
Copy
of
current
passport
(s)
showing
name,
photo,
citizenship/nationality, date and place of issue, expiry date, passport number and issuing country.
1
The following is not intended to be an exhaustive list and will be supplemented by suggestions from due diligence agencies.
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b.
Original excerpt of full birth record with apostile or certified copy of full birth certificate (i.e. birth document that also includes parent's details, or a household register, family book etc.).
c.
Original Bank Reference Letter issued by an internationally recognized bank, not older than 6 months indicating proof of funds. Original professional reference (e.g. from an attorney, notary public, chartered accountant, or other professional of similar standing), not older than 6 months.
d.
Original document of evidence of residential addresses (e.g. certified copy of a recent utility bill or bank statement showing full name and address, or written confirmation from a bank, attorney, chartered accountant or notary public).
e.
Original Police Record or Police Certificate from country of citizenship and residency. (unless the applicant can provide satisfactory evidence that he/she has never lived there) Document must not be older than 3 months.
f.
Certified copy of military records (IF APPLICABLE).
g.
Certified copy of proof of name change (IF APPLICABLE, i.e. statutory declaration, adoption papers etc.).
h.
Certified copy of current national identity card(s).
i.
6 original passport-size photos of the applicant taken within the past 6 months.
j.
Investment Confirmation / Escrow Deposit Evidence - i.e. A copy of duly executed real-estate contract (Purchase and Sales Agreement), evidence of Title Transfer (either deed or certificate of title). Also copy of escrow deposit for purpose of building.
k.
Photograph and Signature Certificate.
l.
Medical Certificate.
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IN-HOUSE VS. OUTSOURCING
1. Core competence: 2Expertise is a strong argument that speaks to outsourcing. While in-house due diligence staff members may have significant experience and expertise in the field, it is virtually impossible for them to be experts on the specific risks and stages and across all jurisdictions. The Task Force recommends that the CIU creates an aggressive staff training initiative to develop this competence.
2. Neutrality: Outsourcing due diligence will provide the Government with an unbiased third party assessment of the applicant.
3. Cost: The applicant will pay all due diligence fees. 4. Global Access to Information: The service provider must have a network that provides information from formal Government sources as well as non-traditional sources via a network of local sources. Some due diligence companies pursue this on a negative basis i.e. dig deep specifically for adverse information.
The service provider should provide among others, the following services:
1.
Verification of source of funds
2.
Verification of identity
3.
Programme Processing Personnel: The agency must provide enough expert personnel to help facilitate the processing of applications at rates and terms that allow Antigua and Barbuda to be efficient and competitive. Initially, the CIU should be staffed with six persons and then expand based on demand.
4.
Promotion of the Programme Overseas: Some agencies will also bring a network of client sources that will direct business to Antigua and Barbuda. For example some agencies provide due diligence services to wealth management firms.
2
www.thehedgefundjournal.com Page 30 of 59
DUE DILIGENCE CRITERIA:
1. Financial stability: The Company should be on a sound financial footing. Financially weak companies are vulnerable to influence and unable to invest resources in thorough investigations. Publicly listed companies offer more information on financial condition and find it easier to raise capital. 2.
Track record: The number of years of operation, industry awards for excellence, reference from clients can all point to the operational capability of the company. The agency should have a track record of providing due diligence services for countries or wealth management institutions.
3.
Certification: Given the nature of their work, some companies are certified by security agencies such as the US Homeland Security. This provides some assurance of quality and signals that the host countries are comfortable with their expertise.
4.
Cost: If the cost of due diligence is too high some applicants may be disinclined to apply. Due diligence fees are usually non-refundable.
INTERVIEW PANEL
The CIU reserves the right to interview any applicant and will use a risk-based approach to make its decision.
POTENTIAL PROVIDERS OF DUE DILIGENCE SERVICE:
The research of the committee has unearthed several potential sources of due diligence services:
•
Kroll, Ernst and Young (headquarters in New York) and Bishops Services Incorporated, IPSA International and Risk Advisory Group:
•
Kroll provides due diligence and investigation services to countries such as United States, Austria and St. Kitts. Over the last 40 years, the company has Page 31 of 59
developed a network of clients (including four of the top five global banks, 350 of the Fortune 500 as well as 238 of the 250 largest global law firms) with sophisticated due diligence and investigative research that has been conducted in nearly every country in the world. Today, the company has offices in 59 cities in 29 countries worldwide and is comprised of more than 2,800 professionals with backgrounds including former prosecutors, attorneys, professional investigators, forensic accountants, intelligence analysts, electronic evidence specialists and security and law enforcement experts. It claims to have hundreds of trained, sophisticated researchers who creatively and analytically assemble intelligence for Kroll’s clients based on the full spectrum of public information, proprietary databases and local source insight.
Kroll’s performs nearly 15,000 checks a year for investment banks interested in verifying the legal source of funds for foreign investors.
•
Ernst and Young has a global network of partner firms which span the globe. The company assists major private banks such as UBS with due diligence. Through its global reach of partners, the company can access traditional and non-traditional sources of information. The head of its unit was head of the Association of Certified Anti-Money-Laundering Specials (ACAMS).
•
Bishops Services Inc. is the oldest privately held investigation and corporate due diligence firm in the USA and has provided due diligence services to the CI programme in Dominica.
Bishop's clients include law and accounting firms,
Governments, hedge funds, private equity firms, commercial and investment banks, recruiting and search practices, real estate firms and corporations considering mergers, acquisitions and strategic investments. Bishops maintains offices in New York, Los Angeles and in Mumbai, India with associated offices in London, Sao Paulo, Hong Kong, Singapore, Moscow, and Beijing and in more than 200 countries around the world. •
Risk Advisory Group is a global risk management consultancy. They are committed to guiding clients through an increasingly complex international Page 32 of 59
regulatory, compliance and security environment. Their clients include many of the world’s leading corporate entities, financial institutions, and law firms, most of which operate globally including in the most challenging jurisdictions. Their clients demand extensive international reach. Since their launch in 1997 they have conducted assignments in more than 100 jurisdictions across six continents. With an uncompromising attitude to compliance with the law and the application of the highest ethical standards, their multi-disciplinary teams deliver a unique blend of professional expertise and effective, client-focused solutions. Their professional staff is drawn from a wide range of disciplines, including the law, accountancy, banking, the armed forces, the police, the intelligence services, public relations, journalism, academia and specialist research. Their teams are also from a diverse range of nationalities, bringing with them a profound understanding of different countries and regions of the world as well as the highest ability in many languages. •
IPSA International, Inc. assists clients in mitigating risks throughout the world. The information and analysis they provide is utilized to increase and protect our clients’ investments and assets by offering improved transparency to the choices they make or uncovering wrongdoings in their organization. They accomplish this by providing timely, accurate and actionable intelligence. They employ seasoned professionals specializing in conducting high-end investigations with expertise in services ranging from complex financial crime and intellectual property issues to conducting anti-bribery investigations or due diligence on a potential partner or customer. In 1993, IPSA International, Inc., was established as the investigative and consulting division of a large contract security company, American Protective Services (APS). IPSA’s start included two small offices in San Francisco and Los Angeles. In 2000, IPSA became IPSA International, Inc., a stand-alone entity. In
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2005, IPSA was acquired by a group of its senior management team, lead by President and CEO Dan Wachtler. Today, IPSA has offices in the U.S., Canada and U.K., resources in over 75 countries worldwide and a talent base that is focused on assisting clients in making better-informed decisions to protect their investments and assets.
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SPECIAL ADVISOR
The success of this economic development initiative is not only predicated on having sound due diligence agencies but also establishing sound procedures and guidelines to: •
Draft the Policy Guidance to administer the program;
•
Create application forms and the website content;
•
Establish rigorous Escrow arrangements for all funds received and disbursed under the CBI NDF, which includes a vetting process of both the applicants and their funds prior to investment;
This is a new sphere of economic development for the Government and the nation of Antiguan and Barbuda. It is also fraught with risk, especially for the inexperienced. As a result, the Task Force met with several companies to assess their competence in assisting the Government to establish the programme, develop the requisite competence and to market the programme on a global scale. Henley and Partners distinguished itself in this regard.
Henley & Partners - Residency & Citizenship Practice Group Henley & Partners is the world's leading specialist in residence and citizenship planning for private clients ( www.henleyglobal.com ). Although its origins date back more than 40 years, Henley & Partners as it is today was formed in 1997 through the combination of a private client immigration consultancy and a trust company. Headquartered in Jersey (Channel Islands), its Residence & Citizenship Group has over 50 specialists located around the world, including Hong Kong, Dubai, Jersey, Malta, Switzerland, Croatia, Belgium, St. Kitts & Nevis and Canada. The firm also has a thriving Government advisory practice, in which it advises countries in assignments ranging from strategic consulting to assistance in the design and implementation of investment-related immigration programs. Key people of the firm can
be
viewed
here:
https://www.henleyglobal.com/about/key-people/residence-
citizenship-group/. Page 35 of 59
It is recommended that Henley and Partners provide the following services: •
Present to the Government a concept paper on all aspects of the administrative and procedural implementation of the intended CIP, including, without limitation, structure of the CIU, including job descriptions of all staff of the CIU; training by Henley and Partners of CIU staff; a proposed work flow and implementation schedule including milestones; and the relationship between Henley and Partners and the CIU;
•
Assist the Government in setting up a Citizenship by Investment Unit, its terms of reference, its reporting lines to Government and proper internal procedures;
•
Support the CIP implementation process of the Government, including, but not limited to a.
a public information process that offers information about Henley and Partners and its track record with CIPs,
b. •
attend other meetings as requested by the Government;
Present to the Government a concept paper with respect to the launch and international promotion of the CIP;
•
Advise the Government on the licensing requirements of authorized persons, citizen by investment agents, including qualifications, renewal of licences and revocation of licences; establishment of an oversight committee and its powers; a process for granting and revocation of citizenship; and mechanism for appeals.
•
Present to the Government its expert opinion on the expected economic and social benefits as well as the possible adverse aspects of the CIP, and to assist the Government in mitigating the possible adverse aspects;
•
Cooperate with the Government regarding possible modifications of the concept papers created by Henley and Partners required by the Government.
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ECONOMIC IMPACT The CIP is not a panacea to cure all the economic and social challenges in Antigua and Barbuda but it can be an effective tool to mobilize resources for economic and social development. At the end of its third year of existence, the initiative is expected to result in gross inflows of over US$205.2 million (EC$550 million). At its zenith, it is projected to produce US$228.2 (EC$615 million) annually.
These sums are quite significant but with the multiplier effect and the important real estate component, it will produce significantly more economic activity along the construction value chain such as hardware store purchases, legal fees, construction services, payment to statutory corporations and property tax.
The present physical component of the programme will provide a boost to the tourism industry as the individuals will utilize services such as accommodations, dining and transportation. The programme provides an incentive for persons to satisfy their physical presence requirement in the summer when there is a marked decline in visitor arrivals.
The financial projections in the short to medium term for the CIP are provided below:
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Table 2: Projection 1: First 3 Years All Figures are in US
Months from launch Yearly Total of Applications Yearly Total collected under NDF Yearly Total collected under Charitable Option
12
24
36
Grand Total
70
150
230
450
7,000,000 15,000,000 23,000,000 $45,000,000 4,200,000
9,000,000 13,800,000 $27,000,000
Yearly total Real Estate
5,600,000 12,000,000 18,400,000 $36,000,000
Yearly processingFees
12,250,000 26,250,000 40,250,000 $78,750,000
Yearly Due Diligence 1,470,000 Fees Yearly Fees to Authorized 1,400,000 agents
3,150,000
4,830,000
$9,450,000
3,000,000
4,600,000
$9,000,000
Grand Total: $205,200,000 Key: NDF is the National Development Fund.
After the initial three year, it is expected that the CIP will progress along the following path annually:
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Table 3: Annual Receipts After Year 3
Yearly Totals Total funds raised under National Dev Fund option Yearly Totals Total funds raised under Charitable Fund Option Yearly Totals Total funds raised under Real Estate option Yearly Totals Total Processing fees Yearly Totals Total Due diligence fees Yearly Totals Total Distribution fees to Service Providers Yearly Totals
500 50,000,000 30,000,000 40,000,000 87,500,000 10,500,000 10,000,000 228,000,000
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All Funds are in US Dollars
It is expected that the CIU will bring resources to the island based on the following proportion seen in Chart 1:
Distribution to Agents 4%
Chart 1:CIP Receipt Allocation Due Diligence 5% National Development Trust 22% Application Fees 38% Real Estate Investment 18%
Charitable Contribution 13%
REAL ESTATE OPTION
The economy of Antigua and Barbuda has benefited greatly from the buoyancy of the construction sector. This impact was contributed to in part by the expansion of the tourism sector, particularly residential tourism. The commencement of the Citizenship by Investment Programme will allow for the re-energizing of this vital sector as a core component is the construction and or purchase of residences valued at a minimum of US$400,000.00. The country has a stock of inactive units as well as incomplete projects which an initiative such as this could make viable in the short to medium term. With respect to the incomplete or stalled projects, the impact on the construction sector and
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employment will be significant.
3
It is estimated, that there are thirty-four (34) units
completed and readily available for sale under the residential option. Another thirty-one (31) are under construction. The estimated inventory of residential tourism lots is 1,176, with a value of US$1.28 billion. This underscores the potential benefit of a Citizenship by Investment Programme, which will make the destination even more attractive.
The Taskforce anticipates that 20% of the applicants will choose the property option resulting in direct investment of US$40 million (EC$108 million) annually.
4
Additionally,
income will be generated through the payment of fees, licenses, service providers in the initial stages, as well as the multiplier effect of spending from the recurring residential tourism traffic created by the programme.
Additional fees to be generated by this
investment option include property and transfer taxes.
The Escrow agents for the property option must be internationally recognized firms that serve the mutual interest of the parties to the transaction. In order to bring order to this arrangement the Task Force will provide Guidelines to govern this important relationship since it has strong reputational implications for the jurisdiction.
BUSINESS OPTION
This component of the Citizenship by Investment Programme provides a direct economic impact by way of its contribution to productive and trading activity and the attendant employment and sub-contracting spin-offs. Beneficiaries of the CIP through the business option would be expected to generate long term employment, differentiate their enterprises through the introduction of new technology or technology transfer, value added services or production activities leading to (near) export ready products or services to enhance foreign currency earnings and consolidate the country’s comparative 3
Antigua and Barbuda Real Estate Association, “Antigua and Barbuda Development Analysis�, November 2011 4 Based on the construction or purchase of 15 properties. Page 41 of 59
advantage. This option may also be used to fund public-private partnerships as well. Additional benefits to accrue to the public purse include payroll, ABST and corporate taxes.
NATIONAL DEVELOPMENT FUND (NDF) The National Development Fund (NDF) route to citizenship by investment is a strategic capital mobilization measure aimed at leveraging wealth primarily to fund income generating public sector projects and innovation in entrepreneurship. An increasingly conservative lending environment coupled with constrained Government resources have exacerbated the inability of small and micro enterprises, in particular, to access finance both for new projects and expansion. The degree of the country’s exposure to external factors and their impact on the domestic economic climate compels a diversification of the productive economic base which is generally driven by dynamic small enterprises. These businesses are often able to recognize and respond to supply gaps in the market and apply demand analysis to develop appropriate products and or services. The NDF option has the potential to drive job creation and economic growth, by helping entrepreneurs turn innovative ideas into products and services that change the way we live and work. As such, it is recommended that the NDF focus primarily on enterprises developing significant innovations through the provision of long-term, committed share capital, to help these businesses grow and succeed. Funding should however not be limited to new enterprises. If an entrepreneur plans to expand, buy-into a business, buyout a business in which he works, turn around or revitalize a company, consideration should be given to these efforts. As a guiding principle, these businesses should be aiming to grow rapidly to a significant size offering the prospect of significant turnover growth within five years. Funds from the NDF can be channeled through agencies such as the Antigua and Barbuda Development Bank, the Credit Unions and National Development Foundation for on-lending or to support Government’s contributions to
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projects such as the redevelopment of Half Moon Bay and the upgrading of Heritage Quay. Apart from providing a new financing option for businesses, the NDF also adjusts the culture of management and ownership, allowing entrepreneurs to experience the benefit of wider expertise with the NDF providing high quality management expertise.
Additionally, public private partnership projects with economically viable components would be able to apply for financing support from the NDF.
The NDF’s management and operations must be transparent. With an anticipated 22% of the approvals using this option, capital mobilization through this medium is estimated at US$50,000,000.00 annually when it reaches the maximum. It is critical that the NDF is structured correctly to ensure it achieves it purpose. It is therefore recommended that the NDF: 1.
Be its own organization, separate from the government
2.
Be managed by an independent Board of Directors composed of highly respected individuals
3.
Have a well-defined Mission Statement and clearly defined investment parameters
4.
Have a Board that will manage its affairs professionally and regularly meet to set policies and priorities for its investment activities
5.
Publishes its accounts and be audited by an international accounting firm
CHARITABLE FUND The research suggests that there are individuals who would wish to use what may be considered the least complicated medium for making a contribution to the development of the country but with the caveat that specific projects benefit.
The Task Force has identified the areas of health care, education, sports, youth development and environmental management as priority areas to be funded through this Page 43 of 59
option.
Contributions can only be made to approved and regulated non-profit
organizations which deliver services in the identified areas. This option differentiates Antigua and Barbuda’s Citizenship by Investment Programme from all similar initiatives and positions the product as a wholistic investment mechanism.
A DESIRABLE OUTCOME-PHILANTHROPY
As a related benefit, we intend to encourage the network of new citizens to be philanthropic in the application of capital, business strategies, skills, and resources to charities and socially conscious projects. The objective would be to focus on leadership, bold ideas, developing strong teams, active board involvement, and long-term investment. We anticipate significant impact in the areas of poverty prevention and alleviation, education, corporate responsibility and community relations, sustainable energy and technology. Social agencies such as the Sunshine Home for Girls, Amazing Grace Foundation and similar programmes, would be transformed by the human and capital investment, management assistance and knowledge transfer available through such philanthropy. Revised or new job placement and poverty alleviation programmes could be supported in this manner.
Additionally, where CIP citizens have highly specialized skills in medicine, education, environmental
management,
business
management,
psychology
and
behavior
management, and green technology, the Task Force recommends that they be offered the opportunity to apply and or transfer those skills in relevant institutions and agencies. As an incentive, they can be given credit for the number of days spent in these activities towards the minimum residency requirement, thus reducing the number of calendar days they are compelled to stay in the country.
As an example, should a behavioural
psychologist spend 5 days working in the public school system with school counselors and at-risk children, this could be computed as 7.5 days of physical presence.
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INSTITUTIONAL SETTING
Citizenship by Investment programmes are treated as a pivotal strategic business development matter. Citizenship by Investment is treated as a driver of economic development by all of the countries reviewed by the Task Force. In some cases, it is concerned with purchasing of real estate, in others investing in sovereign financial instruments and starting/purchasing a business to generate employment. All of these are business development issues.
Currently, the ABIA and the Marine Department fall under the Prime Minister’s portfolio. In many countries, the Investment Promotion Agency also falls under the Prime Minister. The Task Force therefore recommends that the Citizenship by Investment Unit be placed under the Prime Minister’s portfolio.
The hosting of CIU under the portfolio of the Prime Minister will also send a powerful signal to developers, potential clients, service providers and other nations, as it speaks to the level of importance attached to CIU.
The issue of CIP will no doubt attract strong and spirited public discussion. The Task Force will hold public consultations given its strong emphasis on transparency.
This initiative
will be one of the major policy decisions of this administration and the Prime Minister can play a key role in piloting its approval.
This Unit can be a stand alone, located in the Prime Minister’s Office or as a Department of the Antigua and Barbuda Investment Authority. The latter brings the commercial and
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5
retail business processes of investing in real estate, under one roof. “IPAs usually fall under and are included in the responsibilities of the ministries of economic affairs, finance or foreign affairs. These ministries allocate the agencies’ budgets. Heads of IPAs consequently report to the respective ministry and budgetary changes are at the ministry’s discretion. In some cases, IPAs are placed under the President or the Prime Minister's Office.”
The decision to grant citizenship by investment will rest with a dedicated
core of
professionals employed by the CIP Unit. The interview team should possess the required mix of competences such as due diligence, audit, business development, legal matters, international relations and security. All employees of CIU should sign a special oath of secrecy to ensure confidentiality. Some of the functions of the CIU include:
•
Evaluating all applications for citizenship
•
Appointing all Authorized Agents and Licensing Citizen by Investment Agents
•
Interviewing applicants as required
•
Receiving and distributing all funds collected under the CIP
•
Selecting all Due Diligence service providers
•
Referring applications to Due Diligence Service providers for their review
•
Interfacing with other service providers in the citizenship by investment process e.g. passport office or other relevant government departments and entities
•
Reporting to the Management Oversight Committee
•
Promoting the CIP internationally
Oversight Committees The Task Force realizes the important role that the CIU will play in this national development effort and the need to ensure that it is closely guarded to safeguard its
5
“The World of Investment Promotion Agencies at a Glance”, ASIT Advisory Studies No.17, UNCTAD 2001 Page 46 of 59
reputation and that of the country. It is therefore recommended that two Oversight Committees be established to oversee its operations.
Management Oversight Committee This committee will oversee two main areas: •
The daily operations of the CIU
•
The CIU relationships with outside contractors, especially those which provide Due Diligence services
This committee will perform an important role in gathering information on the functioning of individual departments and ensuring, through its oversight and questioning of management officials, that corrupt practices do not take place. It should also ensure that the CIU delivers high quality service to its clients and maintains its competitive advantage by simplification of administrative procedures where necessary.
Parliamentary Oversight Committee The Task Force recommends that a permanent bi-partisan five-member senior parliamentary committee provides oversight of the CIU. The recommended members are: the Hon. Prime Minister, The Leader of the Opposition, the Hon. Attorney General and one other member drawn from each political party. The Prime Minister should report to this august body twice per year.
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PROCESS FLOW Application Submitted to CIU by CIP Agent
Payment of Fees to CIU
Application forwarded by CIU to International Due Diligence Service Provider
International Due diligence Service provider forwards report to CIU No
Yes Interview of Applicants by CIU
CIU makes decision re granting of citizenship
Yes
No
f
Payment of funds into Escrow Agent
Notification of Approval to Honourable Prime Minister
Notification of Approval/Refusal to CIP Agent
Swearing of Oath of Allegiance and Issuance of Passport by Passport Office
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It is intended that an application for citizenship by investment will be processed and a decision communicated to the applicant and his/her agent within 90 days.
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CITIZENSHIP BY INVESTMENT AGENTS Applications to the CIU should be made through citizenship by investment agents. These agents should be selected based on their international business experience and network, marketing acumen and corporate ethics. Agents have been traditionally drawn from the disciplines of law, accounting and international business services. However, where selected agents are not themselves accountants or lawyers, the practice has been to require them to use the services of an accounting or law firm.
It should therefore be the policy of the Government that all persons desirous of obtaining citizenship by means of investment shall make their applications through licensed CIP Agents. This will serve to protect the applicants as well as the integrity of the programme and the country’s national passport. Licenses issued by the CIU should be understood to be revocable for cause and as outlined in all documentation covering the issuance of the licenses.
The Task Force has engaged a service provider to provide detail guidelines to regulate the behavior of citizenship by investment agents.
At the onset, it is proposed that the citizen by investment agents be paid US$20,000 per successful application. This rate can be changed from time to time by the Minister on the recommendation of the CIU.
Criteria for Granting of C.I.P License
Applicants for the C.I.P. Agent license must:
•
Be fully conversant with the requirements, criteria, guidelines, laws pertaining to the Citizenship by Investment Programme; Page 50 of 59
•
Have the capacity to contact, attract and influence foreign investors;
•
Have the machinery to assist prospective investors to comply with the requirements of the CIP Secretariat.
•
Have no criminal record for offenses involving dishonesty and in the case of a company, have no shareholders or directors with a criminal record for an offense involving dishonesty;
•
Not have declared bankruptcy or adjudged bankrupt;
•
In the case of a company provide the CIU with a current list of its directors, officers and shareholders, indicating their nationality and along with a certificate of good standing issued by the Registrar of Companies;
•
Have the machinery to keep proper records and to maintain documents in safekeeping;
•
Indemnify Government against exposure based on their involvement in the programme. Each Agent must obtain professional indemnity insurance to an established limit set by the CIU.
The Procedure for Obtaining a Licence
•
Applications for a CIP Agent license should be made to the CIU and should be accompanied by the requisite forms and documentation required by the CIU. Some of the documentation required include: o
Notarized copy of license certificate
o
Certificate of good standing or Practising Certificate from its professional body
•
All applicants must be a local Antiguan business registered in Antigua/Barbuda.
•
The application will be reviewed by a select oversight committee based on the eligibility requirements as stipulated above and a recommendation sent to the CIU for approval.
•
Applications should be accompanied by a non-refundable processing fee of US$1,000.00. Page 51 of 59
•
CIU will inform applicant within 30 days of the receipt of the application whether the same has been approved or denied.
•
Where an application has been approved, the CIP Agent shall pay an annual fee of US$3,000.00.
•
CIU will publish a list of CIP agents/consultants.
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CONCLUSION Like the rest of the world, Antigua and Barbuda is facing hostile fiscal challenges with over-burdening debt and declining financial resources to finance its development agenda. Bilateral aid and multilateral loans are delivered with golden handcuffs including specifying contractors, source of supply and policies which expose the most vulnerable in our society. The CIP should not be seen as a cure all and an excuse for financial irresponsibility but an opportunity to build national consensus on a path to development that reduces the national debt, builds adequate infrastructure, educates the population, encourages entrepreneurship and
diversifies the economy while safeguarding the
integrity of the Antigua and Barbuda passport.
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SUMMARY OF RECOMMENDATIONS
a. FEATURES OF CITIZENSHIP BY INVESTMENT: •
Citizenship, which confers the right to a passport being valid for a period of 5 years with application for renewal thereafter.
•
Citizenship under this initiative comes with a residency requirement of at least fifteen days per year over a five year period. Citizens may opt to complete their residency requirement in any one year of the five year period.
•
Purchase of a previously held property in a designated zone would not confer automatic eligibility for citizenship.
•
The right to vote is not automatically conferred through the CIP. The provisions of the Representation of the People’s Act will apply.
•
The CIU reserves the right to interview any applicant.
b. ELIGIBILITY REQUIREMENTS: •
Applicants may have to present themselves for an interview on completion of the due diligence process and receipt of a favorable 6
report. The Citizenship by Investment Unit (CIU) reserves the right to interview every applicant.
Every successful applicant must appear in
person in Antigua and Barbuda at the CIU to collect his/her passport and to take the Oath of Allegiance. •
A certificate of good health must be presented by the applicant.
•
Individuals convicted of the crimes listed hereafter would not be eligible for consideration:-crimes against humanity, drug trafficking and related offenses, sexual offenses, capital offenses, money laundering, terrorism and its financing, human trafficking, migrant smuggling and piracy, or
6
A risk-based approach can be used to determine the need for an interview. Page 54 of 59
any immigration offence that led to a denial of visa, refusal of admission at port of entry, or deportation. •
There would be no automatic disqualification of specific jurisdictions, however in the national interest the Government could impose restrictions if necessary and these restrictions should form the basis of the policy guidelines established prior to the launching of the CIP.
•
Applicants must deposit 100% of the contract sum after due diligence is completed.
•
There will be a physical presence requirement of a minimum 15 days annually or 75 days over a 5 year period.
Where on application for
renewal of a passport it is determined that the CIP citizen has not fulfilled the physical presence requirement, they would be required to comply prior to renewal.
c.
•
Applicants may be 18 years or older.
•
Dual (multiple) citizenship is allowed.
INVESTMENT QUALIFICATIONS FOR CITIZENSHIP:
•
Applicants
for
citizenship
must
acquire
property
of
at
least
US$400,000.00 •
Contributions to the NDF and CF would be US$200,000 minimum (for a single applicant
•
Business investment for citizenship would start at US$1.5M
•
Multiple applicants may invest in a business not less than US$4 million each person contributing not less US$400,000.00 each
d.
REVOCATION: Antigua and Barbuda retains the right to withdraw citizenship obtained under the CIP if a citizen by investment fails to retain ownership of the real estate that prequalified him for citizenship, commits a crime on the territory of Antigua and Barbuda or elsewhere, has become a threat to national security and/or it has Page 55 of 59
become evident that he/she had made one or more material false statements in the course of application.
e.
FEES There are three types of fees payable under the programme: Due Diligence, Processing and Commission. Due Diligence fees are the direct cost of assessing the worthiness of applicants. In addition to making an investment, the principal applicant and family members pay a Processing fee per person. The Commission is the amount paid by the applicant to Citizen by Investment Agents whose clients meet successfully apply and are granted citizenship.
f.
SPECIAL AREAS: RESORT DISTRICTS
The Task Force strongly recommends that only designated zones be considered eligible under the real estate component of the CIP. The developments in the zones recommended by the Task Force can be found in Appendix 1.
g.
DUE DILIGENCE:
•
Outsourcing: The Task Force recommends that this function be outsourced to experienced international firms which currently provide the services to other jurisdictions that provide citizenship by investment. Additionally, the service providers must be those used to provide due diligence services to first world Governments and major financial institutions.
•
Potential candidates: The Task Force interviewed and entertained presentations from Kroll, Ernst and Young (New York), IPSA International and Risk Advisory Group and recommends them as potential service providers.
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h. INSTITUTIONAL SETTING: Citizenship by Investment programmes are treated as a pivotal strategic business development matter. The Task Force recommends that the Citizenship by Investment Unit be placed under the Prime Minister’s portfolio. This Unit must have a separate location from the Prime Minister’s Office.
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ANNEX 1 : Proposed Projects for Citizenship-by-Investment Programme Harbour Island Jolly Beach Pelican Island Crump Island Crump Peninsula Guiana Island Carlisle Bay Morris Bay South Point Galley Bay Heights Jolly Harbour Pearns Point Galleon Beach Rendezvous Bay Windward Bay St. James Willoughby Bay Half Moon Bay Emerald Cove Non Such Bay Jumby Bay Weatherills Hodges Bay Club Waterfront Properties Antigua Village Page 58 of 59
Azure Bay Tamarind Hills Sugar Ridge Queen’s Bay Resort Orange Valley Blue Waters Valley Church Development Ffryes Estate Development
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