Caribbean nations ravaged by recent hurricanes are selling citizenship at dramatically discounted prices in an effort to raise emergency funds, sparking concerns that the programs may be vulnerable to abuse.
Past scandals involving Iranian-born individuals buying St. Kitts and Nevis citizenship to evade sanctions and invest in the U.S. highlight the potential vulnerabilities of citizenship-by-investment programs — which have been branded "passports for sale." In some cases, those prepared to pay $100,000 or more for citizenship don't even need to travel to the country before getting the documentation.
Some experts worry the scramble to pay for hurricane-relief efforts could make authorities more inclined to approve would-be citizens and result in laxer vetting practices.
Five Caribbean nations currently offer citizenship in exchange for either a one-off contribution to the nation or an investment in a designated sector, such as real estate. Many of those countries' passports allow visa-free travel to the European Union.
"It's fairly clear these programs are being exploited by all sorts of people with something to hide whether that be tax evaders, terror finance operatives, drug cartels or corrupt oligarchs, you name it," said Emanuele Ottolenghi, a senior fellow at the Foundation for the Defense of Democracies, a right-leaning Washington, D.C.-based think tank**.** "You need cash in hand and it's a pretty straightforward process which doesn't take that long."
Hurricanes Irma and Maria tore through the Caribbean last fall, devastating dozens of islands including several where citizenship-by-investment is an option.
In September, St. Kitts and Nevis set up a "hurricane relief fund" which allows foreigners to contribute $150,000 in exchange for citizenship. The program, which is open until the end of March, is $100,000 cheaper than the country's previously lowest-priced citizenship-by-investment offer.
Antigua and Barbuda then followed suit, halving its program's basic contribution from $200,000 to $100,000, according to Ronald Sanders, the country's ambassador to the U.S.
The island of Grenada also lowered the price of one its routes to citizenship, according to Henley and Partners, a consultancy firm which specializes in citizenship and residency-by-investment.
Saint Lucia and Dominica's single-applicant investment costs both remained at $100,000.
Peter Vincent, a former Department of Homeland Security official, warned strong background checks carried out on behalf of the Caribbean countries were essential to prevent criminals from obfuscating their true identities and obtaining passports. That could potentially allow them to use the travel documents to get to the United States.
Vincent said that during his time working for the Department of Justice in Colombia he knew that narco-traffickers and members of the FARC guerrilla group were "actively and aggressively" trying to obtain Caribbean passports to evade the law.
"The move to lower prices will undoubtedly decrease the amount of money available to conduct proper due diligence," Vincent said.
Ottolenghi agreed that the cheaper costs raised questions.
"There is a risk they will cut corners when there is less margin for revenue, potentially spending less on due diligence and investigating each case, making citizenship available to more people who shouldn't have it."
"This race to the bottom is not good"
Caribbean islands and brokering firms dismissed concerns that the standard of background checks will slip as prices fall, pointing to the fact that there are separate due diligence fees on top of the base cost of citizenship.
"There's been a big shift recently on the amount of emphasis they [countries] put on due diligence," said Paul Williams, CEO of La Vida Golden Visas, a citizenship-by-investment consultancy firm.
Williams said he thought vetting was tougher than ever before in the industry. He also clarified that while applicants need to visit Antigua and Barbuda, the other four countries don't require you to step foot on the island to obtain citizenship-by-investment.
Sanders, the diplomat, said Antigua and Barbuda "strictly adhered" to its vetting system which consisted of four stages, though he cautioned that there was always a chance that someone of "doubtful character" could slip through.
He added that it wasn't in any country's interest to sell citizenship to undesirable applicants because it could jeopardize visa-free travel arrangements with other countries — a key selling point of the citizenship program.
"If they were given to people of dubious quality or a criminal nature then the entire program is brought into question," he said.
But in June, the Canadian government announced that after assessing the integrity of Antigua and Barbuda's travel documents, it had decided that the country no longer meets its criteria for visa exemption.
It wasn't the first time the integrity of Caribbean travel documents has come under fire.
In 2014, St. Kitts and Nevis was pressured to revoke thousands of passports after it was revealed that there was no mention of place of birth or whether the holder had changed their name on the documents — meaning applicants would have the chance to effectively create a new identity.
In February of that year, the Department of Treasury sanctioned three Iranian nationals for evading U.S. sanctions. All three held St. Kitts and Nevis passports, according to Ottolenghi.
Three months later, the U.S. — which offers its own residency-by-investment program starting at $500,000 — issued an official warning to financial institutions that foreign "illicit actors" had obtained St. Kitts and Nevis passports to evade American sanctions.
The statement said it believed that several Iranian nationals had been issued a St. Kitts and Nevis passport despite government assurances that all Iranian nationals were suspended from participating in the program.
By November, Canada had revoked St. Kitts and Nevis citizens' right to visa-free travel to the country. And the following month, St. Kitts and Nevis recalled all passports issued without the key information included.
The government of St. Kitts and Nevis did not respond to a request for comment, but recent promotional material for its hurricane relief program said the nation "adhered to the strictest due diligence parameters, ensuring only applicants with the highest moral character need apply."
Sanders, the Antigua and Barbuda diplomat, criticized St. Kitts and Nevis' decision to cut the cost of citizenship, claiming his country had little choice but to follow suit.
"We're depriving ourselves of revenue," Sanders said, noting that citizenship-by-investment accounts for some 20 percent of Antigua and Barbuda's GDP. "Dropping prices doesn't necessarily mean you get more applicants, that's the gamble that St. Kitts took."
He added: "This race to the bottom is not good. We don't have the money to rebuild the place with the speed that the residents would like."