Due Diligence is mandatory for investors and their family members who apply for citizenship or a residence permit by investment. The government department responsible for the program checks the applicant’s sources of income, reputation, and no criminal record certificate; it also verifies that they are not on the list of sanctioned individuals and another country has not refused their application for a visa, residence permit, or citizenship.
The purpose of Due Diligence is to find out if the applicant’s background meets the requirements of the citizenship or residence program. Governments of countries offering these programs want to ensure that the investor and their relatives included in the application do not have any criminal history and that the funds to be used for investment are from legal sources.
Criticism of programs. Citizenship by investment programs is often criticised by the European Union and civil society organisations. Their criticism is primarily aimed at the quality of the Due Diligence process. The European Commission is concerned that criminals, tax evaders, or those who finance terrorism can get access to the European Union by using citizenship and residence by investment programs.
Consequences of criticism for investors. As a result of the EU’s criticism, the rules for citizenship programs are becoming more complex, and the Due Diligence checks are stricter. Some countries, such as Malta, check not only the investors and their families but also their backgrounds and associates, including their business partners and other connections.
I. Risks of citizenship by investment "Financial Options" or "grey" schemes
It is important to realise the Illegality and consequences of using “Financial Options” to bypass citizenship by investment program conditions.
Citizenship by investment (CBI) programs offer individuals the opportunity to become citizens in exchange for a significant financial investment in a country. However, some individuals seek to bypass the conditions of these programmes through illicit financial means, which can have severe legal and personal repercussions.
1. These are legal violations. Attempting to bypass CBI program conditions through “Financial Options” constitutes a violation of the law of the chosen country.
All CBI programmes are regulated by local legislation and are supervised by governmental authorities. It is an offence to knowingly provide false information with the intent to defraud a government authority.
Moreover, by signing your citizenship application, clients confirm and certify that all information provided by them is true, the client’s signature on this document is notarised, so the client will not be able to avoid liability for breaches of these obligations in the future.
2. Risk of loss of citizenship. Engaging in illegal financial activities to obtain citizenship can lead to the revocation of citizenship, rendering individuals stateless, and devoid of legal protection.
Offences against the government are considered much more critical and fall under the general legislation on deprivation of citizenship for offences against the interests of the country.
3. Financial consequences. Individuals involved in such activities may face substantial financial penalties, including forfeiture of invested funds and legal fees.
Financial schemes are most often offered by companies with non-transparent structures, non-public closed offshore companies and counterparties without proper licence. With such partners, you will never have a guarantee that you will not lose all your investment amount.
4. Criminal prosecution. Illicit financial practices associated with bypassing CBI programme conditions can result in criminal prosecution, tarnishing one’s reputation, and limiting future opportunities.
Oasis Gateway will never tolerate such risks for its clients and its own reputation.
II. Due Diligence for citizenship by investment
It is important to realise the Illegality and consequences of using “Financial Options” to bypass citizenship by investment program conditions.
Citizenship by investment (CBI) programs offer individuals the opportunity to become citizens in exchange for a significant financial investment in a country. However, some individuals seek to bypass the conditions of these programmes through illicit financial means, which can have severe legal and personal repercussions.
1. These are legal violations. Attempting to bypass CBI program conditions through “Financial Options” constitutes a violation of the law of the chosen country.
All CBI programmes are regulated by local legislation and are supervised by governmental authorities. It is an offence to knowingly provide false information with the intent to defraud a government authority.
Moreover, by signing your citizenship application, clients confirm and certify that all information provided by them is true, the client’s signature on this document is notarised, so the client will not be able to avoid liability for breaches of these obligations in the future.
2. Risk of loss of citizenship. Engaging in illegal financial activities to obtain citizenship can lead to the revocation of citizenship, rendering individuals stateless, and devoid of legal protection.
Offences against the government are considered much more critical and fall under the general legislation on deprivation of citizenship for offences against the interests of the country.
3. Financial consequences. Individuals involved in such activities may face substantial financial penalties, including forfeiture of invested funds and legal fees.
Financial schemes are most often offered by companies with non-transparent structures, non-public closed offshore companies and counterparties without proper licence. With such partners, you will never have a guarantee that you will not lose all your investment amount.
4. Criminal prosecution. Illicit financial practices associated with bypassing CBI programme conditions can result in criminal prosecution, tarnishing one’s reputation, and limiting future opportunities.
Due Diligence for citizenship by investment
1. Preliminary Due Diligence check by a licensed agent
1 business day
Government-licensed agents for citizenship by investment programs must conduct Know Your Client (KYC) Due Diligence checks by the industry standards. The agent sends the results of this check to the government department in charge of the program.
Oasis Gateway has its own compliance department and carries out preliminary Due Diligence checks on its clients through its own certified Anti-Money Laundering Compliance Officers. They know all the nuances related to Due Diligence checks for residence and citizenship by investment programs.
We carry out a preliminary Due Diligence check before signing an agreement with an investor. It takes 1 to 3 business days. The investor simply provides us with a copy of their passport and fills out a questionnaire on their business, no criminal record certificate, and other important aspects related to Due Diligence.
Our preliminary Due Diligence check discovered that a convicted criminal has the same Christian name and surname as our client. This could easily have inadvertently led to our client’s citizenship by investment application being unfairly rejected.
2. Main Due Diligence
3 weeks to 6 months
The government department responsible for citizenship by investment starts its Due Diligence check after the licensed agent submits the citizenship application on behalf of the investor.
Specialists from the department handling the citizenship by investment program check the reputation of the investor and their families and whether any of them is a politically exposed person. They look for any instances of their visa, residence permit, or citizenship applications being rejected by other countries.
They also check the investor’s business and the legality of the sources of their funds.
In some cases, they also look into the background of applicants’ business partners, for example, if a politician applies for citizenship by investment.
If the government department handling the citizenship application needs additional documents to process the application, it requests the licensed agent to send them the additional material. Additional requests for information delay the Due Diligence process, and it is important to provide a complete package of documents when applying.
3. Due Diligence check in international organisations & independent companies
1+ week
At this stage, international organisations such as Interpol, Europol, and FATF, submit their conclusions.
III. Information required to carry out a Due Diligence check
The personal and business biographies of the applicant are verified in the Due Diligence check for citizenship by investment application. This must be disclosed to the applicant’s licensed agent so that the agent’s lawyers can prepare a suitable package of documents and reduce the risk of the application being rejected.
Information to be provided to the agent:
- sources of income, a sphere of business, and the structure of the business;
- financial position;
- no criminal record certificate or details of any criminal prosecution;
- any instance of the investor’s application for a visa, residence permit, or citizenship being rejected by another country;
- any issues related to their personal or business reputation;
- any connection of the investor or their family members with political activities.
Oasis Gateway does not disclose information about the investor to third parties: we pass it on only to the government department handling the application for further verification. Based on the information disclosed by the investor, our lawyers prepare the required list of documents that need to be attached to the application for citizenship by investment.
IV. Risk factors related to the Due Diligence check
Certain factors raise doubts among the officers of the state department who conduct the applicant’s eligibility verification, which sometimes results in the refusal to accept the citizenship application.
To increase the chances of their application being approved, an investor needs to attach a complete package of documents, which help answer any questions the government officers handling the application might reasonably raise: for example, copies of licences for particular business activity, documents clarifying the structure of their business, and documents proving that the money to be used for investment is not related to or sourced from political activities.
V. How to prepare for Due Diligence
1. Select a government licensed agent. It is important that the agency has experience in conducting Due Diligence and a department that conducts preliminary Due Diligence checks.
2. Sign a contract with an agent only after a preliminary Due Diligence check. Preliminary Due Diligence helps identify risks that may lead to the application for residence or citizenship by investment being rejected. It is thus better to sign the contract and pay for the agent’s services after the preliminary Due Diligence check.
3. Provide complete information about yourself, your family members, and your sources of income. Information on your business partners may also be required, especially if the applicant for residence or citizenship by investment is a politically exposed person.
4. Disclose any negative information about yourself to the agent if such information is related to yourself or your company.
All risk factors related to the application must be analysed and described: for example, negative publications in the media can be countered by documents showing the negative publications to be unfounded, and participation in court proceedings as a defendant in the past can be explained and supplemented with evidence confirming your innocence. In this way, the government department handling the application will have fewer requests for additional information, and the risk of the application being rejected will decrease.
The agency’s lawyers prepare a list of required documents specific to each application. The investor provides the required personal and financial documents: passports, marriage and birth certificates, registration data, bank statements, etc. If necessary, the lawyers prepare affidavits to clarify any information they consider requiring additional explanation.
VI. How undergoing a Due Diligence check helps investors in the future
The main advantage of a rigorous Due Diligence check is that if the government department thoroughly vets applicants, the risk of their residence permit or citizenship by investment being revoked in the future is minimal. The investor’s citizenship will not be revoked as long as they do not violate the terms of the program
The experience of successfully undergoing a Due Diligence check can also be helpful for the investor in the future. Due Diligence is carried out for any major transaction: for example, in the European Union, it is not possible to open a bank account, buy real estate, or conduct a financial transaction for a significant amount without undergoing a Due Diligence check.
Our certified Anti-Money Laundering Compliance Officers know the nuances of Due Diligence checks in different countries and take them into account in their preliminary Due Diligence check. We identify risks that our clients may not be aware of: for example, an investor may not consider themselves a politically exposed person, even though they are a politically exposed person under the laws of another country.
Our lawyers provide our clients with a complete list of the documents required for the application, help prepare information about their business, and assist them in proving the legality of the source of their money.
If an investor has successfully undergone Due Diligence once with the help of a professional team, it will be easier for them to pass subsequent checks in the future. They will have an idea about the questions that may be asked. They will be able to quickly provide all the necessary documents: for example, an organisation chart that reflects their business structure.
FAQs
Why should an applicant undergo Due Diligence?
Ensure that the applicant or their business partners are not involved in illegal activities like money laundering, tax evasion, and financing terrorism.
A Due Diligence check is carried out for any major transaction: for example, the purchase of real estate or the conclusion of business contracts. Due Diligence is also the main step in applications for citizenship and residence permits by investment: a preliminary Due Diligence check is carried out by the licensed agent, and the main Due Diligence check is undertaken by the government department responsible for the application.
Who cannot successfully undergo a Due Diligence check?
It depends on the requirements of a particular program. Investors with a criminal record that has not lost their legal force will not be able to undergo a Due Diligence check successfully. The result of the check may also be negatively affected by sanctions being placed on any applications by the investor for visas, residence permits, or citizenship being rejected by other countries.
Who is subjected to the strictest scrutiny?
There are several risk factors related to Due Diligence:
- Country risk. Citizens of Russia, Kazakhstan, China, Arab countries, and some other countries are at high risk: they are checked more carefully.
- Industrial risk. If the company is involved in mining minerals, trading in luxury goods, the gaming sector, freight transport, and some other industries, their source of income is checked in greater detail.
- Company features. It is more difficult for investors who own or work for companies registered in offshore jurisdictions with complex ownership structures to undergo Due Diligence successfully. Funds, hedge funds, and trusts also pose an increased risk.
- The activity and reputation of the investor. It is more difficult for politicians, civil servants, a person who participated in court proceedings as a defendant, a person with negative information on the Internet or in the media, and a person who has gone through bankruptcy proceedings to undergo a Due Diligence check successfully.
The presence of high-risk factors does not mean that the applicant will not be able to get citizenship by investment. However, they will need to prepare more carefully for the Due Diligence check. A preliminary Due Diligence check with a licensed agent helps the agent compile an individual list of required documents to address the high-risk factors and thus reduce the risk of the application being rejected.
How do I prepare for Due Diligence?
Find a licensed agent with Due Diligence experience and their own compliance department. It is better to sign the contract with the agent and make the payment after undergoing a preliminary Due Diligence check and all potential risks have been identified.
The investor needs to disclose detailed information about themselves, their family, and their business, including any negative information: in this way, the agent will be able to prepare a comprehensive package of documents and the government department handling the application will make fewer, if any, requests for additional information.
Why is a rigorous Due Diligence check good?
An investor who has successfully undergone a Due Diligence check with a professional team will find it easier to undergo Due Diligence in the future, for example, in relation to a real estate transaction or when opening a bank account. They will be aware of the questions that could be asked, and the required documents.
A strict Due Diligence check when applying for a citizenship or residence permit by investment guarantees that only law-abiding investors’ applications will be approved. It also significantly reduces the likelihood of a passport or residence permit being revoked in the future.
