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Cash for passports: Canadians play key role in lucrative business

Cash for passports: Canadians play key role in lucrative business
From CBC - December 7, 2017

Canadians are playing a key role in the lucrative and rapidly growing worldwide business of cash for passports, an industry that Canada, the United Statesand the European Unionhave warned could threatennational security, a CBC News investigation reveals.

Industry insiders paint a picture of a multi-million dollar industry that runs in large part through Canada, connecting wealthy individuals from areas like China, Russia and the Middle East to citizenship by investment programs around the world. In return, millions of dollars in commissions are being paid to middlemenoften Canadians.

Estimates by top industry insiders of just how much the citizenship by investment business is worth each year range from $1 billion to $10 billion.

One of the biggest attractions for potential investors is the visa-free access the passports offer to more than 100 countries, including the European Union. Without that access, citizens of some countries like China or Russia have to go through the paperwork of applying for separate visas for each country they want to visit.

Canadians are not only involved in promoting the programsthey are also designing and running some of them.

Antigua and Barbuda's program was designed by Don Myatt, a former Canadian federal public servant who worked with Henley and Partners, which designs and markets citizenship by investment programs.

Myatt went on to become the program's first manager. Chisanga Chekwe, a former Ontario deputy minister, was its second.

"One runs into Canadians all of the time," says Kristin Surak, a professor at the SOAS University of London who has been studying the industry for the past two years.

"Really, the (citizenship by investment) industry was created by the Canadian government," said Nuri Katz, a top player in the industry and founder of Apex Capital Partners. "Then other governments saw the success of the Canadian program and wanted to enjoy some of the success themselves."

"I would say Canada is the grandfather of the industry."

The roots of the industry lie in Canada's former federal business immigration program.

Under that program, someone with a net worth of at least $1.6 million who agreed to make an $800,000 investment in Canada could qualify for permanent resident status.

Canada ended its program in 2014

When Canada shut down the program in 2014, it left a fully trained industry adept at selling immigration investment and public servants used to administering immigration investment programs, as well as a pipeline with thousands of clients from around the world who had applied to Canada's program and whose applications had not yet been processed.

Former immigration minister Chris Alexander said he shut down the programbecause ofconcerns about fraud, and the money being invested just contributed to government spending.

Those involved in selling citizenship by investment programs around the world maintain that they simply help cash-strapped countries connect with wealthy investors seeking greater mobility or a safe haven for their families.

They admit that there are some "fly by night" operatorsattracted by the big money involved. They make veiled suggestions of possible corruption on the part of politicians they refuse to name.

However, they maintain that most reputable people in the industry are careful about who they accept as clients and they say most government officials are doing their best to screen out those who could pose a security risk.

Warnings of criminals and terrorists

Government insiders, however, paint a picture of citizenship for sale programs open to abuse by criminals and potential terrorists. They say some countries are not taking enough care or asking enough questions about where the money came from before handing over passports that come with visa-free access to more than 100 countries.

In June, those concerns led Prime Minister Justin Trudeau's government to impose a visa on everyone entering Canada with a passport from Antigua and Barbuda, "to protect the safety and security of Canadians and uphold Canada's commitment to secure the North American perimeter."

In its announcement, the Canadian government said it had been watching the program since it began in 2013. Chisanga Chekwe told Antigua's Daily Observer in August that he got wind of a plan to impose a visa over concerns about candidate vetting when he headed the program in 2016 and was able to convince Canadian authoritiesnot to do it.

Three years earlier, the Canadian government imposed a similar measure on St. Kitts and Nevis, another Caribbean island nation. Alexander, the former immigration minister, said that decision was triggered whenan Iranian, whom he described as an "Iranian state representative," showedup at Toronto's Pearson International Airport with a diplomatic passport from St. Kitts and said he had come to meet then prime minister Stephen Harper.

Canada closed its embassy in Iran in 2012 and expelled Iranian diplomats from Canada. Formal diplomatic relations have not yet resumed.

On Dec. 1, a European Parliament delegation led by Ana Gomes raised red flags about Malta's citizenship by investment program, saying there was "great concern" about the sale of Maltese passports to foreigners without disclosing who was buying them. The program, popular with Russians, includesEuropean citizenship and visa-free access to Canada and the U.S.

"This system, with all its opacity, bears the risk of importing criminals and money laundering into the whole EU," Gomes wrote.

The U.S. government has also raised serious concerns about programs offering citizenship for a price.In a written presentation before the U.S Senate armed services committee in March 2015, then General John Kelly listed "cash for passports"programs among the security threats faced by the U.S, saying they "could be exploited by criminals, terrorists or other nefarious actors."Kellynow serves as chief of staff to U.S. President Donald Trump.

In its 2017 International Narcotics Control Strategy Report, the U.S. State Department warned Antigua and Barbuda's Citizenship by Investment Program (CIP) could be susceptible to money laundering and other financial crimes.

"The CIP remains among the most lax in the world," officials wrote."The CIU (Citizenship by Investment Unit) does not maintain adequate autonomy from politicians to prevent political interference in its decisions," they later added.

The report also warned about the program in St. Kitts, saying "prior lax vetting created AML (anti-money laundering) and security vulnerabilities domestically and internationally. The CIP continues to be afflicted by significant deficiencies in vetting candidates and conducting due diligence on passport and citizenship recipients after they receive citizenship."

Antigua and St. Kitts are just two of countries in the growing business of citizenship for sale.

"There has been an explosion of demand based pretty much on political instability around the world in the last 10 years," said Armand Arton, president of Arton Capital, one of the largest firms matching wealthy investors with second citizenships.

Arton, who grew up in Montreal but now spends much of his time in Dubai, estimates 25,000 people buy a second citizenship each year. He expects that number to double in the next five years as more countries offer programs and the cost of buying citizenship drops.

Canadian addresses dominate in Antigua

'Canada developed this in the '80s and most of the original professionals, like myself, are from Canada.' Nuri Katz

'Kleptocrats' can be'brilliantly corrupt'

Eyebrow-raising citizenships

No comment from Antigua's PM

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