US to Cancel Visa-Free Regime for Travelers from Countries Granting Economic Citizenship

On March 3, US congressmen introduced to the US Congress a bill to terminate visa-free travel agreements between the USA and other jurisdictions that offer economic citizenship (the practice of issuing passports, often known as “golden passports”, in exchange for investment in priority projects). Additionally, congressmen prompt the UK and the EU to adopt similar restrictions. Let’s study the bill, make conclusions, and consider our experts’ expectations of the bill’s impact.

US bill to end visa-free travel from countries of economic citizenship

The No Travel for Traffickers Act was introduced in the USA by 2 congressmen – Burgess Owens (Rep. from Utah; member of the Republican Party) and Steve Cohen (Rep. from Tennessee; member of the Democratic Party; co-chair of the US Commission on Security and Cooperation in Europe).

This bipartisan legislation revokes all agreements on participation in the US Visa Waiver Program for countries maintaining citizenship-by-investment programs.

Congressmen Owens and Cohen claim that the practice of providing “golden passports” in exchange for donations or returnable investments to the economy is typical for countries that pay insufficient attention to the due diligence of candidates. Such schemes are allegedly “used by human traffickers, international criminals, and corrupt oligarchs” as a back door to other countries.

“Human trafficking kingpins and other international criminal enterprises rely heavily on their passport purchasing power to freely travel the world, establish a foothold in multiple countries, open bank accounts, and evade accountability. The No Travel for Traffickers Act addresses the severe security risks of golden passports, signaling a critical step in our efforts to isolate bad actors around the globe.” said Rep. Owens.

“Giving traffickers the ability to purchase passports or extending citizenship rights allows them to travel the world and escape accountability for their crimes. Many countries sell citizenship to traffickers through phony ‘investments’ such as real estate, and this must be stopped.” noted Rep. Cohen.

The No Travel for Traffickers Act involves the adoption of the following US measures geared towards the countries maintaining economic citizenship programs: 

• Ban participation of countries that sell passports from participation in the U.S. Visa Waiver Program.
• Mandate that the Executive Branch list publicly all countries with citizenship-by-investment or “Golden Passport” programs.
• Direct the Executive Branch to cooperate with the United Kingdom and the European Union to eliminate Schengen Area visa-free travel for countries that sell passports.
• Prohibit the use of U.S. taxpayer funds to vet “golden passport” applicants so taxpayer dollars cannot be used to enable these corrupt programs. 

Visa-free-travel ban’s possible impacts on the economic citizenship market 

Visa-free travel to the USA 

Malta is the only EU country that issues economic citizenship to foreigners and at the same time provides its citizens with the right to visa-free travel to the USA. If the Maltese are deprived of this freedom, technically, all the Schengen and EU states will have to be deprived of it too, because of Malta’s membership in these organizations.

The European Union calls for reciprocity principles in diplomacy and visa-free travel agreements. MEPs have repeatedly warned to cancel the visa-free regime for US citizens in the Schengen Area, as long as the US government does not abolish visa formalities for visitors from a number of EU countries.

Due to pressure from the European Parliament, the American government added Poland to the list of states participating in the US Visa Waiver Program in November 2019. Croatians received a similar privilege on October 23, 2021.

Today, only citizens of Bulgaria, Cyprus, and Romania have no access to the privileges of the US Visa Waiver Program. Moreover, US officials have previously stated that the main reason for the inaccessibility of the US Visa Waiver Program for Cypriots and Bulgarians is the use of economic citizenship programs by both countries. Cyprus suspended the acceptance of applications for economic citizenship in November 2020, and Bulgaria began the process of liquidating such a program at the end of 2021.

It’s quite interesting that shortly before the closure of the relevant investment migration scheme, Eric Schmidt, the former Google CEO, applied for Cyprus economic citizenship, thus becoming one of the last beneficiaries of this migration option.

The US authorities explain the preservation of restrictions of the US Visa Waiver Program for Romanian citizens by the fact that many Romanian passports fell into the hands of foreigners through illegal schemes, which, by the way, have nothing in common with economic citizenship programs. As a rule, participants of such schemes received fictitious evidence of Romanian origin through corruption mechanisms and obtained citizenship by blood.

For the same reason, the US authorities denied access to the US Visa Waiver Program to Hungarians born outside of Hungary. These restrictive measures took effect in February 2022.

Visa-free travel to the Schengen Area and the UK

Experts consider another part of the No Travel for Traffickers Act to be much more dangerous for the investment migration industry. The authors of the bill, in fact, call on the British government and official Brussels to abolish the visa-free travel regime for citizens of countries that issue economic citizenship.

Firstly, this restriction will affect the holders of the Caribbean “golden passports” in the Commonwealth of Dominica, Antigua and Barbuda, Grenada, Saint Kitts and Nevis, and Saint Lucia.        

Citizens of the Republic of Vanuatu offering economic citizenship to investors have already lost their right to visa-free entry to the Schengen Area. At the beginning of March 2022, the EU Council announced a temporary suspension of this right for travelers who received Vanuatu passports after 2015. This ban was explained by the allegedly ineffective verification of the CIB applicants’ identity. So far, Vanuatu citizens have not lost the right for visiting the UK without a visa.

The local government previously announced the revision of the Due Diligence rules and the hiring of a number of international companies to assist in this objective. It is possible that visa-free visits to the Schengen Area for Vanuatu citizens will be allowed in the near future.

Risks for new players and old-timers in the economic citizenship market

In March 2022, the list of states in which citizens are entitled to visa-free travel to the USA for tourism or on business for up to 90 days under the US Visa Waiver Program, is as follows:

• Australia
• Austria
• Andorra
• Belgium
• Brunei
• Hungary
• Germany
• Greece
• Denmark
• Ireland
• Iceland
• Spain
• Italy
• Latvia
• Lithuania
• Liechtenstein
• Luxembourg
• Malta
• Monaco
• Netherlands
• New Zealand
• Norway
• Poland
• Portugal
• San Marino
• Singapore
• Slovakia
• Slovenia
• United Kingdom
• Taiwan
• Finland
• France
• Croatia
• Czech
• Chile
• Switzerland
• Sweden
• Estonia
• South Korea
• Japan.

In addition to Malta, several countries from this list have previously shown interest in raising foreign capital through the issuance of passports and citizenship to investors. As a rule, such projects are worked out behind closed doors, but sometimes information about these initiatives becomes public.

For example, in 2015, the Croatian government, led by Prime Minister Zoran Milanovic, discussed some amendments to the law to allow citizenship-by-investment. However, the Croatian authorities refused such an idea at that time.

According to insiders, in March 2019, the local authorities held a series of consultations with independent experts regarding the possibility of starting the issuance of economic citizenship. They planned to grant Croatian passports on the following financial terms:

• donation of 300,000 euros
• purchase of real estate worth at least 350,000 euros

HNWIs from Eastern Europe and Asia were the target audience of the new investment migration program. Officials planned for them a quota of 1,000 passports annually. However, the plans were put on hold again.

Due to the possible implementation of the No Travel for Traffickers Act by the US authorities and the introduction of similar restrictive measures by their partners from the UK and the EU, the number of states ready to open economic citizenship programs will decrease. Otherwise, their governments will risk losing the confidence of citizens by depriving them of visa-free travel, for example, to the Schengen Area.

On the other hand, many experts observe the growing worldwide demand for economic citizenship. They expect new players in the investment migration market who will be tempted to attract capital through the issuance of second passports despite the threat of sanctions.

Phony statements about insufficiently effective Due Diligence 

The main argument of the authors of the No Travel for Traffickers Act demanding restrictions on countries maintaining economic citizenship programs is the insufficient efficiency of the DD screening of applicants.

Ironically, Malta, which is the only EU country offering its citizens visa-free trips to the US, uses the most effective multi-level mechanism of screening to detect unreliable applicants. It is part of a fast and straightforward application procedure. 

The host country authorities use the best international practices and experience, independently analyzing candidates for involvement in money laundering or financing of terrorism. After that, the information about the applicants is transferred to world-renowned private detective firms that check investors and their dependents and do so independently of the authorities.

Well-known structures like FACT, S-RM, Thomson Reuters, BDO, and Exiger participate in the process.  The data analysis and checks in the candidates’ residence places are also held. Finally, consultations with governmental and intergovernmental partners, including INTERPOL, are carried out.

It should be noted that the applicants’ identity verification starts long before the application is submitted to the authorities of the host state. Any economic citizenship program involves a pool of licensed immigration agents and banks. Agents and bankers conduct risk assessments, weeding out lawbreakers who are on the wanted list, as well as former criminals and politically exposed persons (PEP).

The pre-screening conducted by an immigration agent is generally free of charge and does not impose any financial burden on the migrant investor. Please note that some immigration agencies are ready to conduct verification only after the signing of a contract for the provision of services.

Our immigration partners accredited in states offering economic citizenship programs are ready to conduct for you the pre-screening in full accordance with ethical and privacy principles. This is a reliable way to obtain the pre-approval before investing big sums in your “golden passport” and submitting personal information to the authorities of the host state.

Another witch-hunt begins! Act while you can

After the terrorist attacks in New York in 2001, the US authorities and a number of other states began to tighten the screws on all fronts. In particular, Grenada’s economic citizenship program was suspended in the same year under pressure from the US government, which accused the state of allegedly ineffective screening practices. It was reopened only in 2013.

In 2002, the Nauru program was permanently closed. Local authorities made that step under pressure from Canadian, American, and Australian officials who complained that supposedly unreliable Russian and Chinese investors were using the Nauru passports with altered personal details to travel visa-free around the world. The US authorities even threatened to impose sanctions against this island jurisdiction.

The Belize Economic Citizenship Investment Program also closed in 2002 under the pressure from the United States of America and questionable security concerns.

The reality is that due to economic citizenship programs in low-tax jurisdictions (such as Antigua, St. Kitts, the Commonwealth of Dominica, Vanuatu, and even Malta – by the standards of the European Union) many Western countries are losing wealthy taxpayers.

Therefore, European and American officials criticize economic citizenship and investment residency programs at every opportunity. They seek to stop the reduction in their tax base under the pretext of blocking alternative citizenship or residency options for criminals.

Expert assistance with choosing and obtaining economic citizenship

Given all of the above, you should apply for economic citizenship as quickly as possible while such an opportunity is still available. Yes, there is a risk of getting a “golden passport” and losing visa-free access to a certain country in the future, but there is also a high probability of a subsequent restoration of this visa-free regime. In addition, the ability to move to a safe tax-free country quickly and relatively seamlessly outweighs the risk of losing a visa-free regime in the current realities.

Our partners are ready to quickly conduct a preliminary check and assess the possibility of obtaining economic citizenship by a particular person. Clients receive complete confidentiality and a 100% guarantee of approval based on the results of government checks in the host state. Our team and partners are committed to the principles of responsibility and honesty, briefly and clearly defining the key risks and possible problems when communicating with customers.

Our seasoned experts specializing in economic citizenship programs have solid experience in different parts of the world. They speak several languages, including Russian and English. You can trust their diligence and rely on their sound judgment in whatever goals you set.