High on the agenda in the Caribbean is a crucial meeting between leaders of 5 OECS countries, who are set to discuss the future of their respective economic citizenship or formally known as Citizenship by Investment (CBI) programs.
Leaders from Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, and Saint Lucia are scheduled to convene in Grenada next week for the 2024 Caribbean Investment Summit.
Adding an international layer to the discussions, the Organisation for Economic Co-operation and Development (OECD) is closely monitoring the Grenada Summit. The OECD has expressed concerns that a significant portion of the funds invested by individuals through CBI programs do not directly benefit the host countries.
This raises questions about the true economic impact of these programs and the potential for misuse of funds. The Summit presents a crucial opportunity for the Caribbean nations to address these concerns and implement stricter measures to ensure transparency and accountability in the flow of CBI funds.
The upcoming summit presents a significant opportunity for the leaders to collaborate on streamlining and potentially standardizing their CBI standards, which could make them more attractive to potential investors while maintaining international security.
The OECD has further emphasized the need for robust financial oversight within the CBI programs. According to information from internal source of OECD, they advocate for mandatory use of local bank accounts by developers and their associated companies. This system would allow a designated unit within each host country to verify the receipt of actual investment funds into the country.
For instance, a developer in Grenada operates through a company called ABC Ltd. Under the OECD’s proposal, ABC Ltd. would be required to open a bank account in Grenada or utilize an escrow service held within the country. Only after verifying the funds are present in the local account would the citizenship unit process the application.
Any diversion of funds to non-Grenadian accounts would be considered money laundering, potentially leading to the country’s inclusion on the EU’s Grey List, a designation that could severely damage its financial reputation.
Local sources in Grenada have shed light on a significant challenge plaguing the economic citizenship program. According to the sources, a number of developers operating under the program have developed a negative reputation. This has led local banks to be hesitant about opening accounts for these developers and their associated companies.
The reluctance of banks to open accounts creates a major obstacle in channeling investment funds into the host country. This directly contradicts the goals of the CBI program, which relies on these investments to stimulate the nation’s economy.
According to reports, a key area of focus will be establishing a unified cost structure for the CBI programs across all five nations. This would provide greater transparency and potentially make the programs more competitive in the global marketplace.
Additionally, the leaders are expected to discuss measures to ensure that investment funds are directed towards the development of the host countries and not diverted to offshore accounts. This focus on accountability could address concerns raised by some international bodies regarding the use of CBI funds including the EU and the UK.
Unified Investment Outlay
The proposed strategy, set to be formalized during the Caribbean Investment Summit in Grenada, envisions an equal minimum investment outlay of US $200,000 across all participating countries.
This move aims to streamline and standardize the process, enhancing the global competitiveness of their CBI offerings. However, not all were in agreement initially; back in March 2024, while Antigua and Barbuda, Dominica, Grenada, and St Kitts and Nevis signed a Memorandum of Understanding to this effect, St Lucia initially refrained from joining this consensus, citing the need for further deliberations.
The upcoming summit presents a critical opportunity to unify their approaches and fortify their economic positions on the international stage.
Bringing Investment Into The Country
One of the biggest concerns currently facing the OECS countries is ensuring that funds generated by their CBI programs actually reach their intended destinations. There have been numerous instances where investments from developers or CBI agents have been diverted away from the host nation.
This not only undermines the economic benefits of the program but also raises concerns about money laundering. Tracing these diverted funds can be difficult, as they are often directed to offshore havens like Hong Kong, Singapore, or Dubai. The upcoming meetup aims to address this critical issue by establishing clear guidelines to ensure transparency and accountability in the flow of CBI funds.
