The Changing Landscape of Immigrant Investment Programs

The Changing Landscape of Immigrant Investment Programs

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October 25, 2019
The Changing Landscape of Immigrant Investment Programs
Immigrant investment programs (IIPs), also known as
Program Types
“golden visas,” “golden passports,” and citizenship-or
Residency-by-investment (RBI) programs make up the
residency-by-investment (CBI, RBI) programs, among
majority of IIPs offered, including those in the United
other names, are distinct from other immigration
States, Portugal, and Australia. RBI total revenues are
channels—such as family ties or employer sponsorship—in
estimated to exceed tens of billions of dollars annually.
that the applicant is required to make a financial
Through a clearly defined process, RBI candidates are
contribution for the benefit of the host nation. Criteria and
granted permanent residence in exchange for a significant
expectations range widely across programs, yet all IIPs
economic contribution, which can be extended in some
grant an immigration benefit to the approved applicant in
cases to citizenship after a designated period of time.
exchange for a sizable financial contribution to the private
or public sector (sometimes both). The first official IIP was
Citizenship-by-investment (CBI) programs make up about
established in St. Kitts and Nevis in 1984, followed by one
a quarter of the current IIPs offered globally, and program
in Canada in 1986 and in the United States in 1990 (P.L.
revenues are approximately $3 billion annually. Like RBIs,
101-649). There are now more than 50 actively promoted
there is an equally delineated process, however, CBIs waive
IIPs around the world, and more than 100 countries have
naturalization requirements, such as residency and language
immigrant investment legislation in place. The number of
proficiency, and grant approved candidates’ citizenship in
IIPs has increased by almost 50% over the past 10 years
exchange for a substantial economic contribution. CBIs can
(see Figure 1). Some of the lowest IIP rates are found in
be found all over the world, including in Grenada, Cyprus,
North America’s Caribbean islands, including the
Turkey, Cambodia, Russia, and Vanuatu.
Dominican Republic’s RBI, which accepts an investment of
at least $100,000. Austria’s CBI tops the market rate,
Program types vary across countries and jurisdictions.
requiring an investment of approximately $10 million.
While some countries have legislation in place for
investment in exchange for an immigration benefit, the
Figure 1. Growth in Immigrant Investment Programs
process may not be clearly structured, investment amounts
by Program Type and Region: 1980-2019
may be decided on a case-by-case basis, or there may be no
active promotion of the program by the government, among
other variances. These programs—including the CBI in
Austria and both the CBI and RBI Cabo Verde—are
generally considered unofficial.
Investment Options
Private sector investment options aim to stimulate the
economy and create jobs. Examples of such programs
include the U.S. Immigrant Investor Program (EB-5) and
Singapore’s Global Investor Program. A small subset of
this group admits applicants in exchange for real estate
purchases in that country. This option is available in
Greece, Spain, Portugal, and Latvia, whose property
markets were severely hit by the 2008-2009 financial crisis.
Public sector investment options require investors to give
money directly to the government in the form of a donation
or low-interest loan (i.e., purchase of government bonds).
These funds are managed differently across programs, but
are typically used for economic development and other
public interest purposes. Examples of such programs can be
found throughout the Caribbean, as well as in the United
Kingdom (UK) and Malta (which requires both a public
donation and private investment).

Sources: Government websites, various immigration investment
consultancy and service provider websites.
Program Effectiveness
Notes: The y-axis shows the number of countries and jurisdictions
Experts suggest that the clearest public gains come from
with immigrant investment legislation that offer permanent residency
programs that encourage financial donations to the
and citizenship, where enactment dates are available. Long-term only
government or a national development fund, also seen as
and temporary visa programs are not included.
“cash-for-passports.” The overall effectiveness of this
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The Changing Landscape of Immigrant Investment Programs
model depends on how the funds are used. They may be
Congress acts to stop these and other program changes.)
spent to support long-term economic growth and provide
EB-5 requires a non-guaranteed, “at-risk” investment in a
other forms of social support, but such assurances are
private sector entity that creates jobs. In contrast, the UK’s
typically not written into the policies. Lack of transparency
Tier-1 Investor visa and Australia’s Significant Investor
and minimal residency requirements of some programs
Visa allow for “low-risk” investment in government bonds
make this model highly controversial, and program
or a combination of public and private assets.
outcomes are ultimately a question of implementation and
The Caribbean
oversight. Foreign direct investment from IIPs can result in
Five Caribbean nations—St. Kitts and Nevis, Dominica,
new and flexible capital flows both to the public and private
Grenada, Antigua and Barbuda, and Saint Lucia—currently
sectors for developing, recovering, and transition
offer citizenship in exchange for a contribution to the
economies. Some programs have served as a lifeline for
government, a national development fund, or an investment
governments recovering from the global recession, but
in a designated sector, such as real estate. CBIs have
critics raise questions over program misuse, security
provided these governments—often saddled with large
concerns, and corruption in light of the lack of global
public debts and devastated by recurring natural disasters—
industry standards.
with a relatively low-cost, non-debt-bearing revenue source
(up to a third of GDP for some) outside of traditional
lending options, which are often conditional. Some
EB-5 and the U.S. Economy
governments have significantly discounted their program
After the 2008 U.S. financial crisis, banks tightened lending and
rates in an effort to raise emergency funds after natural
businesses suffered. As a result, entrepreneurs found
disasters, sparking concerns that such programs may be
alternative financing through EB-5, which led to a dramatic
vulnerable to abuse and subject to laxer vetting standards.
increase in its popularity. EB-5 recipients increased 92% from
The European Union
2007 to 2017, reaching its annual cap of 10,000 visas issued in
Most IIPs in the EU were established or redesigned
2014 and 2015 and oversubscription from China (limited by a
following the 2008-2009 global financial crisis and
per country cap of 7%) since 2014. For more see CRS Report
subsequent Eurozone crisis. Roughly half of the EU
R44475, EB-5 Immigrant Investor Visa.
member states offer residency pathways, and Cyprus,
Malta, Bulgaria, and Austria offer citizenship programs.
Changing Landscape
Disagreements exist within the EU over the benefits and
Over the last decade, interest in and the availability of IIPs
risks of such programs. The European Parliament has
have surged. The growth in IIPs may reflect a combination
strongly recommended phasing out IIPs, in light of the
of growing wealth in emerging markets; a rise in global
potential security concerns and corruption risks they
uncertainties; interest by governments seeking more ways
present.
to raise revenue and boost talent inflows; and a resulting
Visa Waiver Liberalization and Visa Attractiveness
niche of IIP service and advisory industry (lawyers,
In an effort to increase IIP attractiveness and demand,
financial advisors, visa consultancies, etc.). Reports suggest
advisory firms have helped facilitate more inclusive visa-
that wealthy populations from areas affected by economic
waiver agreements with governments in desirable locations,
or political turbulence—Iran, Brazil, and Venezuela—are
including the EU, Schengen Area, and China. Such visa
expected to increase demand for second passports in the
liberalization is of particular concern with certain high-risk
near term. Fears of Brexit and political unrest in Hong
CBIs, notably St. Kitts and Nevis, Antigua and Barbuda,
Kong have also fueled inquiries about and demand for IIP
and Cyprus, and governments may be reluctant to accept
options. Based on currently available statistics, an average
“purchased” passports for fear of admitting illicit actors and
of 80% of RBI applicants worldwide are from China but
possible terrorists. For the CBI programs of Austria,
source countries vary by region and country. IIPs in Europe
Grenada, Jordan, Turkey, and Moldova, advisory firms and
are popular with Russians, for example.
immigration lawyers market the United States’ E-2 visa as a
selling point. According to industry professionals, a
IIPs in Traditional Migrant Destinations
growing number of applicants are choosing to first invest in
Historically, the most popular IIPs are residence programs
a Turkish CBI and then apply for the U.S. E-2 entrepreneur
in traditional migrant destinations. Of the more than 36,000
visa.
investment visas granted globally in 2014, more than 80%
Issues for Congress
were issued by the United States, Canada, the UK,
Australia, and Hong Kong (Hong Kong’s IIP closed in
At a time when global immigration policies are becoming
2015). Created in 1990, the United States Immigrant
more restrictive, the rights and freedoms awarded by IIPs
Investor Program or “EB-5” stands out as the world’s
have come into sharper focus. Regulatory pressures coming
largest and most popular program in terms of estimated
from intergovernmental organizations on anti-money
revenue and participation, surpassing Canada’s Federal IIP
laundering and anti-corruption legislation are increasing
since 2013. According to the latest U.S. Commerce
pressure for tighter controls. As the market matures,
Department assessment (2017), an estimated 174,039 U.S.
Congress may examine the ongoing evolution of IIPs and
jobs were created by $16.7 billion total investment ($5.8
consider various reforms of IIP industry rules and
billion in direct EB investment capital) in FY2012 and
standards, as well as domestic application and assessment
FY2013. EB-5 is distinct due to its significantly lower
procedures for visa-free travel and E-2 treaty agreements.
investment minimum—currently $500,000 for pooled
investments in underserved areas. (Program thresholds are
Jennifer M. Roscoe, Research Assistant
set to increase significantly, in November 2019, unless
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The Changing Landscape of Immigrant Investment Programs

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