22nd August 201822nd August 2018 by Fabienne Malkinson

Malta ranks first among all CBI Programmes for due diligence and compliance

According to the new citizenship index published by HF Corporation, Malta ranks first among all Citizenship by Investment programmes for due diligence and compliance. HF Corporation allocated a points-system to due diligence, being 7, and compliance, being 8. Out of a total 15 points, Malta scored the highest amount with a respectful 12 points, just scraping the win against Cyprus who secured a strong 11 points.

In this competitive marketplace, robust due-diligence standards, pricing befitting the offered benefits, smart processing and effective channelling of the foreign direct investment for the economic development of the countries and for the prosperity of their nations, will determine which programme will outperform the other. It is key to note that each sovereign country has, and should have, the right to design a naturalisation policy that works with their nation and their recipient governments.

REPUTATION

A programme’s reputation can be heavily influenced by ‘due diligence’ and the ‘compliance’ of the country with the accepted international standards. What is meant by reputation in relation to a programme is about how well the programme is perceived outside of the country. This could include regulators, institutions, intergovernmental organisations and other professionals. A prominent aspect that advances any programme is its transparency and through the responsibility of government agencies whereby the due diligence standards are set. These are done either directly or through professional due diligence providers, as a way of reflecting this transparency and boosting the reputation of programmes.

DUE DILIGENCE

As briefly mentioned in the above paragraph, due diligence standards are the standards opted by the governmental authority, in respective countries, who are responsible for all approvals of the citizenship by investment and naturalisation applications. These are to ensure that _“persona non grata”_ or otherwise known as, unwanted persons, are not admitted under the respective programme. Much of this includes but does not limit running background checks on the applicants and the source of their funds that may either be run by the government agencies or through third-parties, or a combination of all these practices may be opted.

COMPLIANCE

Compliance of a country’s citizenship programme with the international standards issued can somewhat but not wholly lie in due diligence practices. This may not always the same as the broader compliance of the country can vary with the international standards that also include the financial standards. With the compliance of a country’s financial system aligning with the international standards – which may not only be limited to differential tax rates – is another feature that, in addition, can ensure that the nationals of that country will not have to face additional scrutiny in the outside financial world.

METHODOLOGY

The HF Corporation have allocated seven points (7) to due diligence, while eight (8) points have been assigned to compliance. The methodology that is taken in to account is to determine compliance by the policies announced by task forces, financial advisory bureaus as well as the regional organisations. It is important to analyse and not under estimate all these factors as side by side, they can eventually have a combined effect on the global reputation of a single or even multiple programmes. The more transparent and the stricter the due diligence standards are made in the country will highly impact the reputation of a programme in the long term; the more the compliance of a particular programme with accepted standards, the greater the local, regional and global acceptance of the programme will be – and hence, more foreign direct investment into the respective country – thereby more utilisation of _“ius pecuniae”_ for the welfare of the indigenous population.