Vanuatu steps up Due Diligence under the citizenship by investment program
The Vanuatu government has announced that it will re-check investors who have been granted citizenship under the program since May 25th, 2015. If the investor does not pass the check, he may be deprived of his passport.
New investors will also be subject to more strict Due Diligence. Learn why Vanuatu strengthens Due Diligence and what changes lie ahead of the program.
Vanuatu steps up Due Diligence under the citizenship by investment program
Vanuatu has been granting citizenship by investment since 2015. The current citizenship program was launched in 2017. It takes from one month to get a passport, and the whole procedure takes place remotely. 2,336 investors received a Vanuatu passport from 2017 to August 2020. Public data on the number of investors for the subsequent period is not available yet.
On January 14th, 2022, Vanuatu announced that it plans to change the conditions of the citizenship program and bring them up to international standards. The first step is to conclude an agreement with the British FACT UK agency.
FACT UK is an international provider of Due Diligence services. The agency has access to a large number of information databases, which will allow more thorough and comprehensive verification of investors’ reliability.
Igor Buglo,
Head of the Maltese office, MBA
Due Diligence is a key stage of every investment program. The European Union is struggling with the growth of economic crimes, therefore it is constantly improving Due Diligence standards for citizenship and residence permit programs. Due Diligence under the Vanuatu program now takes place in two stages:
The investor is checked by the Financial Intelligence Unit, or FIU.
Once approval from the FIU is received, the documents are submitted to the Screening Committee and the Citizenship Commission.
As soon as Vanuatu announces the new Due Diligence rules, we will share the details.
Why Vanuatu strengthens Due Diligence
Two days before the government of Vanuatu announced changes to the conditions of the citizenship program, the European Commission proposed to partially suspend the visa waiver agreement between Vanuatu and the EU countries.
The partial suspension means that visa-free entry to the EU countries is proposed to be canceled only for citizens of Vanuatu who received passports after May 25th, 2015. From that day on, Vanuatu began granting citizenship by investment.
The European Commission believes that Vanuatu does not sufficiently check investors, and too often advertises its program as an alternative to a Schengen visa. This violates international standards for investment programs.
The main problems pointed out by the European Commission are that Vanuatu:
granted passports to investors, among whom were persons listed in the Interpol database;
processes investors’ applications too quickly;
does not exchange information with countries in which investors have citizenship or residence permit;
issues passports to citizens of countries that are prohibited from participating in other investment programs, e.g. citizens of Afghanistan and Iran;
rarely rejects applications as during the operation of the citizenship program Vanuatu rejected only one application.
According to the European Commission, the problems of the Vanuatu citizenship program threaten the security not only of the EU states, but also of world security as a whole.
Vanuatu has created a working group to study the report of the European Commission: it has identified problems and is discussing options for solving them.
Elena Ruda,
Chief Development Officer at Immigrant Invest
The report of the European Commission is advisory in nature. The decision remains with the Council of the European Union. If the Council decides to partially suspend the visa waiver agreement, Vanuatu will receive two months’ notice before the decision comes into force. So far, this is just a discussion of the problem. Vanuatu has already taken steps to rectify the situation: the CBI unit will re-check all investors and strengthen the Due Diligence rules for new participants. The Vanuatu government is also planning to revise other conditions of the citizenship program. All changes will be aimed at improving security and eliminating possible risks of money laundering and tax evasion by investors.
Why the citizenship by investment program is important to Vanuatu
Vanuatu is a small island nation in the Pacific Ocean. The population of the country is about 300 thousand people. A significant part of Vanuatu’s GDP is provided by the citizenship by investment program. For example, 45% of government revenue was profit from the investment program in 2020.
Investments from the Vanuatu citizenship program are directed to the construction of infrastructure, the development of agriculture and tourism, and recovery from natural disasters. Since 2020, the money from the program has also been used to combat the consequences of the crisis during the coronavirus pandemic.
The Vanuatu government also established the National Development Fund in 2018. The fund helps to control the income from the citizenship program: investors' contributions are received in one state account. This facilitates auditing and budget management.
A village on the island of Efate, Vanuatu. Approximately three-quarters of the country's population lives in villages, but every year more people move to cities
Immigrant Invest is a licensed agent for the Vanuatu citizenship by investment program. If you want to get a second passport for visa-free travel around the world, please contact investment program experts for advice.
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