A Prelude to Investment Migration
Could there be access to more visas for travel, education and health needs? Could sovereign states devise a strategy to attract Foreign Direct Investment (FDI) inflows to boost economy? Could a newly founded start-up owner or an investor invest in markets, and efficiently manage risks and wealth? Could nations revamp their national security approach to safeguard refugees in a more effective way? From catering to the human needs to upholding national security, Investment Migration has all the answers to the above questions. According to Henley & Partners Report in 2023, there are 40 Investment Migration Programs across 22 countries providing both Citizenship and Residency by Investment (Henley & Partners, 2023). Among the countries, Greece and Malta are top destinations for investors to access investment options, obtain golden visas and residency permits. A notable policy among the investment migration countries include; lesser benchmark of minimum investment or no minimum investment amount, lesser duration of stay for conversion into permanent resident, expanded market, high visa approval rates and other varied benefits. In the light of enhanced global mobility, steady immigration process shifting trends in issue of citizenships and residency, it is crucial to explore Investment Migration.
Contextualizing and Understanding Investment Migration: What, Why and How?
The concept, criterion and definitive elements of citizenship and residency has been evolving from the political philosophy of Aristotle wherein, citizenship would be defined for the actively participating members in the state affairs of the city-state, to the modern theories of citizenship outlined by birth, territory and nationality. Investment Migration is a state-of the art version of citizenship and residency in a territory. Multiple definitions annotate the idea of Investment Migration. The Investment Migration Council explains that “Investment migration comprises various citizenship and residence by investment programmes which allow individuals to gain citizenship or residence rights in return for investments in their host countries”. According to Council For Foreign Relations, “These programs allow individuals the legal right to live and work in a foreign country in return for making significant, qualifying investments in that country’s economy, often in assets such as government bonds, stocks, and real estate”. While, Henley & Partners observe Investment Migration as “Investing in different residence and/or citizenship options worldwide offers both short-term value and long-term yield.”
Investment Migration can be simplified as a mode of obtaining citizenship and residency in a country by contributing to the economy in the form of investments in various assets such as real estate, industry and stocks. There are varying Investment Migration programs across the globe with distinct investment options, time schedule and requirements. Deriving the key elements from the definitions, Investment Migration happens when an individual acquires citizenship and residence permit in the host country through the investment options, leading to short-term and long-term growth in the economy, business and societies. The rationale behind the concept of Investment Migration is to promote cross-cultural citizenship experiences, boost Foreign Direct Investment, improve trade and bilateral relations, and ease immigration process.
The well-known example of the US EB-5 Investor visa depicts the process of the investment migration in the United States. This program is applicable to the investors investing in industry specific companies such as holding, tourism, textiles, etc. The minimum amount required for investment includes USD 800,000 and the investor converts into a permanent resident in US after successful residence for 5 years (Henley & Partners, 2024). Hence, through the commitment to contribute to the US economy, economic growth, employment creation, industry booming via the investment option grants permanent residence and citizenship.
There are three types of actors involved in Investment migrations namely; Individuals such as business owners, media actors, sports players and others, Sovereign States such as developing, developed and emerging economies, Professional Service providers such as audit firms, law firms and medical professionals (Investment Migration Council, 2020).
Investment Migration can be classified into two distinct programs: Citizenship by Investment and Residence by Investment. Residence by Investment, also known as golden visas, include obtaining the permit to reside in a country for a stipulated time period and investment amount, with a potential to convert into citizenship. The residency through investment provides the legal rights for employment, education, access to medical insurance and travel despite residence in the country post obtaining the golden visa. On the other hand, Citizenship through investment is on par with the citizenship by birth. It involves gaining citizenship and enabling accessibility to education, work, local privileges such as lower taxation programs, health care programs and others (Roy. D, 2024).
Climbing the ladders of Prosperity: Unfolding the possibilities through Investment Migration
Investment Migration unlocks significant opportunities to both the investor and the host country from Real Estate to Social Impact. Investors usually aim for wealth accumulation, risk management, visa expansion and escape options in times of war, extremism and economic uncertainty (Jackson, Etti & Edu, 2023). Some of the prominent causes for increased investment are outlined below –
- An escape route during instabilities and uncertainness: During the incessant times of civil war, terrorist attacks, mass invasion, and economic crisis, Investment Migration is used to adopt safeguards and escape techniques to invest wealth, people and resources in other countries. For instance, in times of war and invasion, the sovereign state could invest in other residencies to transport the refugees for safety, survival and national security.
- Effective Risk Management Strategies for firms: Economic and Financial Diversification has been the recent trend in economic landscape. Diversification and expansion of investment opportunities in distinct and varied sectors of the government such as technology, fashion, real estate and property, and expansion of large plants has boosted economic growth. For example, the firm could invest or buy a residential property on rent for a specific period of time, and later disinvest them for wealth accumulation.
- Depreciation of passport value: Inaccessibility or restricted access for visa option to countries, drives greater acquiring of citizenship and residency options through investment visa. For example, India ranked 80th in 2024 by the Henley Passport Index, with access to 62 countries (Business Standard, 2024). Investment migration programs act as an alternative to access citizenship and residency to the non-visa accessibility countries with higher approval rate.
- Social impact and government collaboration: One of the common type of investment include the purchase of Government Bonds and contribution for non-profit organizations and social purposes (Jackson, Etti & Edu, 2023). The firms collaborate with the government to invest in risk-free government bonds with an option of full refund. However, investment in charity does not convert to refunding options – it significantly contributes for the economic development of the country, addressing key development areas of healthcare, basic education, food and nutrition and employment generation.
Navigating the dark waters of Investment migration: Identifying risks
Investment Migration Programs also attract increased illegal activities as means of acquiring citizenship and residency like financial frauds, masking of identity, corruption and bribery, questioning the transparency and accountability of the program providers throughout the migration process including investment requirements, application process, and citizenship grants. The Joint Report by Financial Action Task Force (FATF) and Organization for Economic Co-operation and Development (OECD) in November 2023 highlighted the areas of mistrust, exploitation, and frauds aligned with the Investment Migration Programs. Some of the key areas of risks in investment migration are as follows,
- Masking of Identities: Investment Migration programs offer greater global mobility in the forms of transportation, supply chain, currency, trade and transfer of funds between the host and the local country. There are higher chances of masking or changing the identity information such as name, contacts, nationalities, birth dates, residence information, legal identity proofs, occupation and family details to gain access to visa. Such modifications could complicate the legal validation process and enable greater risks of illegal transfer of funds, movement of family members, corruption of legal representatives, and the immigration process (FATF/OECD, 2023).
- Susceptibility to discrepancies during application process: With the growth of investment migration market, there has been an emerging trend of intermediaries for the investment migration process such as agents, brokers and consultancies. These intermediaries charge high commission, manipulate applicant information, hide criminal activities, background of the applicants and incorporate poor due diligence process, thereby providing entry to illegal investors in the host country (FATF/OECD, 2023). Apart from government approved agency services, third-party program providers exploit the program benefits, requirements and payments too.
- Increased risk of corruption and bribery: As the number of applicants grow, the transparency, quality of validation and due diligence is questioned, especially in the private consultancies and brokers. Inadequate verification of applicant, and payment-induced verification dilutes the transparency of the verification process. Moreover, post the grant of citizenship or residency, the government has to track and monitor the legal, financial activities of the individuals, firms and sovereign states in the form of bank transactions, case filings, investments, and multiple passport ownerships (FATF/OECD, 2023). This is highly evident in the real estate market, with greater chances of encroachment, illegal ownership of property, and disinvestment of assets at a larger rate.
- Challenging the integrity and accountability of program providers: The intermediaries might pose themselves as public representatives in disguise, to promote investment migration programs questioning the integrity of the program. Moreover, the source of wealth and investment provided for accessing citizenship could be accumulated through fraudulent activities, corruption, illegal encroachments and investments for the migration programs (FATF/OECD, 2023). The politically and economically linked firms, individuals and sovereign states might indulge in funding, accumulating funds through extremist activities, and prohibited activities to gain citizenship or residency through investment (FATF/OECD, 2023).
An Epilogue: Digesting the crux of Investment Migration
Investment Migration has become the new trend to boost economies, incentivizing citizenship and residency permit, strengthening economic and political relations among the countries, and streamlining immigration process through expansion of visa options. Individuals, sovereign states and business entities have varied motives and aspirations to utilize investment migration programs –from scaling business operations to inducing social impact in development areas. It contributes to the risk management of firms, escape options for refugees, and accessing human development needs such as education, health care and travel. Among the individuals, start-up owners, students and investors occupy the share of investment migration wherein, students have better access to high-quality education, and investors could accumulate wealth at a lower risk. However, adverse effects of investment migration include threat to public integrity, dark investment migration markets involving third-party agents, serious legal implication for financial and identity frauds. To conclude, Investment Migration has shaped the 21st century citizenship and residency process connecting communities, economies and wealth through global mobility.
Written by Venkatesan Sai Taruni
Edited by Shruti Shiraguppi
