The Bahamas and twenty other countries were recently singled out by the Organization for Economic Co-operation and Development (OECD) on the premise that their residence by investment (RBI) and citizenship by investment (CBI) schemes pose a high risk to the integrity of the Common Reporting Standard (CRS) regime. This adverse listing followed the analysis of over 100 CBI/RBI schemes by the OECD.
In what was termed as the clamping down on CRS avoidance through CBI/RBI, the OECD asserted that it is seeking to equip financial institutions with tools to help them identify accountholders that may misuse RBI/CBI schemes specifically to avoid the CRS. We submit that this is another classic case of the moving of the proverbial goal posts by international organizations.
The Government must now move beyond the semantics and address this issue for what it really is. The reality is that only 21 out of over 100 countries were placed on this list for high risk CBI/RBI schemes. While the use of the word “blacklist” may be inappropriate or frowned upon, the list is not a positive, complimentary or favorable one.
As part of the OECD guidance, financial institutions are being asked to consider the results of the OECD’s CBI/RBI risk analysis and whether an accountholder has residence in a jurisdiction offering a potentially high-risk CBI/RBI scheme. This equates potentially to additional scrutiny and enhanced due diligence on legitimate economic permanent residents of The Bahamas.
We note that since the release of the guidance, the OECD has issued a statement in which it was asserted that Monaco’s residence and immigration requirements do not pose risks to the integrity of the CRS. This followed the provision of additional information by Monaco and it is expected that the guidance/list will be updated to reflect this.
The Government has an obligation to ensure that the OECD is made aware of the robust and rigorous process in place for the granting and maintenance of economic permanent residence by individuals. This includes a comprehensive due diligence and vetting process to ensure the fitness and propriety of all applicants.
The economic permanent resident programme and second home market are well regulated and pivotal to our economy. It impacts the real estate, financial services, tourism and government sectors with contributions to our nation’s Gross Domestic Product.
We need effective representation and diplomatic collaboration to address this latest attack on our nation’s economy. It is simply unfair and unacceptable for the OECD to place The Bahamas on any adverse list despite our demonstrated commitment to meeting our international obligations.