A few days ago, the Organisation for Economic Cooperation and Development (OECD) warned all financial institutions that many citizenship by investment (CBI) programmes that offer passports in exchange for large sums of money create the potential for misuse.
The powerful inter-governmental organisation said that banks and other financial service providers would in future be required to take the outcome of the OECD’s analysis of high-risk CBI and residency by investment schemes into account when performing their due diligence obligations.
Although the OECD recognised that CBI schemes in the Caribbean and elsewhere can be perfectly legitimate, it could not have been clearer. Such programmes, the Paris-based body said, have the potential to be abused to misrepresent an individual’s jurisdiction of tax residence, thereby enabling a low personal income tax rate on offshore financial assets.