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OECD toughens bank checks for participants of residence and citizenship-by-investment programmes
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OECD toughens bank checks for participants of residence and citizenship-by-investment programmes

On 20 November 2018, the OECD published a list of the countries whose residence or citizenship-by-investment programmes it regards as high-risk. The OECD recommends that banks more thoroughly check the clients who obtained citizenship or residence under these programmes and especially the documents verifying the investors’ physical presence in certain countries. This applies not only to new clients but also to those holding at least €1mn in bank accounts.

Which programmes are recognised as high-risk?

The OECD established two main criteria to identify high-risk investment programmes: the low-income tax on financial assets in the issuing country and the absence of investor residence requirements.


Residence or citizenship-by-investment programme regarded as high-risk by the OECD

Antigua and Barbuda

Antigua and Barbuda Citizenship by  Investment

Permanent Residence Certificate


Bahamas Economic Permanent Residency


Bahrain Residence by Investment


Special Entry and Residence Permit


Citizenship by Investment: Scheme for Naturalisation of Investors in Cyprus by Exception

Residence by Investment


Citizenship by Investment


Grenada Citizenship by Investment


Malaysia My Second Home Programme


Malta Individual Investor Programme

Malta Residence and Visa Programme


Residence Visa for Real Estate Owner


Reforestation Investor Permit

Economic Solvency Permit

Friendly Nations Permit

St. Kitts and Nevis

Citizenship by Investment

Residence by Investment

St. Lucia

Citizenship by Investment Saint Lucia


Type 1 Investor Visa

Turks and Caicos

Permanent Residence Certificate via Undertaking and Investment in a Home

Permanent Residence Certificate via Investment in a Designated Public Sector Project

Permanent Residence Certificate via Investment in a Home or Business

United Arab Emirates

UAE Residence by Investment


Development Support Programme

Self-Funded Visa

Land-Owner Visa

Investor Visa

What is driving the OECD initiative?

In 2016, the Multilateral Competent Authority Agreement (MCAA - an nternational treaty compelling banks, brokerages, investment bodies and insurance companies in signatory countries to provide local tax authorities with bank account information pertaining to non-residents) was signed. In turn, the local authorities pass on the obtained data to the tax authorities where the account holders are resident. The agreement has over 100 signatory countries: European states, Canada, island countries (the BVI, St. Kitts & Nevis, the Bahamas, etc.), in addition to several Asian nations (e.g., the UAE, and Saudi Arabia).

The OECD believes that residence-for-investment programmes can become a tax loophole. As reported by the organisation, the absence of tax residency control under residence and citizenship-by-investment programmes may lead to violations in reporting under the Common Reporting Standard (CRS).

What types of violations are concerned?

Residence and citizenship-by-investment programmes may be used to conceal the investor's actual tax residency. For instance, when the investor does not actually live in the country, but claims to be a tax resident there and provides the bank with the correspondent documentation: a resident's ID or passport obtained via the programme.

The OECD recommends that banks check the clients claiming to be tax residents of the high-risk jurisdictions specified. This includes clarifying residence or nationality grounds, requesting tax returns for the past few years and proof of the client's address.

Ekaterina Shabalina Ekaterina Shabalina Tranio lawyer

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