CS Global Partners Speaks to the CEO of St Kitts and Nevis’ CIU

CS Global Partners’ Beatrice Gatti spoke to Les Khan, the CEO of the St Kitts and Nevis Citizenship by Investment Unit, to discuss the Programme, the benefits it provides and its future direction taking consideration of this current crisis.

The St Kitts and Nevis Citizenship by Investment Programme is known as the industry’s ‘Platinum Standard.’ It is the oldest and most famous programme of its kind, and it allows foreigners to obtain a citizenship in return for a significant investment in St Kitts and Nevis.

The Programme has helped St Kitts and Nevis overcome significant challenges, including the closure of the sugar industry in 2005, the global economic recession of 2008, and the aftermath of hurricanes Irma, whilst providing a premium service to investors worldwide.

Today, the world faces a very different challenge: the COVID-19 epidemic. CS Global Partners’ Beatrice Gatti, the Head of Government Advisory Practice, spoke to Les Khan, the CEO of the St Kitts and Nevis Citizenship by Investment Unit, to discuss the Programme, the benefits it provides, and its future direction taking consideration of this current crisis.

Mr Khan has led the CBIU since August 2016 and is responsible for overseeing its day to day operations. He is also responsible for spearheading some of the industry’s due-diligence and processing developments.

BG: The St Kitts and Nevis Citizenship by Investment Programme is a citizenship programme for high net worth investors. Do you think investors will look at it differently in light of COVID-19 developments?

LK: Absolutely. From all feedback from agents and developers, both in the Middle East and China, the interest has already started to peak. It is now considered that a second citizenship is an insurance policy. It is something that people have recognized they need, and high net worth individuals, who did not have it before, especially from the Chinese market, are beginning to recognize that they should have this option.

We expect to see an uptake in applications coming out of China and feedback from agents in the Middle East indicate that applications have already started to increase for similar reasons.

BG: Who can apply to become a citizen of St Kitts and Nevis?

LK: Anyone who is over the age of 18, who qualifies under our strict due-diligence practices. They must be of good moral character. Their family members are included in the application and all dependents up to the age of 30 can apply.

Parents of the main applicants can apply as long as they are over the age of 55.

BG: Is there anyone who cannot apply under the Programme?

LK: Anyone who has a police record, has been detained and has spent time in jail would not qualify. Individuals who have been refused a visa from a country that we have visa-free access to, should not apply until they obtain a visa from that specific country.

A person will probably get rejected for reasons of credibility which can be a reputation risk to the country. Also, if they represent a security threat to the country and our international partners, they can be rejected.

BG: Why is due diligence so important to the Programme?

LK: Due diligence determines who can qualify. We have to remember that citizenship is not a right, it is a privilege. When we grant citizenship, we want to make sure that the applicants are of good moral character, good repute and can contribute to the country in the long term. We also want to make sure that the individuals cannot become a liability on the state, meaning that they have a sound financial background to ensure that they can sustain themselves. Most importantly, we have to remember that citizenship by investment is there to create a situation of foreign direct investment. We want to make sure that the individuals have the resources to invest in the country and ultimately give the country the benefits of the program.

BG: In practice, what checks are applicants subject to?

LK: The due diligence process starts when an agent is screening his/her applicants. They would run a background check on the individuals and ensure that whatever the individual is saying in the application is true. We recommend to all our agents and sub-agents that they follow the strict process and that they ask their clients to be as honest as possible. When the application leaves the agent, it goes to our service provider.

By law, the department cannot take an application from anyone other than a locally approved service provider who is regulated on the island, unlike the other islands where service providers are approved by the Unit. Here, the service provider is ultimately approved by our financial regulatory fund and then become a service provider. We mandated that they run a due diligence check and they submit it with the application. So that’s two levels there already.

When it comes to the Unit, the first thing we do is verify the documentation that we’ve been provided by the applicant to make sure that the information stated on the application form is equal to the hand copies of the documents that we have received. At that point, we acknowledge the file and send it to an international due diligence company. We have about six of these who specialise in certain regions and can do specific checks on the client. These due diligence companies will first look at open sources and share what’s in the media and any information they can get online. They then send that information to one of their sub-agents on the ground to where that client resides. That agent then discreetly confirms information that is put on the application form. For example, the local records, civil registries and any local media. They check employment and the individual’s financial situation. They amalgamate all this information and provide us with a due diligence report.

We also send the information to international law enforcement. There is an agency in the region that is responsible for coordinating all the data from various international partners: US, Canada, EU and the UK. They check the information against any databases that they have which entail criminal records, anti-money laundering and terrorist activity. We do not decide in our Unit until we get both pieces of due diligence.

When the information comes back, we then validate what was stated in the report with what was stated in the client’s applications and if there are any queries or anything that does not match, we do a query and ask the client to explain.

The process from international due diligence countries can take up to 20 to 30 days, but from international law enforcement, it could be anywhere from 30 to 60 days.

We are also working to introduce a bio-metrics process where all applicants will be required to go to the office of that agency and be fingerprinted and have various documents verified. The fingerprinting side of it will take a while to move into operation because international law enforcement does not have a central database yet. However, it offers us the ability to do identity verification, which is something that does not happen right now. I would speculate that by the middle of this year, we should have that up and running.

BG: Does this translate into an onerous process for busy high net worth individuals?

LK: I think once the HNWI has submitted all the documents required and has been honest in answering his questions, I don’t see a burden. The burden comes when there is information that comes up in the due diligence report that maybe the client did not disclose or maybe there is a lot of negative media on the individual. Then we decide on what’s legit and what’s not.

BG: Strong due diligence and efficient processing – are these the two elements that make St Kitts and Nevis the ‘Platinum Standard’ of the citizenship by investment industry?

LK: As the oldest in the industry, a year and a half ago, we were voted as the most innovative programme, and we continue to be innovated in how we do things.

The efficiency factor is very critical to our clients and we are the only Unit that offers a fast-track service. So HNWI who want their application to be expeditious, we can afford that facility at a higher price, but we have the mechanism to do negotiations with our due diligence providers. All our staff are tuned into what a fast-track application is. It gets priority from the minute it comes in through the door to when it’s final approval.

BG: What investments are available under St Kitts and Nevis Citizenship by Investment Programme, and what are the benefits of each?

LK: There are two categories: one is the Sustainable Growth Fund which is a non-refundable contribution for a single applicant for $150,000 USD. We are one of the only islands that have such a high threshold for single applicants. It’s usually $100,000 USD in other places. For a family of four, it’s about a $195,000 USD. This makes it attractive to families. We price to get the families.

If a family joins us, they can add dependents and when their children have children, they will become citizens and so on. It’s a really easy process thereafter.

The second option is a Real-Estate option that’s divided into two. One is the original threshold of $400,000 USD that you can resell in 5 years. The $400,000 USD goes to the developer and the government fee will then need to be added on to that, which is about $75,000 USD per family of four. The second option on the Real Estate is a shared option, which is a $200,000 USD option. In the second one, you hold your share for 7 years. The government fee is the same. One is for the title, for those who want to own property, the other one is an investment option with a rate of retail from the investment in the share.

BG: Let’s now turn to St Kitts and Nevis itself. The Citizenship by Investment Programme plays an important role in the country’s well-being. In what ways does it impact life on the two?

LK: It’s significant. If you look in the last year, we have all our main road resurfaced and made more robust to withstand the hurricanes. This all came from the CBI.

If you look at the second cruise ship here, some of the funding for that came from CBI.

There are some social programs of poverty alleviation and the roof replacement program, this is all a part of our Programme.

At the end of the day, the CBI Programme is not the be-all and end-all of St Kitts and Nevis’ economy and I don’t think it should ever be considered as such. It is intended to drive alternate strategies in the economy, tourism being one. This is why we have so much construction, buildings and hotels. I expect we have three of them in the last year or two. These are all the results of the CBI Programme.

BG: How do you think the Programme will support St Kitts and Nevis in light of the Coronavirus outbreak?

I think it will be most important during this period and the short term and thereafter because it will take a while for the world economy to come back to the same standard as it was. Tourism, cruise ship business, and airlines, that’s all going to take a while to pump up. So, St Kitts and Nevis’ CBI Programme could have a role to play.

BG: What are the next steps for someone wants citizenship of St Kitts and Nevis?

LK: I would recommend that the individual reaches out to one of our agents who are authorized by the Unit to process applications. I would direct you to our website and there is a list of international marketing agents if you don’t already have an agent, and those international marketing agents have access to our local service providers. Alternatively, you can look on our website for local service providers and contact them directly.

This interview has been edited and condensed for length and clarity.

To watch the full webinar, click here.