Frequently Used Terms in the Immigration Investment Industry

What is citizenship by investment? Wealth diversification? Discover the meanings behind some of the frequently used immigration investment industry terms.

From the outside looking in, the immigration investment industry can be complicated and overwhelming. You may have searched ‘what is citizenship by investment’ or wondered what due diligence means in the immigration sphere. Here we break down frequently used terms that you may have come across while researching global opportunities to expand your horizons.

What is Citizenship by Investment?

Different countries award citizenship in different ways. Some countries award citizenship by virtue of birth in that country, descent from a parent who is a citizen, or by naturalisation, for example through marriage to a citizen or through an extended period of residence in that country. Citizenship by investment programmes allow successful applicants to obtain citizenship by virtue of a significant investment in a country.

Many of the best-known citizenship by investment programmes are based in the Caribbean, with Dominica’s Citizenship by Investment Programme having been ranked number one in the CBI Index, a publication by the Financial Times’ Professional Wealth Management magazine, for four years running. The island offers eligible, well-vetted individuals the chance to gain Dominican citizenship in exchange for either a direct contribution to the Government or an investment in pre-approved real estate.

What is Residence by Investment?

In contrast to citizenship by investment programmes, which result in a successful applicant receiving citizenship of a country, residence by investment programmes allow successful applicants to receive residence in a country. That is, the right to live, and often to work, in a country. Residence by investment programmes, sometimes referred to as ‘Golden Visa’ programmes, grant residence rights in return for a substantial investment. However, unlike most citizenship by investment programmes, they generally require applicants to demonstrate a degree of physical presence in the country. As such, a person may lose their residence rights if they fail to fulfil these minimum physical presence requirements.

Many countries within the European Union offer popular residence by investment options, including Portugal, Spain, and Greece. Typically, residence by investment programmes offer several investment routes at different thresholds. Whether you are looking to invest in real estate, government bonds, new businesses, or private equity funds, there are plenty of options available for your budget.

Read also: The Difference Between Residency and Citizenship

What is Wealth Diversification?

Wealth Diversification is a management strategy that blends different investments in a single portfolio. The idea behind diversification is that a variety of investments will yield a higher return and reduce risk for investors.

Many high-net-worth individuals turn to citizenship by investment programmes as an alternative form of asset diversification. Global uncertainty is driving the desire among wealthy individuals to incorporate second citizenship as part of their portfolios.

Read also: Diversifying Your Portfolio with Citizenship by Investment

What is a Return on Investment?

Return on investment (ROI) or return on costs is a ratio between net income and investment. A high ROI means the investment gains compare favourably to its cost. As a performance measure, ROI is used to evaluate an investment’s efficiency or compare the efficiency of several different investments.

What is Due Diligence?

Fundamentally, due diligence is a broad term used to describe a sequence of investigative processes that identify and verify information about an individual. Due diligence forms the backbone of the Caribbean citizenship by investment programmes, whose due diligence procedures are multi-layered and involve a number of entities, including Authorised/Local Agents, the relevant Citizenship by Investment Unit, external, internationally-renowned due diligence firms, and inter-governmental entities.

Stringent due diligence is critical in order to verify, among other things, an investor’s identity, criminal background, source of funds, and reputation. The success of a particular country’s citizenship by investment programme is very much dependent upon the performance of thorough due diligence, as due diligence protects a country’s native citizens and international partners from illicit actors.

Read also: Due Diligence Tops the List in Maintaining CBI Integrity

What is the CBI Index?

The CBI Index is a rating system designed to measure the performance and appeal of global citizenship by investment programmes across a diverse range of indicators. The Financial Times’ Professional Wealth Management magazine publishes the index. Its purpose is to provide a rigorous and systematic mechanism for appraising programmes to facilitate the decision-making process for individuals considering them and bring value to the citizenship by investment industry.

The nine pillars of the index focus on specific programme feature, including freedom of movement, standard of living, minimum investment outlay, mandatory travel or residence, citizenship timeline, ease of processing, due diligence, family, and certainty of product.

What is a Citizen of the World?

Citizens of the world believe that one’s identity transcends geography or political borders. Citizens of the world feel that their responsibilities and rights are derived from membership in a broader group.

Read also: What Does it Mean to Be a Citizen of the World?

What is Dual Citizenship?

Multiple or dual citizenship is a legal status in which a person is regarded as a citizen of more than one country under the laws of those countries.

Individuals can be born with dual citizenship or may gain dual citizenship through naturalization or registration, including by investing in citizenship by investment programme.

CS Global Partners

We at CS Global Partners strongly believe in the right to be a citizen of the world. We offer advice to foreign investors seeking second citizenship or permanent residency, tailored specifically to their needs and those of their families.

Are you interested in obtaining a second citizenship? Send us an email at [email protected], and one of our citizenship experts will be in touch with you.

Read also: How to Start Your Citizenship by Investment Process