19 Jul 2021
Thanks in large part to the ongoing COVID-19 pandemic, “golden visas” and “golden passports”—visas and passports granted to wealthy foreign nationals in return for significant investments, regardless of the sources of their wealth—have exploded in popularity over the past year. The market is thriving, thanks to record numbers of applicants, significant spikes in inquiries, and increasingly affordable pricing (jurisdictions such as Latvia now sell these kinds of golden visas for as little as 60,000 euros, just over $70,000).
Accompanying the popularity has been growing awareness in how these kinds of programs open doors to dirty money and illicit finance. Last summer’s so-called Russia Report in the United Kingdom specifically singled out London’s willingness to sell visas and residency to Russian oligarchs, overlooking their links with the Kremlin. Investigators in Malta discovered that the notorious offshore haven continued to shop European Union citizenship to a raft of wealthy Chinese and Saudi nationals, despite ongoing investigations into the program from Brussels. And in Cyprus, citizens gathered to publicly protest the island’s willingness to sell citizenship to money launderers, transnational criminals, and oligarchs linked to post-Soviet dictators—a program at the center of the so-called Cyprus Papers, which pulled back the curtain on the wealthy crooks and criminals racing to the country and into the EU.
But, amid all this scrutiny, one of the leading jurisdictions involved in selling residency and eventual citizenship has largely escaped notice: the United States.
For decades, Washington has feasted on funds gained via its own golden visa program. Technically known as the EB-5 investment visa program, the scheme traces back to 1990. For $500,000 and the pledge to create a handful new jobs in the United States, foreign nationals can gain conditional residency, followed shortly thereafter by a path to American citizenship. Thirty years later, the program remains largely the same—and recent efforts to raise the cost were struck down.
For boosters, the program has been a nominal success, with tens of thousands of foreign nationals supposedly creating thousands of jobs while generating billions of dollars in foreign investment. The program has also enjoyed high-profile backers, from Sen. Lindsey Graham to Jared Kushner, former U.S. President Donald Trump’s son-in-law, whose family traveled to China specifically to hawk the visas.
Yet if you scratch the surface, it’s clear that the United States’ program is little different than the similar programs suddenly facing backlash elsewhere (and the ones that countries like Canada have already axed outright). If anything, the relative affordability of the U.S. program—a far cry from similar programs in the U.K. (costing some $2.6 million) or Australia (costing some $3.7 million)—makes the American program a fantastic deal. After all, few passports, if any, can match the heft and the import of an American passport. Likewise, if you’re an oligarch with an American passport, you’re far less likely to end up on any sanctions list—and far less likely to face questions about the provenance of your own financing. And as the Real Deal highlighted in an analysis last year, potential investors can apply for American residency “without already being in the U.S.”—a handy workaround for those who’d rather not deal with tighter immigration restrictions elsewhere.
But price isn’t the only advantage to this American golden visa scheme. Decades after its inception, “almost nothing is known about the backgrounds of applicants for the EB-5 program,” the analyst Belinda Li wrote. “The only information made available to [American authorities] is provided by applicants themselves on their application forms.” Thanks in large part to U.S. immigration authorities being stretched thin, Washington has disregarded the increasing ranks of kleptocrats looking for entry into the United States—and finding the EB-5 program open to whatever money they can provide, regardless of the source.
Moreover, these application documents—which total some 14 million pages, according to Li—remain “far from being fully digitized,” as she noted. That is, not only do applicants present whatever details they’d like about the source of their financing, but they also do so knowing that there’s no central database to make tracking such details easy for American immigration authorities monitoring the program. For those on the lookout for dirty money flowing in via EB-5 visas, it’s like trying to find a needle in a haystack—without even knowing which haystack to look in.
As such, it’s no surprise that the United States’ golden visa program has already attracted the kinds of fraudsters and transnational money launderers saturating similar programs elsewhere. One Chinese kleptocrat, Jianjun Qiao, gained American residency courtesy of the EB-5 program—despite laundering funds via foreign banks and parking that laundered loot in American real estate. Other members of China’s “100 Most Wanted List” have been connected to EB-5 schemes. One of the key figures linked to the sanctioned Ukrainian oligarch Ihor Kolomoisky’s efforts to launder hundreds of millions of dollars across the American Midwest also oversaw EB-5-related investments—and ended up jailed for large-scale fraud.
A recent study from Transparency International Russia uncovered just how easy it is for foreign nationals drenched in dirty money to access one of these American golden visas. Disguised as potential investors, members of the transparency organization uncovered American lawyers and Russian intermediaries more than willing to help along the application process—despite clear signs that the wealth of the poseurs was of “illegitimate origin.” A range of U.S. lawyers—who have proved time and again to be the best friends a kleptocrat could ask for—detailed ways to disguise the wealth’s origin, including creating contracts with relatives and providing work documents from friends.
By Casey Michel and Paul Massaro, Foreign Policy, 16 July 2021
Read more at Foreign Policy
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