Citizenship by Investment: The ultimate insurance policy for the modern era

Opinion by Eric Major, CEO, Latitude Consultancy Limited

I've been in the investment migration market for nearly three decades, watching it grow from infancy to adolescence, with all the ups and downs that entails. The recent meeting in St Kitts in February was a significant milestone for the five Caribbean states offering citizenship by investment (CBI) programmes, namely Antigua & Barbuda, St Kitts & Nevis, Dominica, Grenada, and St Lucia. Delegates from these states, including their Prime Ministers, met with a delegation from the US government to discuss CBI, marking a historic moment in their relationship.

The most critical outcome of this meeting was the US's recognition of CBI programmes as a legitimate source of capital and a service that has significantly boosted the economies of these countries over the last two decades. CBI revenues are invaluable for funding infrastructural and development projects and building resilience against external shocks such as the climate emergency, financial crises, and conflict. It was accepted that dismantling these CBI programmes would severely compromise the prosperity of these countries. The US agreed to recognise these programmes in exchange for the five Caribbean states agreeing to six principles aimed at safeguarding the integrity of the programmes and protecting the financial system from illicit actors. While this meeting was a positive step forward, I wonder if the US Department of the Treasury is aware that Americans are now among the top patrons of these programmes. Since 1994, I have helped thousands of international private clients become residents or citizens of a new country, but I never expected to see the United States suddenly become a significant source country for CBI. The answer to why an American would want a second passport has become apparent over the last five years. Whether it’s a concern over taxes, recent Supreme Court rulings, Black Lives Matter, school mass shootings, or just a plain desire for a lifestyle change, affluent Americans are starting to look abroad and are discovering the benefits of a second passport. As I write this article, another school shooting in Tennessee has added to the alarmingly growing trend over the last couple of years.

A recent poll conducted by Gallup has revealed that Americans are increasingly pessimistic about the future quality of life of the next generation. Moreover, this pessimism is particularly pronounced among higher-income earners. Specifically, the poll found that individuals with annual household incomes under US$40,000 are more optimistic about the future, with 52 percent expressing positivity. In contrast, only around 40 percent of those in higher income groups share the same sentiment.

IT WASN'T RAINING WHEN NOAH BUILT THE ARK.” THE TIME TO CONSIDER A SECOND CITIZENSHIP MAY BE NOW BEFORE THE STORM HITS.

The pandemic significantly transformed the American mindset, prompting many to consider acquiring a second citizenship. At the peak of the COVID outbreak, travelling to large swathes of the world was off-limits for Americans, rendering their passport relatively powerless. Surprisingly, the tiny nation of Antigua & Barbuda boasted greater travel privileges during the pandemic than the United States, as it was not subject to the same restrictions.

For example, if you held Antigua & Barbuda citizenship during the pandemic, you were able to explore over 150 countries without a visa, whereas the US had access to only about 78. This predicament affected everyone, regardless of their social status, leaving many Americans unprepared for such a major inconvenience.

The pandemic has also highlighted that you don’t need to be in a skyscraper in Manhattan to earn a decent living and keep business moving forward. Thanks to digital technology, we have learned that changing our approach to work can enhance our productivity and help us achieve a better work-life balance. This has given rise to the "digital nomad" - someone who earns a living working online from different locations of their choice instead of in a fixed office. This has opened the eyes of many Americans who have realised that obtaining a second citizenship can offer greater flexibility in terms of travel, work, and lifestyle.

The pandemic also highlighted the advantages of having citizenship instead of just residency status. Some countries allowed only their citizens to return during the height of the outbreak. For instance, if you owned a property in St Lucia and wished to spend several months there during the pandemic, you could only do so if you were a citizen of the island. As a citizen, you have the state's protection, and they would have been obligated to allow you entry into the country. Most wealthy Americans with overseas properties hadn't anticipated this reality, and it emphasised the importance of having a second citizenship in one’s toolkit. It is fair to say that a second citizenship is the ultimate modern-day insurance policy: it's better to have it and not need it than to need it and not have it. Although there was some minor demand for alternative citizenship among Americans before the pandemic, it certainly wasn't as prevalent in the public consciousness as it is now.

The Caribbean - a great Plan B for Americans

The Caribbean has long attracted affluent Americans seeking a second home or residence with its warm climate, stunning beaches, and laid-back lifestyle. Furthermore, the Caribbean offers several financial incentives for investors, such as favourable tax laws, accessible property prices, and attractive rental yields.

Investing in a second citizenship in the Caribbean not only offers a tropical paradise but also the freedom to work and settle anywhere in the region. And thanks to the CARICOM regional organisation, which boasts 15 member states and five associate member states, obtaining citizenship through one of the five available CBIs additionally allows you to work and settle in the other member states.

As the world becomes increasingly complex and uncertain, it is no surprise that wealthy Americans are considering a Plan B. Whether they are worried about political instability and social unrest at home or simply seeking greater freedom and mobility, Americans are looking to improve their S.M.I.L.E., by enhancing their Safety, Mobility, Insurance Policy, Lifestyle, and Expanding their business and educational opportunities for their children abroad.

AS THE WORLD BECOMES INCREASINGLY COMPLEX AND UNCERTAIN, IT IS NO SURPRISE THAT WEALTHY AMERICANS ARE CONSIDERING A PLAN B.

Conclusion

As the world becomes more complex and uncertain, it is not surprising that Americans are exploring the idea of a good Plan B. Investing in a second citizenship in the Caribbean can provide investors with a unique opportunity to obtain an alternative passport, enabling visa-free travel to over 130 countries, access to attractive tax regimes as well as enjoying the unrivalled and relaxing Caribbean lifestyle.

The decision to invest in a second citizenship is a personal one that will depend on a variety of factors, including one’s financial situation, lifestyle goals, and risk tolerance. However, it is vital to explore all available options and to stay informed about the opportunities available in the ever-changing marketplace.

As Howard Ruff famously said, “It wasn't raining when Noah built the ark.” The time to consider a second citizenship may be now before the storm hits.