Malta’s residency, citizenship schemes ‘pose high-risk to integrity of Common Reporting Standard’

The Organisation for Economic and Social Development named and shamed 22 countries out of over 100 it studied that have either residency or citizenship programmes, for having lax rules that potentially pose high-risk to the integrity of Common Reporting Standard’.

Malta, which has long cited the OECD’s endorsement of its Individual Investor Programme citizenship scheme, was cited for its citizenship scheme as well as its Residence and Visa Programme.

The OECD said yesterday that, “While residence and citizenship by investment (RBI/CBI) schemes allow individuals to obtain citizenship or residence rights through local investments or against a flat fee for perfectly legitimate reasons, they can also be potentially misused to hide their assets offshore by escaping reporting under the OECD/G20 Common Reporting Standard (CRS).

“In particular, Identity Cards and other documentation obtained through CBI/RBI schemes can potentially be misused abuse to misrepresent an individual’s jurisdiction(s) of tax residence and to endanger the proper operation of the CRS due diligence procedures.”

Potentially high-risk schemes [such as that of Malta, which was just one of three EU member states named and shamed yesterday], the OECD said yesterday, “are those that give access to a low personal income tax rate on offshore financial assets and do not require an individual to spend a significant amount of time in the location offering the scheme”.

The OECD’s findings are bound to have ramifications, as the organisation points out, “Financial Institutions are required to take the outcome of the OECD’s analysis of high-risk CBI/RBI schemes into account when performing their CRS due diligence obligations.

The OECD said it has analysed over 100 CBI/RBI schemes offered by Common Reporting Standard – committed jurisdictions, and identified the following schemes that “potentially pose a high-risk to the integrity of CRS”:

Antigua and Barbuda

Bahamas

Bahrain

Barbados

Colombia

Cyprus

Dominica

Grenada

Malaysia

Malta

Mauritius

Monaco

Montserrat

Panama

Qatar

Saint Kitts and Nevis

Saint Lucia

Seychelles

Turks and Caicos Islands

United Arab Emirates

Vanuatu