Late July this year, the Eur. Commission proposed legislative amendments to their AML/CFT frameworks.
The new changes are directed towards all EU member countries. If put into effect, investment migration practitioners will be categorized as “obliged entities.”
The proposal doesn’t stop there. It also includes amendments for an AML6 (6th Anti-Money Laundering Directive).
Obliged Entities – What’s Expected of Them?
If an investment migration firm or practitioner becomes an obliged entity, they’ll be required by law to setup systems that mitigate money laundering efforts.
Those systems (mainly internal controls, policies, procedures) include the following:
• Employee training and screening
• Compliance management
• Record keeping and reporting
• Customer due diligence
Each firm must appoint compliance departments (or officers) to check the procedures they have, where their internal systems will be tested by auditors.
Basically, each firm will be expected to follow similar reporting obligations and compliance rules as financial services and institutions.
But What Defines an Investment Migration Operator?
According to the European Commission, anyone representing third-country nationals trying to obtain an EU country membership counts as an operator.
The operator is required to act or interact with Member States authorities on behalf of the third-country nationals.
Their services can be intermediary, assisting in residency rights granted through any type of investment (whether it be property, capital transfer, bond investment, or investment in corporate entities).
However, what’s odd about the Commission’s definition is that it excludes CIPs.
Historically, the European Union has been averse to citizenship by investment programs. It sees them as easy access to EU member states, and thus doesn’t recognize migration operators who provide CIP services.
How is the IMC Reacting to the Proposal?
The Investment Migration Council welcomes the proposal. It welcomes the regulation of investment migration in the EU.
It also encourages the creation of strict standards for each party in the investment migration world. In fact, the IMC commends the new amendments as being similar to what is recommended in its second report.
The IMC has also proposed on multiple occasions to work with the EU, in addition to other organizations in the migration world.
However, the IMC seems disappointed with the extent of the regulations. It had been hoped that CIP practitioners would fall under the new amendments as well.
It seems that not regulating CIPs is disappointing since ignoring them also doesn’t solve the risks that they create.