‘Residency by Investment’ (RBI) Schema Demands Enhanced CRS Due Diligence on Individual Account Holder

Introduction
"Citizenship by Investment" (CBI) and "Residence by Investment" (RBI) schemes are being offered by a substantial number of jurisdictions and allow foreign individuals to obtain citizenship or temporary or permanent residence rights on the basis of local investments or against a flat fee.

RBI schemes might be used to circumvent the objectives of the Common Reporting Standard, in such cases where the individual account holder does not actually or not only reside in the jurisdiction providing the RBI Schema.

The OECD defined criteria by when a RBI Scheme should be treated as a potentially high-risk scheme, that can be exploited to circumvent CRS.

An RBI Scheme that gives taxpayers access to a personal income tax rate of

in the jurisdiction offering RBI schemes should be perceived as potentially high-risk. For more details please refer to OECD-CBI/RBI Scheme.

Panamanian RBI Schema perceived as potential high-risk schema

The OECD and Panama worked closely together to ensure that any potential risk created by Panama’s RBI programs are effectively addressed.

Residence documentation issued under the below listed programs should be perceived as potential high-risk schema in the context of the CRS due diligence procedures

Name of the RBI Scheme	Residency Documentation provide
Panama’s Reforestation Investor Permit	Panamanian ID cards with reference code “PRP-FOR”
Economic Solvency Permit Program	Panamanian ID cards with reference code “PRP-SEP”
Friendly Nations Permit	Panamanian ID cards with reference code “PRP-PA”

Impact on CRS Reporting Financial Institutions

CRS Reporting financial institutions should apply the enhanced CRS due diligence procedures in order to ensure that the documentation is not misused by account holders for the purpose of circumventing the CRS.

How Dion’s TRAC-CRS Solution can help

Dion’s TRAC-CRS Solution can be customised to support your CRS due diligence procedure by generating specific cases on account holders providing a tax residency in a jurisdiction offering high-risk RBI Schemes.

For more information about our FATCA, CRS Solutions, please write to us at connect@dionglobal.com.