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Transcript

Behind the Scenes of CBI Screening: How Due Diligence Really Works · IMI Podcasts

• 0:00
  SPEAKER_00: The due diligence process in residence and citizenship by investment, referred to as RCBI programs, has undergone substantial transformation over the past two decades.
• 0:11
  SPEAKER_00: What began as basic document reviews has evolved into comprehensive multi-stage investigations involving both private firms and government agencies.
• 0:22
  SPEAKER_00: David Lesperance of Lesperance and Associates recalls the early days when some countries did a poor job in carrying out due diligence on applicants, noting how one Caribbean programs report listed Saudi Arabia, Riyadh, and Jeddah as separate countries.
• 1:10
  SPEAKER_00: When authorities later discovered several problematic individuals had secured residence status, he notes that critics pointed to the admittance of these scoundrels to kill the Tier 1 visa program, describing this as throwing the baby out with the bathwater.
• 1:26
  SPEAKER_00: Lesperance observes that governments now understand that letting in even a single bad apple is dangerous as it can result in not only a loss of reputation, but also loss of visa-free travel for all citizens.
• 1:41
  SPEAKER_00: Patrick Peters, CEO of Client Referrals, describes the process through a banking analogy.
• 1:47
  SPEAKER_00: Quote, due diligence can be performed by the private industry, but can never replace the background checks carried out by a government.
• 1:55
  SPEAKER_00: End quote.
• 1:57
  SPEAKER_00: Peters explains that, quote, migration firms are incentivized to onboard clients, not turn them away.
• 2:04
  SPEAKER_00: Therefore, any due diligence procedures they produce are inherently biased and should not be relied upon alone, end quote.
• 2:13
  SPEAKER_00: He argues that governments alone command the necessary resources and access, as, quote, private firms do not have the same resources that governments.
• 2:23
  SPEAKER_00: We do not have access to intelligence agencies, nor do we fully understand each government's geopolitical and regulatory commitments, end quote.
• 2:32
  SPEAKER_00: Peters details his firm's initial screening process, quote, collect and review identity documents, including copies of the passports, national ID cards, and birth certificates, review of the travel history, web-based and open source verifications of the individual and family members through the refinitive system, and through other social media and search engines.
• 2:55
  SPEAKER_00: End quote.
• 2:56
  SPEAKER_00: He adds that, quote, our partners around the globe get to know each applicant and their family and usually see where they live and work with their own eyes, end quote.
• 3:05
  SPEAKER_00: Peters claims that Caribbean CBI due diligence is the most comprehensive of the R CBI industry.
• 3:12
  SPEAKER_00: It's not even close.
• 3:13
  SPEAKER_00: Government-level investigations include collaboration with law enforcement agencies, interviews with applicants, and comprehensive background checks that specialized due diligence companies perform.
• 3:24
  SPEAKER_00: Lesperance has developed what he terms a bullshit meter over 35 years.
• 3:29
  SPEAKER_00: He identifies, quote, a classic dead giveaway is inquiries from people that claim to be ultra-high net worth individuals, yet do not know that KYC and AML screening is a part of all financial dealings, end quote.
• 3:46
  SPEAKER_00: However, he emphasizes that one would be foolish to believe that gut instinct and experience are enough.
• 3:53
  SPEAKER_00: He recommends checking with the referral source combined with commercial services like WorldCheck and open source internet searches.
• 4:02
  SPEAKER_00: He notes that governments occasionally turn up something that an advisor did not find.
• 4:08
  SPEAKER_00: Peters explains that governments require documentation showing applicants have earned their funds from legal commercial activities.
• 4:29
  SPEAKER_00: Peters strongly recommends that clients provide a complete and accurate set of documents and information from day one, noting that in his experience, the smoothest and fastest applicants spend extra time up front, gathering all the necessary documents, and it usually pays off.
• 4:47
  SPEAKER_00: He notes that Caribbean governments no longer take due diligence lightly and that applications take several months to complete, on average, due to comprehensive review processes that require a lot of resources and administrative work.
• 5:02
  SPEAKER_00: He also emphasizes document consistency, explaining that his team cross-checks documents such as bank statements, employment letters, and more, to ensure the figures match the declared income or assets.
• 5:15
  SPEAKER_00: Otherwise, the CIU is confused and can lead to frustration within the CIU's processing team.
• 5:22
  SPEAKER_00: Peters observes that when a completed application is presented nicely to the CIU, the reviewing officer will have an easier time navigating the application and actually want to pick up the file and move it to the next stage.
• 5:37
  SPEAKER_00: Lesperance frequently encounters disappointed applicants whose problems stem from either a lack of information on alternative solutions and or the undisclosed tax issues that accompany the status.
• 5:49
  SPEAKER_00: He notes that the higher the net worth, the greater the repercussions.
• 5:53
  SPEAKER_00: He explains that, quote, clients need to have explained to them the sometimes arcane reasons why certain documents are required, and must understand they are dealing with a different legal framework, for example, civil versus common law, and local bureaucratic customs, end quote.
• 6:13
  SPEAKER_00: Finally, he observes that disappointed applicants later come to understand that the free advice given was worth less than they paid for it and could not replace the design and execution of an integrated strategy.
• 6:27
  SPEAKER_00: This episode first appeared as an article by Ahmad Abbas on IMIDaily.com.
• 6:34
  SPEAKER_00: Subscribe for free to the IMI newsletter for breaking news and updates from the investment migration industry, and upgrade your membership to IMI Pro to get access to our exclusive professional community, citizenship catalog, investment migration company Rolodex, private briefings, and more members only content.