A recent investigation led by the SEC, in collaboration with multiple international media partners, has unveiled the widespread abuse of citizenship by investment programs in the Caribbean, particularly in Dominica. The probe shed light on the intricate web of fraudulent schemes that allowed criminals to secure citizenship in exchange for substantial investments, tarnishing the reputation of these programs.
The investigation, titled “Dominica: Passports of the Caribbean”, exposed several alarming instances of abuse. Notably, it revealed that the Dominican authorities granted citizenship to multiple high-profile individuals, including sanctioned Russian oligarchs and a controversial crypto investor wanted in Singapore. The findings have sparked global concerns about the integrity and credibility of the citizenship acquisition process in the region.
One of the prime cases outlined in the investigation involved Danhong “Jean” Chen, an immigration lawyer from Atherton, California, who was indicted in 2018 for orchestrating a fraudulent scheme with her husband. The couple amassed over US$12 million by embezzling funds from foreign investors seeking US residency over nearly a decade. Chen’s escape from the US using a Dominican passport under an assumed name raised serious questions about the program’s oversight and due diligence protocols.
The Dominican citizenship by investment program, touted as the “fastest and most affordable” in the world, has been a lucrative venture for the Dominican government, generating significant revenue since its inception in 1993. However, the program’s lax scrutiny of applicants, as highlighted by the US State Department and the UK government, has drawn criticism from international authorities.
Dominica is not alone in offering citizenship by investment. At least four other Caribbean islands offer similar programs, as do several countries in Europe and the Middle East, including Turkey. But what sets Dominica apart is that it has long faced criticism from Western governments for its lax attitude towards ensuring that suspected criminals and politically exposed people don’t get passports from the country.
In a 2019 report, the US State Department called Dominica’s due diligence “lax” and stated that the country “does not always deny citizenship to those who are red flagged.” A follow-up report published in 2022 said that “Dominica sometimes issues passports despite adverse information uncovered during vetting”. The UK, which previously allowed visa-free access to Dominican citizens, introduced a visa requirement on July 19. In a statement, the UK’s home secretary Suella Braverman said that Dominica’s citizenship investment program had “shown clear and evident abuse of the scheme, including the granting of citizenship to individuals known to pose a risk to the UK”.
“[Dominica doesn’t] have any other resources besides tourism. So that’s why they do this”, says Reaz Jafri, a private client and tax attorney at law firm Withersworldwide who focuses on immigration. “They’re relatively inexpensive. People do it primarily to have a good travel document. The due diligence, with 10 being very rigorous…I think these Caribbean countries are maybe around 5 or 6”.
Despite the controversy, the program has been a massive revenue generator for the Dominican government since it was first established in 1993. Skerrit, who has served as prime minister since 2004, announced in 2020 that the country had raised US$1.2 billion from the program in the previous three years alone. In the 2021-22 financial year, the most recent year where full records are available, Dominica received 459 million East Caribbean dollars (US$170 million) from the citizenship by investment program—54% of total revenues.
And interest in the program is rising: according to London-based law firm Henley & Partners, which assists clients in getting residence and citizenship by investment, enquiries regarding Dominican citizenship by investment rose 729 percent in 2020, 131 percent in 2021 and 13 percent in 2022.
Even without access to the UK, Dominican citizenship provides a key benefit for nefarious individuals facing sanctions or seeking to flee their home countries: a “clean” travel document. Dominican passports allow visa-free, visa-on-arrival or electronic visa access to 132 countries, including China, the European Union and Singapore.
Several more controversial figures have used the scheme to get a second passport. One of them is Kyle Livingston Davies, the cofounder of former cryptocurrency hedge fund Three Arrows Capital, which filed for bankruptcy in July 2022. Davies received Dominican citizenship in 2009, three years before launching Three Arrows.
Despite the increasing scrutiny, interest in Dominican citizenship by investment has continued to surge, with a staggering rise in inquiries in recent years. The allure of visa-free access to numerous countries, including China, the European Union, and Singapore, has made the Dominican passport an attractive asset for individuals with dubious backgrounds and intentions.
The investigation also uncovered the case of Kyle Livingston Davies, a former cryptocurrency hedge fund co-founder, who obtained Dominican citizenship in 2009 and subsequently acquired passports from other countries. Davies’ recent legal entanglements in Singapore and his global travels have raised questions about the authenticity of his citizenship status.
With the number of naturalized Dominican citizens potentially outnumbering the island’s residents, concerns have escalated regarding the sustainability and accountability of the program. Limited restrictions on eligibility, coupled with the lack of transparency in the approval process, have amplified fears of exploitation and misuse.
In light of the investigation’s revelations, there have been growing calls for stricter regulations and enhanced due diligence procedures within the Caribbean’s citizenship by investment programs. The need for greater transparency and integrity in the vetting process is paramount to restore trust and ensure the credibility of these programs in the future.
