2022 year in review for RCBI industry

By Moustafa Daly

For better or worse, 2022 has been a pretty eventful year. As soon as the world economy started slowly recovering from the repercussions of the Covid-19 pandemic, Russia invaded Ukraine in February, bringing unprecedented consequences for the global economy and directly causing a global food crisis and an escalating energy crisis in Europe, and inadvertently causing more uncertainty in the world.

Many investors around the world work to overcome such adversities by seeking second residencies or passports that shield them and their families against uncertainties. This has led to unprecedented interest in the global residency-by-investment and citizenship-by-investment (RCBI) industry, which has reportedly been forecasted to continue growing to a staggering $100 billion figure in 2025, nearly five times more than its current size of $21.4 billion.

But 2022 wasn’t all smooth sailing for the booming industry, as governments around the world, particularly in the EU and U.S., have also moved to tighten restrictions against RCBI programs citing security and legal concerns, which may prove to be hurdles for the growth of the industry in the future.

As we bid 2022 farewell, we journey back across the year to bring you the biggest news, for better or worse, that happened in the RCBI industry this year.

European Parliament votes in favor of CBI program ban

In March 2022, lawmakers at the European Parliament shook the RCBI industry by an overwhelming majority voted to recommend phasing-out RCBI programs across the continent, or with countries that have visa-free access to the Schengen Area.

The vote was hot-off-the-heel of the Russian invasion of Ukraine which started in February 24, 2022, a few weeks prior to the vote, which is why the legislative report also called for suspension of all RCBI procedures with Russian individuals with immediate effect.

The proposal called for adopting stricter background checks for golden visa applicants, and steps to vet RCBI applicants in third countries. It also aimed at introducing processes and mechanisms that would allow EU countries to object to applicants’ residence via a golden visa scheme.

As per the established legal system, the EU Commission may approve or reject a proposal from the EU Parliament, and is not obliged to take account of the parliament’s stance. The vote, however, signifies growing anti RCBI sentiment with lawmakers in the EU, which may prove to bring further hurdles for the industry in the future.

EU Commission takes Malta to court over its Golden Visa

The Maltese golden visa has been around since 2014, generating more than $800 million in revenue between then and 2020, and growing to become a popular route for investors seeking residency and travel rights in Malta and across the Schengen Area. However, the program has also drawn criticism from the EU since Malta launched a new golden visa program in 2020. On Sept. 29, 2022, the EU Commission escalated the dispute by referring ‘Malta to the Court of Justice of the European Union for its investor citizenship scheme, also referred to as the ‘golden passports',’ read the commission’s statement on the matter.

The EU Commission is lamenting the program due to the lack of what they described as a ‘genuine link’ between visa applicants and Malta, making their access to the EU via a Maltese residency incompatible with the Treaty of European Union principle of ‘sincere cooperation.’ At the essence, the commission sees that the granting of an EU citizenship in exchange for a pre-determined amount as violation of this principle. 

It is yet to be seen whether Malta’s program will survive in its current form. But we’ll definitely be hearing more about this developing story in 2023.

Portuguese parliament votes against ending Golden Visa program

In 2012, the Portuguese Golden Visa program was launched to attract foreign investors to the country’s real estate and bolster job creation. A simple process and relatively low investment threshold quickly made it one of the continent’s most popular golden visa programs, successfully bringing in more than $6 billion in investment since 2012.

This success story seemed to be en route to a screeching halt when the Portuguese Communist Party brought forward a parliament proposal to end the program. On Nov. 22, 2022, the moment finally arrived, and Portuguese Parliament casted their votes against ending the program and including it in the country’s 2023 budget, meaning the program is set to survive for at least another year if not more. 

“The government doesn't want to end the program,” said Tiago Gali Macedo, managing partner at Gali Macedo & Associates, to Uglobal in November. “They just want to focus it on more productive investments like funds, companies, productive real estate, etc.”

Being Europe’s most popular program made this very good news for the industry, and it is anticipated by experts that the program is probably here to stay as long as the Socialist Party maintains its parliament majority. The next elections are going to take place in October 2026.

EU halts visa-waiver program with Vanuatu over security concerns

Vanuatu is an island nation in the South Pacific. In 2015, its citizens gained visa-free access to the EU for up to 90 days. With this advantage, the country’s residency-by-investment program, which costs $130,000 in passive investment, has become popular for those seeking easy access to the Schengen Area. One of the perceived advantages of the program is that the passport can be obtained by applicants entirely remotely, further increasing the popularity of the program and making its revenues a large source of Vanuatu’s total annual revenue.

However, this same advantage eventually proved fatal to the program, with 2022 witnessing rapid escalations from the EU Council against it following an expansion of the program by the Vanuatu government in April 2021. First came a partial suspension of access to the Schengen Area, effective since May 2021, restricting it to Vanuatu citizens who obtained their passports prior to 2015.

As Vanuatu was perceived by the EU to be failing in accommodating the bloc’s concerns, the Council of the European Union moved forward with a full suspension of the visa-waiver agreement, which will come in full effect in February 2023.

UAE expands visa options to stay competitive

The UAE is a thriving Persian Gulf economy. Initially oil-dependent, it grew to be a diverse economy and a global hub of commerce and finance. Particularly, the Emirates are attractive to wealthy individuals seeking privacy and luxurious real estate, as well as protection of assets and funds against global uncertainties. All of these factors make the UAE golden visa program popular for some investors. In the aftermath of the Russian invasion of Ukraine in 2022, the program got even more popular due to restrictions on the west to Russians’ access to RCBI programs. That pushed wealthy Russians to other markets like Turkey and the UAE, with many setting sail for Dubai on a golden visa which durations are determined upon the size of investment.

In 2022, the UAE decided to expand its visa offerings to remain competitive as it sees higher competition for talent and capital from Gulf Cooperation Council countries like Saudi Arabia and Qatar. The expansion to the golden visa, which took place in August 2022, made it possible for investors to apply for 10-year golden visas for a notably high figure of $2.72 million.

The expansion comes as the UAE claims a top global spot in the RCBI market, with over 150,000 individuals having secured the golden visa, quite a significant figure seeing that the program was only launched in 2019.

US to extend E-2 visa treaty to Portugal but adding eligibility restrictions

While the US doesn’t offer a direct citizenship-by-investment program, other global RCBI program rely on access to the US’ E-2 investor visa as they market their own programs. Many investors apply to RCBI programs in countries such as Turkey and Grenada in order to secure access to E-2 visas, granting them the right to live and work in the US for up to five years.

Then came the Amigo Act, which was recently approved by the US House of Representatives. The act potentially gives a further boost of popularity to the Portuguese Golden Visa as it grants Portuguese citizens access to E-2 visas. It wasn’t good news for other E-2 treaty nations, however, as it restricted access to E-2 visas to individuals who have taken up residence in those countries of nationality for at least 3 years prior to applying to the E-2 visa, eliminating much of the convenience investors seek by applying for those visas.

It remains to be seen the impact of the Amigo Act on interest in the RCBI programs of those countries. What experts predict, however, is that the act is well en-route to the Senate’s approval.

Turkey raises investment amount for its citizenship program

Turkey is one of the Middle East’s biggest economies. With a financial crisis that has rocked the Turkish Lira, the government has been focusing on bolstering foreign investments in the country, and one such route is through its RCBI programs.

With access to the US E-2 visa, and minimal restrictions on Russian applicants, the program witnessed an uptick in 2022 – driven primarily by the exodus of HNWI Russians seeking non-western residencies and citizenships. Capitalizing on such interest, the Turkish government has increased the amount of investment threshold for its RCBI programs to be set at $400,000 instead of $250,000 – set it on par with the Portuguese Golden Visa program. However, the Turkish one offers a direct and hassle-free path to citizenship.

"I do not think it will hurt the business since $400,000 is a reasonable amount for Turkish citizenship," said Turkish immigration attorney Burcin Barlas to Uglobal in April.

UK abruptly ends end Tier-1 investor visa

With no visa-free access to the Schengen Area, the UK investor visa was already expected to decline in popularity, but it was still a preferred option for many investors. Until February 2022, investors seeking a fast-track to the UK residency could do so by of investing at least £2m in the country, a program which has been around since 2008.

But in February, the program was surprisingly grounded to a halt. The move was mainly motivated by pressure on UK lawmakers to sever ties with Russia and keep Russian oligarchs in particular at bay. The UK investor visa was issued to 2,581 Russian investors between 2008 and 2020.

The decision impacted all potential applicants to the visa, Russian and otherwise.

“This leaves rather a gap in visa route options, because it was the only route that is a ‘pure’ investment route. It rather looks as though high net worth people who want to come to the UK and eventually acquire settlement may have to apply for entrepreneur visas and run a business in the UK, which is a rather different kettle of fish,” said Oliver Westmoreland, senior immigration adviser at Get UK Visa, to Uglobal in February.

This leaves potential investors interested in the UK with no option to get residency except by way of a passive investment.

“Settlement will now be conditional on applicants executing an investment strategy that can show genuine job creation and other tangible economic impacts, passively holding UK investments will no longer be enough to obtain settlement,” read the official statement by the UK Home Office on the matter.

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