Economic Citizenship Programs: Second Passport Scams? (e.g. Recent Mexican Passport Scam)

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October 2015 – We have just posted a new article about Citizenship and Residency scams and frauds, you can check out the latest news here

Getting a second passport can set you free. But if not done right, it can also land you in hot water – as several clients of previous supposedly legitimate economic citizenship programs are finding to their costs. Peter Macfarlane reports.

Second passports are increasingly important as means of achieving freedom and privacy. The paradox of the world becoming at once more globalized and more mobile, yet at the same time more restricted, means that holding just one passport puts you at the mercy of just one government.

Our American cousins have it particularly bad, because US citizens are the only people who are subject to taxation on their worldwide income no matter where they live. While wealthy Russians and Chinese who wanted easier visa-free travel were in the past the main groups seeking second passports, today American tax exiles seeking to renounce American citizenship and escape the tax burden are the main consumers.

If you’ve read anything about second passports, you will have heard of low level scams offering citizenship from countries as diverse as Guyana, Surinam, Mexico, Monaco and Liechtenstein. These countries have no economic citizenship programs, and if you apply for one of these programs the best that can happen is you will lose your upfront deposit. The worst that can happen is that you will receive a doctored pdf file that is supposedly a ‘copy’ of your new second passport, requesting you to pay the outstanding balance – and if you do not pay up you will then be threatend with blackmail.

This article however is a little warning about potential problems at a much higher level – with supposedly legitimate economic citizenship programs.It is about high level corruption and reneging on deals by sovereign governments and well-connected law offices.

As a reminder, right now there are only two legitimate second citizenship programs in the world that allow you to qualify for a second passport by ‘investment’ (in other words, that allow you to buy a second passport.) Both are run by small Caribbean countries. Those are the Economic Citizenship Programs of St Kitts and Nevis and the Commonwealth of Dominica. In the past, however, there have been various other such second passport programs from countries including Seychelles, Belize and Grenada.

Now I’m not going to name names in this article. But the nature of our position here at Q Wealth, talking to numerous clients and contacts, is that certain confidential information tends to come our way. Recently, we have heard of several apparently unrelated incidents that anyone considering one of these paid-for second citizenship programs should unquestionably bear in mind.

  • A large sum of money simply disappeared from the escrow account of a law firm on St Kitts. This was money that clients had paid over as part of property purchases intended to qualify them for the economic citizenship program. The clients appear to be out of pocket.
  • We have heard from more than one person who was naturalized completely by-the-books in a particular economic citizenship program that was closed down around nine years ago, that they are having problems renewing their passports. One of our sources reports that: The gentleman in XXXXX said that unfortunately there is a “review of the passport process” for the citizens who obtained citizenship through the naturalization process and therefore he is unable to give any deadline. When pressed, he admitted that there are various applications on hold.
  • Then there are some serious and seemingly well founded allegations going through the US court system at the moment against another sovereign government of an island nation, that is known to be bankrupt and has been well-known in the past for second passport sales. The allegation is that they used spurious allegations of money laundering against innocent individuals to seize millions of dollars from offshore bank accounts within their jurisdictions, and they are now failing to follow the due process in their local court systems. Of course these allegations are not proven, but it would certainly take brass balls for a money launderer to show up in court in the USA and sue a foreign government, which is exactly what is happening here.

To repeat, the above is more hearsay than anything else and doesn’t necessarily reflect negatively on the governments that are offering second passport programs today. But it certainly doesn’t give us a warm fuzzy feeling about entrusting delicate matters (your passport could literally be a matter of life and death at some point) to small island governments who are desperately in need of money. And lawyers in these places who are entrusted with running passport schemes are, of course, usually golf, church and drinking buddies of the head honchos.

My advice has always been that economic citizenship programs should only be a last resort. They are high profile and most banks and border guards will immediately recognise that you have ‘bought’ your passport. They are expensive. And they are not particularly private.

A much better solution is to go for citizenship through naturalization in a country that does not sell passports. This way your second passport will be much lower profile, and will work out costing you a fraction of what the ecomomic citizenship programs charge. Several countries known to be relatively liberal in this regard are Uruguay, Paraguay and the Dominican Republic. Even Singapore.

The big downside of course is the time-frame. The quickest you can generally qualify through one of these residence programs is 3-5 years. But if you start now, that time will pass quickly. And in the meantime just having the residence can still bring you substantial tax, freedom and asset protection benefits. I won’t go into these here but you can read about in other articles on this site. Start by reading Joe B. Gonzalez’s excellent article on Second Passports by Residence and Naturalization.

As I said a little while ago, while protecting your assets don’t overlook the fact that you need to protect yourself and your family against circumstances like civil unrest or a lockdown of the borders. Why not make it a New Year’s Resoltion to start work on a second passport at the earliest opportunity?

Bearing in mind the recent Mexican Passport Scam, plus remember we offer free personal consultations by e-mail to our paid-up members on matters such as this. If you are not yet a member of Q Wealth, you can join now online.

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