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Citizenship by Investment (CBI): Why is this a risk factor for money laundering and what steps should be taken?

Galleries, auction houses and other Art Market Participants (AMPs) should be aware that HMRC now expects Citizenship by Investment (CB) related risk to be reflected in customer and geographical risk assessments for the conducting of due diligence. This is one addition among several in HMRC's refreshed AMP risk assessment (AMLG3100)—it sits alongside existing guidance on cash risk, unregistered AMPs, and other geographical risk factors, rather than replacing it.

This risk generally applies to AMPs who are regulated in other countries. Accordingly, a check for customers associated with a CBI country in which they were born in a different country is being applied to all ArtAML™ users regardless of your location.

What is Citizenship by Investment?

Citizenship by Investment programmes allow individuals to obtain citizenship through financial investment, often without the usual residency requirements involved in becoming a citizen. These programmes are sometimes referred to as "golden passport" schemes, and some allow citizenship to be passed to dependents.

There is nothing inherently suspicious about holding citizenship obtained through a legitimate CBI programme. However, HMRC has identified CBI as a potential money laundering risk because an additional passport can let a person present themselves under a different nationality—making it easier to obscure their original identity, and, in particular, to evade sanctions.

The Financial Action Task Force (FATF) and the Organisation for Economic Co-operation and Development (OECD) have also identified risks associated with the misuse of CBI programmes, including the potential to conceal identity or assets, increase cross-border mobility and make use of companies or intermediaries across multiple jurisdictions.

When does CBI become relevant for an AMP?

HMRC highlights the situation where a customer presents a passport issued by a country offering a CBI programme, but their place of birth is in a different jurisdiction.

HMRC provides a non-exhaustive list of countries associated with CBI schemes, including:

  • Antigua and Barbuda
  • Cyprus
  • Dominica
  • Grenada
  • Jordan
  • Malta
  • Montenegro
  • Saint Vincent and the Grenadines
  • St Kitts and Nevis
  • St Lucia
  • Turkey
  • United Arab Emirates
  • Vanuatu

Does a CBI passport automatically make a customer high risk?

No: holding a passport from a CBI jurisdiction does not, by itself, mean that a customer is suspicious or involved in money laundering. However, where the passport is issued by a CBI country and the customer's place of birth is in a different jurisdiction, HMRC expects the customer to be treated as higher risk, in order to meet AMPs' enhanced due diligence obligations under regulation 33(6)(viii) of the MLRs 2017.

Example: a customer may present a St Kitts and Nevis passport while their place of birth is recorded in another country. That mismatch does not automatically require the AMP to reject the customer, but HMRC expects it to be considered as part of the overall risk assessment—and, in particular, as a potential indicator of sanctions-evasion risk, not just identity concealment more generally.

What else should an AMP consider?

A CBI jurisdiction is only one part of a broader customer risk assessment. Where a CBI indicator is identified, the AMP should also weigh:

  • the customer's place of birth and residence;
  • any other nationalities held;
  • source of wealth and source of funds;
  • FATF status and sanctions exposure of relevant jurisdictions;
  • corruption, tax-evasion and organised-crime risk;
  • the use of intermediaries, companies or other complex structures; and
  • whether the transaction is consistent with what is known about the customer.

What should AMPs do now?

Check that CBI-related risk is reflected in your business-wide risk assessment, customer risk-rating methodology and CDD procedures. This is being introduced across the board in ArtAML™ CDD, business-wide AML Risk Assessments and Policies (incl. PCPs) and AML Training courses.

Staff carrying out onboarding should understand that a mismatch between the country issuing a customer's passport and their place of birth may require further consideration and, where appropriate, escalation—and should be alert to sanctions-evasion risk specifically, not only general identity concealment.

Important note: if the overall assessment identifies the customer or transaction as high risk, enhanced due diligence and enhanced ongoing monitoring will be required.

Conclusion: A prompt to look closer, not an automatic risk

A CBI passport is not, on its own, a finding of risk. Treat it as one factor among several, and make sure your risk assessment and CDD procedures are ready to reflect it.

If you’d like support reviewing your CDD process or AML policies against these changes, get in touch with our team.

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