For as relatively low as €100,000 a person can obtain a passport in the small country, a former member of the Soviet Union. Is this market becoming a cheap free-for-all? This publication investigates.

A few days ago this publication reported that Moldova, a former Soviet republic that sits between Romania and Ukraine, has joined the swelling ranks of countries adopting citizenship-by-investment programmes, aka "golden visas". For the relatively low price (in this field) of €100,000 ($112,919) a person can obtain a passport if he or she passes certain tests. The market for these passports is already controversial. Some policymakers have warned that they facilitate money laundering, now a hot issue in Europe and elsewhere.

Those criticisms have, however, drawn strong responses from groups such as the Investment Migration Council, a body representing practitioners in the space.

A firm in this sector is Henley & Partners and it has hailed Moldova's venture. This publication decided to question the firm about it and spoke to Dominic Volek, managing partner of the firm in Singapore and head of Southeast Asia.

As these schemes are marketed around the world, we are carrying this interview on the WealthBriefing family of newswires, including WealthBriefingAsia. For responses and comments, email tom.burroughes@wealthbriefing.com

The programme is open to individuals for €100,000. That is about a fifth of what the Malta scheme costs for example - are the benefits comparable? What would you say to critics of these schemes who might see this as selling citizenship - and access - on the cheap?
Every citizenship-by-investment programme is different, offering a variety of different benefits and appealing features. Some, like the Malta programme, are well-established, and appeal to investors as such. Others, like the newly launched Moldova citizenship-by-investment programme are appealing precisely because they offer investors a chance to tap into a dynamic emerging market.

Malta is a European Union member and therefore becoming a Maltese citizen will afford the investor the right to settle throughout the 28 EU member states as well as provide a passport with visa free or visa-on-arrival access to 183 countries – but this would require a capital outlay of approximately €1 million and processing time is more than 12 months.

Moldova on the other hand provides visa-free access to 122 destinations, including Russia, Turkey, and the countries in Europe’s Schengen Area; it allows for permanent residence in a uniquely positioned country at the crossroads of Europe, the Middle East, and Asia; and it allows citizenship to be transferred to future generations without restrictions. The most significant advantage offered by the programme, however, is its genuine affordability and accessibility, which makes it probably the most cost-efficient programme in the world to date starting at just €100,000 and having a processing time of only 90 days.

In response to the possible criticism you mention, I would note that such a view fails to take into account the fact that not only does a programme like MCBI offer a cost-efficient, transparent, and reliable option for individuals and their families, it also brings immense value to the host country, from significant direct foreign investment to the more intangible but equally enriching benefits that come with living in a diverse society.

What sort of due diligence tests around the probity, source of wealth, etc, are required of applicants entering this scheme?
In order to make sure that applicants have entirely clean personal backgrounds, the MCBI programme employs a four-tier due diligence system considered to be the most rigorous in the world. In addition to the usual personal documentation, such as passport copies and birth certificates, the applicant is required to supply a number of additional supporting documents, including a police certificate confirming that he or she has no criminal record. All the information provided is thoroughly vetted by specialised due diligence service providers, and the source of all funds is scrupulously verified.

Where does Henley & Partners expect most of the applicants for this scheme in Moldova to come from?
We expect that the programme will appeal to investors from a wide variety of regions and countries, including Southeast Asia, Africa, Pakistan, Lebanon, Jordan, Russia, and China. Having said that, the MCBI programme has only launched recently, so we are still waiting to see what kinds of patterns emerge in terms of where most interest comes from.

From the government's point of view, what would success for this programme look like in terms of volume of take-up, revenues, etc?
As I mentioned above, a programme like the MCBI brings extraordinary value to the host country. We already know that citizenship- and residence-by-investment programmes have been fundamental to restoring countries’ economic health following the European sovereign debt crisis and the global financial crisis. We see this already in Malta where the economy grew by 6.4 per cent last year with the expectation being that the government budget surplus for 2019 will amount to 1.3 per cent of GDP, of which 0.8 per cent will come from its citizenship-by-investment programme.

The Moldovan government can therefore look forward to similar benefits, with the country’s developing economy benefiting enormously from the boost in capital inflows that this new programme is going to generate.

What sort of fee structure does Henley operate in advising persons who apply: is it a percentage fee, a flat rate, or one based on hourly rates, etc?
Prior to beginning any process with a potential client, we first perform initial due diligence checks which include a worldwide check to ensure no high-level complications will affect the process or government opinion on the client’s application – this is done at no cost to the client. If the initial checks are favourable, we then proceed to formally onboard the client where we charge a fixed fee dependent on the number of applicants included in the application.