Oligarchs’ favourite US visa might not last

Thanks in large part to the ongoing Covid-19 pandemic, "golden visas" and "golden passports"—visas and passports granted to wealthy foreign nationals in return for significant investments, regardless of the sources of their wealth—have exploded in popularity over the past year. The market is thriving, thanks to record numbers of applicants, significant spikes in inquiries, and increasingly affordable pricing (jurisdictions such as Latvia now sell these kinds of golden visas for as little as 60,000 euros, just over $70,000).

Accompanying the popularity has been growing awareness in how these kinds of programmes open doors to dirty money and illicit finance. Last summer's so-called Russia Report in the United Kingdom specifically singled out London's willingness to sell visas and residency to Russian oligarchs, overlooking their links with the Kremlin. Investigators in Malta discovered that the notorious offshore haven continued to shop European Union citizenship to a raft of wealthy Chinese and Saudi nationals, despite ongoing investigations into the program from Brussels. And in Cyprus, citizens gathered to publicly protest the island's willingness to sell citizenship to money launderers, transnational criminals, and oligarchs linked to post-Soviet dictators—a programme at the center of the so-called Cyprus Papers, which pulled back the curtain on the wealthy crooks and criminals racing to the country and into the EU.

But, amid all this scrutiny, one of the leading jurisdictions involved in selling residency and eventual citizenship has largely escaped notice: the United States.

For decades, Washington has feasted on funds gained via its own golden visa programme. Technically known as the EB-5 investment visa program, the scheme traces back to 1990. For $500,000 and the pledge to create a handful new jobs in the United States, foreign nationals can gain conditional residency, followed shortly thereafter by a path to American citizenship. Thirty years later, the programme remains largely the same—and recent efforts to raise the cost were struck down.

For boosters, the programme has been a nominal success, with tens of thousands of foreign nationals supposedly creating thousands of jobs while generating billions of dollars in foreign investment. The programme has also enjoyed high-profile backers, from Sen. Lindsey Graham to Jared Kushner, former US President Donald Trump's son-in-law, whose family traveled to China specifically to hawk the visas.

Yet if you scratch the surface, it's clear that the United States' programme is little different than the similar programmes suddenly facing backlash elsewhere (and the ones that countries like Canada have already axed outright). If anything, the relative affordability of the US programme—a far cry from similar programmes in the U.K. (costing some $2.6 million) or Australia (costing some $3.7 million)—makes the American programme a fantastic deal. After all, few passports, if any, can match the heft and the import of an American passport. Likewise, if you're an oligarch with an American passport, you're far less likely to end up on any sanctions list—and far less likely to face questions about the provenance of your own financing. And as the Real Deal highlighted in an analysis last year, potential investors can apply for American residency "without already being in the US"—a handy workaround for those who'd rather not deal with tighter immigration restrictions elsewhere.

But price isn't the only advantage to this American golden visa scheme. Decades after its inception, "almost nothing is known about the backgrounds of applicants for the EB-5 programme," the analyst Belinda Li wrote. "The only information made available to [American authorities] is provided by applicants themselves on their application forms." Thanks in large part to US immigration authorities being stretched thin, Washington has disregarded the increasing ranks of kleptocrats looking for entry into the United States—and finding the EB-5 programme open to whatever money they can provide, regardless of the source.

Moreover, these application documents—which total some 14 million pages, according to Li—remain "far from being fully digitised," as she noted. That is, not only do applicants present whatever details they'd like about the source of their financing, but they also do so knowing that there's no central database to make tracking such details easy for American immigration authorities monitoring the programme. For those on the lookout for dirty money flowing in via EB-5 visas, it's like trying to find a needle in a haystack—without even knowing which haystack to look in.

As such, it's no surprise that the United States' golden visa programme has already attracted the kinds of fraudsters and transnational money launderers saturating similar programmes elsewhere. One Chinese kleptocrat, Jianjun Qiao, gained American residency courtesy of the EB-5 programme—despite laundering funds via foreign banks and parking that laundered loot in American real estate. Other members of China's "100 Most Wanted List" have been connected to EB-5 schemes. One of the key figures linked to the sanctioned Ukrainian oligarch Ihor Kolomoisky's efforts to launder hundreds of millions of dollars across the American Midwest also oversaw EB-5-related investments—and ended up jailed for large-scale fraud.

TBS Illustration.

A recent study from Transparency International Russia uncovered just how easy it is for foreign nationals drenched in dirty money to access one of these American golden visas. Disguised as potential investors, members of the transparency organisation uncovered American lawyers and Russian intermediaries more than willing to help along the application process—despite clear signs that the wealth of the poseurs was of "illegitimate origin." A range of US lawyers—who have proved time and again to be the best friends a kleptocrat could ask for—detailed ways to disguise the wealth's origin, including creating contracts with relatives and providing work documents from friends.

The strategies have clearly proved successful; as the group uncovered, some 150 Russian nationals have successfully obtained EB-5 visas in just the past few years. But because the US government "does not publish the names of these investors, the Russian public can only guess who they are." And since all of the financial information is provided by the supposed investors themselves, the rest of us can only guess at the source of the funds as well.

Thankfully, renewed focus in Washington has created an opening for finally reforming, and potentially cutting entirely, America's golden visa programme. At the end of June, thanks to a quirk of congressional language, the EB-5 regional center programme—regional spokes of the EB-5 programme, where 95 percent of all EB-5 capital is raised and invested—expired. While the expiration is a major blow to the EB-5 programme, it remains unlikely to last in perpetuity. Indeed, the programme has come close to expiring before, but it has been reauthorised time and again with little change.

This time, though, may be different. The programme has long faced pressure for reform from Sens. Chuck Grassley and Patrick Leahy, who (correctly) view the programme as a wide avenue for fraud. The two senators recently proposed a bipartisan bill dubbed the EB-5 Reform and Integrity Act of 2021, which would establish new disclosure and anti-fraud requirements for regional centers, and would require the Department of Homeland Security to finally conduct regular audits of the programme itself. Despite opposition from Senate Majority Leader Chuck Schumer, the bill presents the strongest salvo out of the Senate against the programme yet.

And that salvo has been matched in the House, where members increasingly share similar concerns about fraud and kleptocracy. Democratic Rep. Tom Malinowski, co-chair of the new Congressional Caucus against Foreign Corruption and Kleptocracy, and Republican Rep. Adam Kinzinger recently proposed another bipartisan initiative, called the Golden Visa Accountability Act. The bill would direct the State Department to create a database of the identities of individuals who have been denied an EB-5 visa for corruption or human rights abuse. The United States would then encourage allies and other governments to share the identities of individuals who have been similarly denied golden visas elsewhere. The bill specifically goes after the problem of so-called golden visa shopping, where kleptocrats denied in one jurisdiction simply move to another in order to gain access to the West. "American citizenship should not be for sale," Malinowski said. "The EB-5 cash-for-citizenship programme is … too great a risk in this age of kleptocracy, where authoritarian cronies and oligarchs use their wealth to infiltrate and corrode democracy."

While the new bills present an unprecedented effort to tackle the United States' golden visa programme, Washington shouldn't stop there. Additional scrutiny, increased resourcing and transparency, and a commitment to (finally) digitising all documents related to the programme would take a sledgehammer to the ease with which kleptocrats access these visas. Likewise, in addition to increasing coordination and data-sharing about visa denials, the United States should begin denying visa-free travel to countries that continue offering wide-open golden passport programmes—and continue to pressure allies to do the same.

While these reforms may seem imposing at first, there's reason to think that they may actually have legs. Not only do they come while similar programmes elsewhere, including those mentioned above, show signs of potential reform, but they also come on the back of unprecedented momentum in Washington to finally address the dirty, kleptocratic funds flooding the United States. Congress, for instance, passed the country's strongest anti-money laundering reforms in a generation earlier this year, finally banning anonymous American shell companies. Nor has the momentum slowed since. The Biden administration recently elevated countering corruption to a "core United States national security interest," with Congress likewise declaring June Counter-Kleptocracy Month and launching bill upon bill upon bill to begin patching up the United States' listing counterkleptocracy regime. It's this momentum that EB-5 reform now joins, and builds upon. And it's a momentum that might finally be enough to get necessary reforms across the finish line—and end America's golden visa program before it washes more dirty money and more kleptocrats onto American shores.

Casey Michel is an investigative journalist and the author of the forthcoming book American Kleptocracy: How the US Created the World's Greatest Money Laundering Scheme in History.

Paul Massaro is the policy advisor for counter-kleptocracy at the Helsinki Commission. Views expressed here do not necessarily reflect those of the Helsinki Commission.

Disclaimer: This article first appeared on Foreign Policy, and is published by special syndication arrangement.