Indian black money entering Dominica

Sohail Choudhury

Dominica, an island country in the Caribbean has grabbed news headlines in recent years because of hundreds of foreign nationals ever-increasing interest in buying citizenship in exchange of just one hundred thousand dollars. But, selling of citizenship is not the only source of earnings for the politicians and officials in Dominica, they also are engaged into selling diplomatic passports and even appointing foreign nationals as Dominica’s envoys in a number of countries, where this tiny island even has no presence. Our team of investigative reporters are working on finding information centering corruption and numerous forms of crimes that have been taking place in Dominica. This episode is about how a section of Indian nationals is smuggling-out millions of dollars into Dominica by deceiving the eyes of the authorities and Central Bureau of Investigation.

For those having tons of black money, fleeing India has never been so easy. Specialized firms, with offices in London, Dubai and other financial centers, are in regular touch with many Indian wealth managers, tax practitioners, and lawyers — fishing for rich clients who are ready to surrender their Indian passports and take citizenship of countries like Dominica, St Lucia, Antigua, Grenada, St Kitts, Malta, or Cyprus.

For many well-heeled Indians, it’s an escape route to an easier tax regime and jurisdiction promising a friendlier business climate; but for some, it’s a secret plan to run away from Indian courts well before local enforcement authorities get a whiff of their handiwork.

Blitz investigative team of reporters has reached out to some of the leading firms which process and facilitate the programs that offer citizenship between 3 to 4 months for investment ranging between $100,000 and $2.4 million.

“Over 10% of our clients are Indian NRIs as well as Indian nationals residing in India. During the course of the past 4 years, we have witnessed a trend of over 40 percent increase in applicants coming from India… Our clients find us online or through word of mouth. Between July 2017 to February 2018 there has been a 65% increase in enquiries for an alternative citizenship from both NRI and Resident Indian nationals following a high-profile push by Prime Minister Narendra Modi’s administration to be more vigilant and effective on tax collections on individuals and corporates owned by either by resident or NRIs,” said Veronica Cotdemiey, CEO of the Dubai-headquartered Citizenship Invest, which over the 9 years since its inception has advised thousands to obtain new nationality.

But chances are such people can never be touched if news of their involvement in a fraud breaks long after their application for citizen has been accepted, investment in the new country has been cleared, and a new passport has been issued.

Arton Capital, which has advised 200 families from India in the past five years, has received higher inquiries since January 2017. This was possibly due to demonetization, said Leena Motwani, associate vice president at Arton in Dubai.

Many of the Indian nationals were drawn to the Caribbean islands — Commonwealth of Dominica and St Lucia — due to low application cost. These passports allow visa-free travel in 120 countries including the Schengen zone, UK, Singapore, Malaysia, Hong Kong and other relevant jurisdictions and the citizenship programs require single applicants to make a financial contribution of $100,000 to a government fund.

To improve their fragile finances, these tiny countries, such as Dominica — where a single applicant has to pay only $100,000 — have developed schemes where contribution to a government fund or a real estate investment can fetch citizenship in a few months. The currencies are pegged to the dollar and there is no tax on foreign income, capital gains, imports, gift, inheritance and wealth.

Many Indians are interested in Grenadian citizenship as it is the only Caribbean passport that allows visa-free entry to China, which is an advantage for Indians who have businesses in China. Grenada, which reopened the program in 2013, offers citizen for a non-refundable contribution of $200,000 to the National Transformation Fund (NTF).

India does not yet allow dual citizenship, but wealthy Indian nationals are looking for a ‘Plan B’ option that will provide them and their family with this `safety and security — and the most direct route is through residence-by-investment.

Since India does not allow dual citizenship, many prefer a permanent residency outside India rather than seeking citizenship of another country. According to the report by New World Wealth, 7,000 ultra-rich Indians shifted overseas in 2017. But Indians who want to stay beyond the reach of Indian law and regulations opt for a residency in Dubai and a passport from Dominica. “Surrendering an Indian passport is very easy. You can even do it from outside India. One has to simply tick a few boxes in a form and drop it in an Indian embassy office. A person, who is running away from the law would probably do that after he obtains a new passport from a country like Dominica. Since dual passports are not allowed, the Indian government has no choice but to cancel the existing Indian passport after 3 months. They do not have to inform any Indian authority before applying for the nationality of some other country.

There is a 90-day window during which the Indian passport is valid. This period can be used to travel to India, move the family, close bank accounts, transfer money, and take care of the assets. Unless a person is a criminal or a fugitive, there is no law that can hold him back from fleeing to the Caribbean shores. But then the intentions, whether moral or immoral, cannot be controlled by either the agents of those citizenship selling countries or the Indian government or even the immigration company which is just a facilitator.

Although hundreds of Indian nationals buying foreign citizenship and ultimately smuggling-out their wealth through illegal channels have already become a regular phenomenon, Indian authorities or its agencies such as the Central Bureau of Investigation are either in the dark or somehow unable to stop such activities.


Next episode: Dominica may gradually become a narco republic

Sohail Choudhury is the Executive Editor of Blitz

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