Standardised Due Diligence to Improve Approval Rates

Published on 06 June, 2019

Citizenship by investment units and RCBI-firms across the globe each conduct due diligence on applicants, using their own procedures. Finally, one company aims to propagate a standardised, open-source, 8-step risk assessment framework to allow anyone to reliably identify the relative risk of taking on an applicant.

Civiquo’s proposed Risk Assessment Framework (RAF) would standardise due diligence of residence and citizenship by investment programs. This enables anyone – CIUs, service providers, researchers, or government entities – to systematically and objectively review applications. Hence, this can help improve approval rates among applicants, as well as weed out in advance those applicants that won’t qualify.

“Something as important as due diligence within the industry, should be shared, researched and improved upon. We feel that sharing the RAF as open source, kick-starts the process.” – the company’s CEO,
Yakof Agius says.

The standardised due diligence consists of eight categories of assessment:

  1. Intent, identification, and verification
  2. Political exposure, watch-lists, and sanctions
  3. Regulatory compliance and legal conduct
  4. Beneficial ownership and corporate affiliations
  5. Sources of funds and wealth
  6. Taxation
  7. Reputational risk
  8. Social structure and interaction

The risk assessor then identifies the applicant’s risk level for each category:

Level 1: Manageable, level 2: Requiring further investigation, level 3: Posing serious concerns.
If the assessor finds the client’s information fits a risk profile beyond level one in any category, the framework offers guidance on steps needed to mitigate the particular risk-factor; such as by contracting with a third-party provider to obtain further information.

“It is unclear which residence or citizenship by investment units make use of a risk assessment framework and, even if they did, not many of them share this information. Thus leaving service providers ‘guessing’ the risks and how best to approach mitigating those risks. Sharing this information makes it easier for everyone to align and work using the same guidelines, thus having better synergies,” Agius concludes.