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Nigerian govt takes ownership of funds held in bank accounts not linked to BVNs – PREMIUM TIMES

 
The remaining three are: Unity, Bank Wema Bank and Zenith Bank.
The court also ordered all of them to disclose any investments made with funds and to withhold authorisation for any outward inflow of funds from the accounts. All the details are to be submitted to Nigeria Inter-Bank Settlement System, NIBSS, and the CBN for authentication.
The banks were also directed to publish all bank accounts not linked to BVN in national newspapers with a 14-day notice for individuals with interest in such accounts to come forward and justify why their funds should not be forfeited to the Nigerian government.
Mr. Dimgba also ordered the CBN, which was joined as 20th respondent alongside the 19 DMBs, to appoint an official who will examine all the details submitted to the apex bank for compliance.
The government argued the matter under Section 3 of the Money Laundering Act, 2011.
The section said banks must “ensure that documents, data or information collected under the customer due diligence process is kept up-to-date and relevant by undertaking reviews of existing records, particularly for higher risk categories of customers or business relationships.”
The BVN is a unique identification number that can be verified and used to transact business across all the banking platforms in Nigeria.
The CBN imposed the policy to capture customers’ data for financial transactions and check fraud in the banking system.
Registration for BVNs commenced on February 14, 2014, across the country. The CBN said over 20.8 million customers enrolled 40 million bank accounts before the October 31, 2015, final deadline for customers residing within the country.
The CBN extended the deadline for Nigerians in the diaspora to December 2016 to sign up for the BVN system. But hundreds of thousands home and abroad are still believed to be left behind.
 

 
 
“Illogical, hasty‘
A financial analyst who spoke with PREMIUM TIMES about the court order rebuked the Nigerian government for attempting to shore up its revenues by forcibly seizing funds owned by private individuals.
“There’s no basis for this desperate move by the federal government because customers who owned the funds met the required criteria at the time they set up their bank accounts,” said Ugodre Obi-Chukwu, a Lagos-based financial analyst. “This is an attempt to use federal might to coerce banks into submitting funds that belong to customers for its own use.”
The Nigerian government had fallen on hard times since 2014 when dwindling price of crude oil began to take its toll on the country’s revenues.
The Buhari administration, which assumed office in May 2015, has made concerted pushes to source funding to finance a bloated federal civil service and new capital projects, including borrowing from local and international markets.
The government also said it would rely on recovered loot to finance its budget this year.
While Mr. Obi-Chukwu recognised financial challenges confronting the administration, he maintained that no policy must be implemented by fiat in a democratic system.
“The Money Laundering Act they used to sway the judge is clearly not sufficient to confiscate personal funds,” he said. “There’s no law that allows for this specific action taken by the government as it stands.”
He advised the federal government to allow people to withdraw their funds from the bank accounts if they’re not willing to link them to BVN, especially since they weren’t identified as proceeds of crime.
Lawyers weigh in
Two legal practitioners interviewed by PREMIUM TIMES Saturday held slightly disparate views on the matter.
Liborous Oshoma, who runs a law firm in Lagos, condemned the order as “far-reaching and despotic” in nature.
“You can’t just drag banks to court and ask them to submit all funds in bank accounts which they’re holding in trust for private individuals,” Mr. Oshoma said.
 

 
 
“The funds are mostly personal deposits. In law, orders are supposed to be specific, directed and enforceable against individuals or institutions,” Mr. Oshoma said. “But we cannot see how the government assumed it could sue banks to enforce orders against individuals who have not been accused of any criminal offences.”
Mr. Oshoma said the Buhari administration did not fathom the possibilities of Nigerians who are serving long prison sentences abroad and may not be in tune with developments in the outside world.
“The despotic tendency of wanting to take what does not belong to them made them forget that people might be in conditions where they cannot come and claim their funds for the next 20 years or more,” Mr. Oshoma said.
“If the government is really desperate to get people’s money because they cannot be found, it should find sensible means of going about it and not resort to steps that are not in consonance with democracy,” he added.
Although he questioned the legal premise of the federal government’s attempt to seize the funds, Inibehe Effiong, also a Lagos-based lawyer, told PREMIUM TIMES the overarching goal of the move was understandable.
“The BVN is a policy of the federal government which is aimed at mitigating financial crimes in the system,” Mr. Effiong said. “The policy was backed by certain financial regulations which make it appropriate for the government to ask for a general freezing order of accounts whose owners cannot be ascertained.”
“But what I cannot understand is the legal structure upon which the policy is standing,” Mr. Effiong said.
Mr. Effiong said authorities should have sought details of bank accounts first, then examine them individually and isolate ones with suspicious traits.
“The government should have stopped at requesting for details of all the bank accounts. but not go as far as getting a blanket approval to withhold all funds.
“If they all the accounts based on their merits, they can sort out the ones with criminal traces and seek their forfeiture,” Mr. Effiong said.

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An African problem for electric car makers – BUSINESSDAY

An 85 KWh battery used by Tesla requires some 8 kilograms (17.6 pounds) of cobalt. Bloomberg Intelligence predicts that growth in EV sales at currently projected levels will drive up cobalt demand by 9,300 percent by 2040, and the car industry will require about three times the 2016 total mined production that year. Given that cobalt is also an important element in the production of industrial alloys, massive production growth will be required. At current production levels, cobalt reserves are expected to last for 57 years, compared with 400 years for lithium. Surely more reserves will be discovered, but it’s likely that production will remain dependent on one country — the Democratic Republic of the Congo, currently responsible, according to Bloomberg Intelligence, for about 54 percent of mined cobalt and some 49 percent reserves. It’s one of the world’s poorest nations currently run by a president who refused to cede power after his term ran out last year.
A large share of the country’s cobalt exports comes from “artisanal” mines — those dug by locals under the control of various strongmen. Child labor and harsh exploitation are rife, according to an Amnesty International report released last month. Much of the rest is mined by Chinese state companies, with the DRC government using its share of these projects’ profits to pay off loans issued by China. That creates tension: The government wants to extract more profit, and it’s trying to force the Chinese producers to refine more of the cobalt ore inside the country rather than export concentrate to China. In 2008, a supply squeeze driven in part by Congolese export restrictions drove the price of cobalt to its peak; the current price is 41 percent below it. Other companies may follow Tesla in pledging to ethically source their cobalt for new production, helping to eventually develop new sources, but that will take time.
 
In the meantime, this is a scary set of circumstances for the car industry. They’re doing their best to lock in supply. Earlier this year, Volkswagen reportedly benefited from a four-year deal whereby commodities trader and miner Glencore signed up to supply 20,000 metric tons of cobalt to Chinese battery producer Contemporary Amperex Technology. But in September, it made a more direct attempt to ensure its EV plans wouldn’t be thrown off by high cobalt prices or shortages of the metal. Its tender for five-year supplies at a price below the current spot one expired without drawing any interest.

Making electric vehicles profitable is a challenge. The uncertainty of raw materials supplies — an understatement when progress depends on an unstable African country and Chinese state firms — makes it even harder. Technological alternatives that reduce the dependence are necessary, and battery makers are looking at using less cobalt and more nickel in cathodes. Samsung has said it expects cobalt use in batteries to go down eventually to about half of the current level. Meanwhile, recycling can help increase cobalt supply, especially if the current energy-intensive process can be improved. But there’s no technology on the commercial horizon that could completely cut cobalt out without compromising on battery performance.
Perhaps the natural constraints will be useful in toning down the EV exuberance — something both regulators and the industry need to allow more time for research and development. Other solutions, such as hybrid cars with smaller batteries and fuel cell vehicles, don’t deserve to be killed off by a surge in battery-powered vehicle production just yet. For the EV revolution to benefit consumers, battery tech must make a lot of progress both in reducing its reliance on small, capricious raw materials markets and in consumer qualities such as range and charge speed.
By Leonid Bershidsky

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Big Oil Set for Bumper Profits Despite Cheap Crude – WSJ

Baker Hughes, which General Electric Co. bought in July, said its losses narrowed 17% in the third quarter to $122 million, from $147 million in losses in the previous quarter, as it works to merge the oil-field services businesses of the two companies.
Lorenzo Simonelli, CEO of the newly combined company, agreed with his counterpart at Schlumberger, saying he saw a “deceleration” in U.S. drilling activity in the last quarter.
—Bradley Olson contributed to this article.
Write to Christopher M. Matthews at christopher.matthews@wsj.com

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Kazakhstan plans to launch its own cryptocurrency – CNBC

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Here’s how bond markets could react to the ECB next week – CNBC

Its findings, claimed to be broadly consistent with that of Reuters, suggested that the most market neutral scenarios are either an additional 20 billion euros for 12 months, 30 billion euros for nine months or 40 billion euros for six months.
Citi analysis predicted any larger, and therefore “super-dovish,” extension could drive 10yr Bund yields back down by 25 basis points to around 0.20 percent. This would be close to the year-to-date lows.
Conversely, Citi claimed that any limited, and therefore “super-hawkish,” extension could push 10yr Bund yields back up by close to 25 basis points to 0.70 percent. This level has not been seen since 2015.
Citi concluded that the neutral level of quantitative easing (QE) that the ECB could introduce while maintaining market calm was around 250 billion euros. Despite the findings, the research team at Citi believes the central bank will extend by a total of just 150 billion euros and will not specify a monthly purchase rate.
This would lead to a near term sell-off of 10-year bunds corresponding to a 15 to 20 basis point rise in the yield on the sovereign paper.
The bank added that the size of the purchases would provide a signal to investors on whether QE is most likely to come to a hard-stop or be open to continuation.
“For example, 20 billion euros per month would imply that QE could immediately end once the extension is complete. In contrast, 40 billion euros per month is far more likely to require a further taper,” read the note.
Draghi’s press conference, which will immediately follow the ECB governing council meeting on October 26, will screen live on CNBC International.

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There’s a change coming in Brussels — and it could be crucial for the euro zone – CNBC

Behind closed doors some names have started to emerge with the incumbents set to step down at the end of the year. The roles up for grabs will be the president of the Eurogroup (which brings together the finance ministers of the 19 countries that share the euro) and the president of the Euro Working Group (a less-known position, which decides the agenda of the Eurogroup).
Why do we care?
Both positions are key for the stability and future of the euro zone (the monetary bloc of 19 nations), and will oversee new rules that could be applied to European banks and could affect how Greece’s debt is restructured.
Furthermore, they will influence who will take the presidency and vice-presidency of the European Central Bank (ECB). In Europe, there’s always a “battle” of nationalities between member states when deciding which seat goes to whom.
The Eurogroup and Euro Working Group are “spiders in the web and often mediators between different countries and different interests,” Carsten Brzeski, chief euro zone economist at ING, told CNBC via email.
Who will replace Dijsselbloem?

Emmanuel Dunand | AFP | Getty Images
Eurogroup President and Dutch Finance Minister Jeroen Dijsselbloem
Jeroen Dijsselbloem is the current chief of the Eurogroup and the decision on who will replace him is expected at the start of December.
The Dutch politician is leaving in January and one of the 19 sitting finance ministers will take his role. At the moment there are five names being mentioned the most: the Spanish Finance Minister Luis de Guindos, the Portuguese Finance Minister Mario Centeno, the Slovak Finance Minister Peter Kazimir, the French Finance Minister Bruno Le Maire and the Luxembourg Finance Minister Pierre Gramegna.
Luis de Guindos has previously run against Dijsselbloem in the last election for the presidency, but failed to get enough support from his colleagues. He is also often mentioned as one of the potential names to fulfill the vice-presidency of the ECB and therefore may shy away from the Eurogroup.
Mario Centeno didn’t rule out the Eurogroup presidency in an interview with CNBC back in May. In his favor is the fact that he’s from the Socialist Party in Portugal, because currently the majority of the big European positions are in the hands of the center-right and EU officials tend to strike a balance between nationalities and political affiliations when distributing European roles.
Peter Kazimir is also from the left but he is often viewed, just like Dijsselbloem, as a center-right man. He has been one of the most critical ministers of Greece’s bailout program, incentivizing structural reforms and tough economic measures. This could hurt his chances if indeed ministers look for a president from the “traditional” left.

Eurogroup president: Now a good time to make euro zone more solid  5:13 PM ET Fri, 13 Oct 2017 | 03:00
The same applies to France’s Le Maire. It’s not a secret that the French President Emmanuel Macron is keen on securing some key roles for France. The skills of Bruno Le Maire are indeed a plus, such as his fluency in German, but he is also perceived as a right-wing politician. He belonged to the Les Republicains party and is in charge of fulfilling deep reforms in France.
Socialist parties across Europe haven’t had great results in the past few elections and have struggled to get into government. Therefore there aren’t many options from the left that could take the Eurogroup presidency. In this case, Pierre Gramegna from Luxembourg could emerge as the winner. He belongs to one of the founding members of the European Union and is from a liberal party.
What about the Euro Working Group?
The group has been in the hands of an Austrian man, Thomas Weiser, who has been crucial to overcome many stones in the Greek bailout program.

There seem to be two countries potentially taking this role: France and Finland. However, this role requires moving to Brussels and the French representative doesn’t seem keen.
So what about the ECB?
It is still early to discuss the future of the ECB, given that the mandate for the current president comes to an end only in October 2019. Before that, Europe will have to choose the vice-president of the ECB – currently in the hands of Vitor Constancio. The Portuguese man will end his reign in May of next year.
“In the entire musical chair game of upcoming nominations for European top jobs, the vice-presidency at the ECB is important. It could be a counterweight to the president. It could also be a way to give a smaller euro zone country a top job,” Brzeski said.
Again, Spain’s de Guindos is seen as a potential candidate.
What’s known at the moment is that it’s not certain that Germany will get the presidency of the ECB, despite many media reports pointing towards Jens Weidmann, the governor of the German central bank, as the most likely name to take the most important seat at the ECB.
“For Germany, or at least for the German public, the ECB presidency is highly symbolic,” Brzeski said.
“Even though a German ECB president could be a bit too much of German dominance in Europe, Germany could use the ECB presidency as change for agreeing to a set of more controversial measures when it comes to further euro zone integration,” Brzeski added.
However, some argue that Germany will want to have someone from outside its country to put the blame on whenever the course of monetary policy doesn’t fit its interests.
BY  Silvia Amaro

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PASSPORTS FOR CASH: Citizens of anywhere – THE ECONOMIST

Jalal is an Iraqi telecoms executive with fluent English and a Harvard degree. His wife is a surgeon. Well-off by any standards, they have always loved to travel, and have a particular fondness for Lake Como in Italy. But their Iraqi citizenship has often caused them visa problems. So, a few years ago, Jalal (not his real name) and his wife applied to become nationals of a second country: Antigua. After ten months of form-filling and “due diligence” (background checks and the like), they ploughed several hundred thousand dollars into property and a development fund on the Caribbean island, and in return got passports which entitle them to visa-free travel to 130 countries, including most of Europe. They send the citizenship consultant who helped them become Iraqi-Antiguans a card whenever they are in Como, to show their continued gratitude.

Francesco Corallo went one better in the Caribbean, for very different reasons. An Italian businessman on an Interpol most-wanted list, he bought himself a diplomatic passport from Dominica and tried to claim diplomatic immunity on the grounds of being the island’s permanent representative to the UN Food and Agriculture Organisation. He is now in custody in St Maarten, a tiny Dutch territory in the Caribbean, facing extradition to Italy on charges of tax evasion and bribing politicians.

One a meritorious executive looking to overcome travel barriers erected with others in mind, the other a wanted man: both are customers of the passports-for-cash business. Providing citizenship or residence permits in return for a financial contribution generally gets a bad press for offering a perceived back door to criminals, but, like offshore finance, it spans a wide ethical spectrum. How much is black and how much white is anyone’s guess because data are patchy. Peter Vincent of Borderpol, a border agents’ association, estimates that perhaps 1% of the industry’s clients are human-rights violators, money-launderers or other fugitives from justice, and the other 99% mostly jet-setters or “doomsday preppers” (from countries that are politically unstable or threatened by climate change).

 

Christian Kälin, chairman of Henley & Partners, a consultancy, estimates that several thousand people spend a combined $2bn or more a year on adding a passport or residence permit to their collection. The largest sources of custom are China, Russia and the Middle East. Demand is rising fast, says Eric Major, who helped pioneer the industry while at HSBC, a bank. The number of clients from emerging markets whose net worth ranges from $1m-100m is growing at 15-20% a year, he reckons; for them, a few hundred thousand dollars is a bargain for the perks bestowed by an extra nationality. Instability is boosting demand: more South Africans are looking for second passports, for instance, because the number of visa-free destinations they enjoy with their own has shrunk under the prickly government of Jacob Zuma. So is terrorism: citizens of some rich countries (especially America) want a different passport when travelling or working overseas.

Supply has risen to meet this demand. Between 30 and 40 countries have active economic-citizenship or residence programmes, says Kälin, and another 60 have provisions for one in law. Some demand a straight cash donation, others investment in government bonds or the purchase of property. Some take a longer-term view of the potential economic benefits, offering passports to entrepreneurs who will set up a local company and create a minimum number of jobs. The required investment ranges from upwards of $10,000 (Thai residence, for instance) to more than $10m (fast-track residence in Britain). In some countries the original investment can be withdrawn after several years.

Caribbean nations are particularly accommodating. The islands’ colonial past means that they tend to have wide visa-free access; their small size means that rich countries haven’t felt the need to restrict their citizens’ access; their poverty means they need the cash. St Kitts and Nevis helped pioneer the business over a decade ago, after the removal of European subsidies clobbered its sugar industry. It has since sold more than 10,000 passports at $250,000 or more a time – a sweet earner for a pair of islands with 55,000 people and GDP of $1bn. Neighbouring Dominica pumps out passports at an estimated rate of around 2,000 a year for as little as $100,000 a time. Vince Henderson, Dominica’s UN ambassador, described the scheme as a “lifeline” after the island was hit by Tropical Storm Erika in 2015. In 2017, $148m of the country’s budget of $340m will be raised by the citizenship-by-investment programme. Antigua’s prime minister has said its passports-for-cash programme helped it avoid defaulting on its debt. Pacific islands are also touting for business in the hope of patching up weather-beaten public finances. Vanuatu even throws in goodies with its passports, including a free shell company and bank account.

The industry’s biggest leap forward was the entry into the game in recent years of European Union countries, notably Malta and Cyprus. Cyprus advertises “EU citizenship within a few months”, with all the perks, including Europe-wide health care, and with no requirement to live on the island or pass history or language-proficiency tests. The tax benefits are alluring, too. The price is fairly steep: €2m, to be invested in securities or property. The programme explains most of the Russian- and Chinese-owned villas popping up across the island.

Malta is cheaper: at least €650,000, with another €25,000 per spouse or child. But it is also more rigorous. The vetting process takes a year or more, and around a third of applications are said to be rejected. A single contribution can exceed what the average Maltese pays in income tax over a lifetime. The government has approved more than 1,400 applications. The programme limit (in theory) is 1,800.

Around half a dozen other countries are looking to get in on the act. Having failed to get a programme off the ground a few years ago, Montenegro – which could join the EU by 2022 – has just relaunched it. St Lucia recently joined the fray, offering a passport and visa-free travel in return for various investment opportunities. But the industry is troubled by its “optics”. Iranian sanctions-busters have been caught with St Kitts passports in their pockets; Jho Low, a suspect in the huge corruption scandal around 1MDB, a Malaysian fund, had one too, say American investigators. “Processing more than a few hundred a year in such small, resource-constrained countries is sure to result in slippage in terms of who you accept,” says a consultant familiar with the Dominica programme. The OECD has identified citizenship-for-sale schemes as a possible loophole in the fight against international tax evasion. Anti-corruption officials worry they may foster graft, particularly in micro-states, where oversight of officials running schemes is typically flimsy.

St Kitts is trying to regain credibility. Under international pressure, the government recalled thousands of passports and issued new, more detailed ones that made it harder to conceal the holder’s identity. That drastic action was prompted by Canada’s decision to rescind visa-free travel for Kittitians and Nevisians (it has since withdrawn the privilege from Antigua, too). Keen to show it is changing its ways, St Kitts hired an international risk-management firm to audit its programme.

Small-island schemes are not alone in attracting the wrong sort of headlines. Rich countries tend to offer residency instead of (or as a first step to) citizenship. The largest of those, America’s EB-5 programme, has a chequered history. It gives several thousand foreigners a year the right to live and work in the country if they invest $1m – or half as much in a “targeted” high-unemployment zone – and create at least ten jobs. Several projects have been exposed as frauds. The use of EB-5 by Jared Kushner, President Donald Trump’s son-in-law, to lure Chinese investors into his family’s development projects has also tainted the programme. Some senators want it scrapped. Congress is due to decide soon whether to extend it. Rich countries are keen to draw a sharp line between themselves and overt citizenship-sellers, but “the difference is increasingly one of degree”, says Jason Sharman, a professor of international relations at Cambridge University: since the global financial crisis, half of all OECD countries have started selling some sort of visa, residency or citizenship permit. In Britain, the more the investor shells out (up to a maximum of £10m), the faster the track.

In the middle of a late-afternoon interview in a suite next to the conference hall of the Grand Kempinski Hotel, Geneva, Christian Kälin stopped to order some bananas. Back-to-back meetings, he explained, meant he had had no time to eat. When in London, he spends much of the time at the same table in a dark corner of the restaurant at Claridges, a swanky hotel, hosting one client or contact after another.

As the passport industry has grown, it has gone upmarket. It used to be dominated by small firms hawking their wares through classified ads in business magazines or developers selling beach houses with residence rights attached. These days it is part of the business of serving “high net-worth individuals”. Providers range from international consultancies such as Henley, Kälin’s company, to banks with big private-wealth operations, including UBS as well as HSBC. Canadian banks are active too, having cut their teeth at home: Canada was an early seller of residence, inspired by a scheme in Quebec, popular with Asians and Iranians, that helped lift the province’s economy in the 1980s and 1990s.

More recent entrants include big accounting firms, such as KPMG and BDO, and law firms. Mischcon de Reya, a high-end London law firm, offers a suite of “VIP”-branded services, including “VIP Student”, and a “holistic service” for those looking actually to move with their new residence rights, “to ensure a seamless transition to the UK for you and your children”. This includes a concierge service for everything from buying school uniforms to decorating a new property.

Kälin cut his teeth selling residence in various Swiss cantons and Canada, along with a smattering of Austrian passports. His big break was persuading St Kitts to allow Henley to rewrite its citizenship laws and design and market its passport programme. Several struggling Caribbean economies followed – including Grenada as well as Antigua and Dominica. Henley picks up fees for advising both private clients on citizenship planning and governments on setting up their programmes. In some cases, it gets a cut of each successful application. (The firm does not disclose revenues.) “If you operate globally, you have to have more than one passport,” Kälin says, but declines to reveal how many passports he holds himself.

As it goes upmarket, the industry is rebranding and euphemising. In 2014 some of the big firms formed a trade association, the Investment Migration Council (IMC), which holds events and publishes weighty reports designed to increase credibility in the eyes of regulators and the media. It insists it is not in the “passports for sale” business, but in “CBI” (for “citizenship-by-investment”) or, even more legitimate-sounding, “investor migration”. Consultants talk of “facilitating global talent mobility”. Last year the IMC joined Transparency International, an anti-corruption group, to produce a critical report on Hungary’s residence-for-cash programme, whose benefits seem to have gone to intermediaries rather than the taxpayer. Kälin says the IMC is “about setting standards. It’s like oil: do we want to be Norway or Nigeria?” Critics say he uses the association to plug countries whose programmes Henley helped craft and bash those it didn’t. He denies this.

Some of the rebranding effort has gone into developing an intellectual justification for selling passports. Kälin argues that ideas about what forms the basis of citizenship have constantly evolved. To view it as being purely about ius soli (“right of the soil”, ie, for those born in the territory) or ius sanguinis (a blood link) is outdated. Kristin Surak, a migration specialist at the School of Oriental and African Studies, University of London, notes that the European Union Observatory on Democracy’s citizenship database lists 27 grounds for acquiring citizenship. Why shouldn’t ius pecuniae be among them? It has been in the past: German and Italian merchants who contributed to empire-building were granted British citizenship in the 18th century.    

The most energetic and eloquent proponent of this line of argument is Dimitry Kochenov, a constitutional-law expert at Groningen University who works closely with Kälin’s firm, for instance on a global quality-of-citizenship index. A tousle-haired Russian known for his quick wit, bow ties and garish trousers. Kochenov is a “rock star” of the citizenship-by-investment world, says Stéphanie Laulhé Shaelou, a fellow academic.

At a recent IMC conference in Geneva, Kochenov’s zeal was unmistakable as he chaired the opening session. “We are piercing tiny holes in the fences erected by nation states,” he proclaimed. “Our industry’s simple goal is to re-unite the world, and we should be proud to profit from it…We help people cross barriers and contribute to the societies of their choice.” He worries that populism and nationalism are raising those barriers. Brexit and Donald Trump’s ban on travellers from several Muslim-majority countries are the current bêtes noires of the passport-selling fraternity.

Kochenov did not go into the causes of the rise of nationalism, but some of them were sitting in the conference hall of the five-star Grand Kempinski, applauding his speech. Those expensively suited purveyors of passports to plutocrats embody – and encourage – the footloose globalism that has helped spark a nationalist backlash. In the eyes of many less fortunate souls, they enable the global elite to slide unimpeded between countries, moving on when things get tricky, taking what they can get and often giving nothing of themselves except money in return. The industry has to wrestle with the widely held view that citizenship is not purely transactional but has an important cultural and emotional component too. The idea that it can be bought sits uncomfortably with the belief that a sense of belonging matters. While people are keen on foreigners’ cash if it is likely to help the nation’s bills or fuel its economic growth, they feel uneasy about their government selling citizenship in the same way as they feel queasy about offering it to a foreign athlete with no connection to the country, solely to boost its medal count in the Olympics.

On this view, citizenship shouldn’t just be a passport: it should be a commitment as well, carrying not only rights but also responsibilities. The typical passport buyer is unlikely to settle, will care little about her new country’s politics and will have no interest in defending its values. Unless her new citizenship is American – the United States is particularly hot on extracting taxes from all its citizens – she may well pay her new nation no taxes. The normal means of acquiring citizenship acknowledges that there is a cultural component: naturalisation typically takes years and requires an applicant to establish a real connection to their new country. An industry whose main purpose is to allow people to skip those queues does not.

The citizenship brokers counter that hostility towards flogging passports is born of reflex nationalism; some people just can’t abide the concept of global citizenship. Buying a short cut to citizenship, they argue, is no different to splashing out for speedy boarding or a first-class bed on a plane – and more socially useful, since it shovels cash towards poor countries. Why shouldn’t a passport be just another commodity, if neither the government issuing it nor those already carrying it have no problem with that?

These complex sentiments about nationality are making themselves felt through tighter regulation. The European Commission says it will look more closely at passport-selling. It blessed the Maltese and Cypriot schemes, but with reservations. Malta won approval after promising to ensure applicants would be forced to establish a “genuine connection” with the island. But the definition is elastic. Kim Marsh, a former police investigator now with Exiger Diligence, a compliance firm, points to rising public scrutiny of how businesses deal with “politically exposed persons” and other rich but potentially disreputable clients. He predicts that citizenship consultancies will be forced over time to “become reporting agencies, as banks have with tax”.

Tighter regulation is hitting Chinese demand. Although China does not allow its citizens second passports – those who buy them have to be discreet, for instance by keeping their other passport in a safe-deposit box in Hong Kong – the Chinese are big buyers of most schemes. They snap up around 80% of America’s EB-5 permits. But there are signs demand is softening, says Larry Wang of Well Trend, one of the largest of China’s 1,000 or so legal immigration consultancies (there are perhaps ten times as many without licences). Rising living standards at home are part of the explanation, as are tighter currency controls.

Yet hostility to the industry is not necessarily improving outcomes for the countries involved. It may be reducing the benefits to the sellers. One reason for schemes involving investment rather than cash is that a straight sale “lays bare that it’s a naked transaction”, says Madeleine Sumption of the Migration Observatory at Oxford University. But a passport-for-cash deal is normally better for the country that is issuing the passports: unlike EB-5-style investments, the government can be sure the money is really there and that it won’t be withdrawn later.

For the industry, though, the prospects are good. Kochenov is encouraged by the spread in Europe, the Gulf and elsewhere of “inter-citizenship”, where citizenship of one country allows free movement across a larger bloc. A passport which gives access to that bloc is correspondingly more valuable: Malta’s status as an EU member state, for instance, enhances the appeal of citizenship. Kälin reckons that “we’re part of a wider trend in our favour.” He’s probably right. When there is trouble in the world, there will be demand for extra passports; where there is strain on government finances, there will be supply. Neither looks like drying up.

Which passport offers the best perks? Read our buyer’s guide

Matthew Valenciais special assignments editor for The Economist

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