The Government was warned of due diligence risks in the €1.25 billion “golden visa” scheme for millionaire immigrants more than two years before the programme was abruptly shut in February.
The concerns were set out in a “confidential” November 2020 report by accountants EY for the Department of Justice, long before a surge in applications from China last year led officials to press for the suspension of the Immigrant Investor Programme.
When then minister for justice Simon Harris finally closed the scheme five months ago, the Cabinet was told it had become “extremely difficult” to carry out due diligence on the escalating number of applicants from one country.
The department quietly published the EY report online at the end of June, half a year after The Irish Times was refused Freedom of Information access to the document because it was then subject to government deliberation.
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EY warned that private due diligence providers “may come under pressure to provide favourable reports” on applicants and noted cost-cutting in the marketplace for such services. The accountants went on to say the managers of the Irish scheme had “reviewed the contents” of a UK intelligence and security report of July 2020 and findings it made about a “more robust approach to the approval process of such visas”.
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Options for dealing with due diligence risks included the department paying for such services “and incorporating the fees [into] administration fees” levied on applicants. “This would remove the direct relationship between the applicant as funder of the service and the service providers,” it stated.
The report also said certain EU member states had taken due diligence in-house. “This is under active review,” EY said.
The programme opened residency in the State to non-Europeans with “at least €2 million” in personal wealth. They were in return required to invest €1 million in an Irish business or to make a big philanthropic donation.
The scheme was introduced as a job creation measure in 2012 but came to be dominated by Chinese millionaires, 1,275 of whom sought Irish residency last year alone. Mr Harris closed the scheme with only one day’s notice in February.
In addition to the due diligence risks cited then, concern was also expressed about the suitability of wealthy people with “no significant links” to the State.
Publication of the EY report came to light only in correspondence from the Information Commissioner, whose office is examining an appeal from The Irish Times against the department’s refusal to grant access to many records on the scheme through Freedom of Information.
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Asked why the Government waited 26 months after receiving the document before deciding to shut the programme, the department said the EY report “did not recommend” closing the scheme.
“Instead, it made a number of recommendations concerning its governance, and noted the continuing benefits brought by the scheme,” the department said. “Since then the profile and scale of the applications has continued to evolve, as has the broader international context in which schemes of this type and the risks associated with them are assessed.
“In light of this, and has been said previously, it is important that we keep all programmes under review including any implications for wider public policy, such as the continuing appropriateness and suitability of this programme for cultural, social and economic use.”
The EY report said the provision of anti-money laundering checks was challenging. “We understand that [Immigration Service Delivery] have experienced some challenges in establishing appropriate controls to mitigate the risk of financial crime, partly due to the technically complex nature of the risk and barriers to information created by investors and funds originating in other jurisdictions,” the accountants said.
