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Times Caribbean Global Investigations Desk

Executive summary

A growing class of ultra-wealthy investors is pursuing a version of “sovereignty on demand”: second (or third) passports, quasi-autonomous enclaves, and bespoke legal regimes that promise insulation from geopolitical shocks, sanctions, taxation, and scrutiny. In practice, many of these arrangements concentrate in small, relatively poor states—where constrained public finances, weak oversight capacity, and the promise of quick capital inflows create openings that can be exploited. Global watchdogs now warn that, absent hard guardrails, these schemes risk laundering illicit capital, commodifying citizenship, and eroding national sovereignty.

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The toolbox of “portable sovereignty”

1) Golden passports / CBI (Citizenship by Investment).
Citizenship-by-investment programs (CIP/CBI) sell passports in exchange for investment or donations. The Financial Action Task Force and OECD have formally documented misuse risks: from identity obfuscation to money-laundering and sanctions evasion—pressing states to tighten due diligence.

2) Visa-waiver arbitrage & external pressure.
When due diligence fails, small states can face sweeping, economy-wide penalties. The EU fully revoked Vanuatu’s visa-free access (suspension from 2022, removal in December 2024) expressly because of security risks linked to its investor-citizenship schemes. That decision hammered program value overnight and is now a global case study in how one program’s laxity can boomerang against an entire nation.

3) From passports to “private cities.”
Beyond papers, a new frontier seeks territorial or regulatory carve-outs. Honduras’ ZEDE framework allowed privately governed zones with sweeping exemptions. The flagship project—Próspera on Roatán—markets a menu of imported legal codes and private arbitration. After a political turn, Honduras moved to dismantle ZEDEs; litigation exploded, including a multibillion-dollar claim, while the Supreme Court ruled the ZEDEs unconstitutional in September 2024. The tug-of-war over who governs—and for whom—has become a sovereignty stress test.

4) Diplomatic shortcuts & mass naturalisations gone wrong.
The Comoros “economic citizenship” saga shows how opaque deals can metastasize into state-scale scandal. Originally pitched as a development fix, the program devolved into alleged mass sales (including to sanctioned-risk actors) and grand corruption; a former president received a life sentence related to the scheme.

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What “marketized sovereignty” looks like on the ground

Commodifying citizenship
Europe’s crackdown turned Cyprus and Malta into cautionary tales. After Al Jazeera’s 2020 undercover probe exposed how Cyprus facilitators were ready to help a convicted “investor,” Nicosia killed its program within days. The EU then escalated action against Malta; in May 2025 the EU’s top court ruled Malta’s investor-citizenship scheme incompatible with EU law, ordering it shut. The message: EU citizenship is not for sale.

Arbitraging weak oversight
In small states, a single opaque program can distort whole economies. Migration Policy Institute’s global review documents how “golden passport” industries have courted influence and exploited regulatory gaps—until scandals force abrupt reversals that leave citizens with the bill.

Blunt-force externalities
Once a program triggers external sanctions (e.g., visa-waiver loss), downstream sectors—from tourism to higher education—feel the shock. Vanuatu’s EU decision underscores how an investor-citizenship policy can morph into a national mobility penalty.

Legal “lock-ins”
ZEDE-style charters can outlive the political coalitions that birth them. When governments try to unwind overly generous concessions, investors invoke treaty protections and arbitration, converting regulatory change into fiscal liabilities. Honduras’ ICSID fight with Próspera—intertwined with a move to quit ICSID—illustrates the costs of signing away jurisdiction.

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Why small, poorer states are targeted

• Fiscal stress & development desperation: Quick non-tax revenue is irresistible when debt is high and growth is thin. CBI inflows can be large relative to GDP, creating dependency and political capture risks. (FATF/OECD warnings.)
• Capacity asymmetry: Vetting oligarchs, crypto moguls, or sanctioned-adjacent applicants demands investigative resources most small administrations lack. External partners can cut visa access if standards slip. (EU–Vanuatu case.)
• Legal engineering: Private-city promoters arrive with world-class law firms and arbitration clauses, pre-writing regimes that bind future governments. (ZEDE/Próspera litigation.)
• Information asymmetry: Slick marketing touts FDI and jobs; costs—reputational, legal, geopolitical—arrive later and land on voters. (Cyprus, Malta, Comoros, Vanuatu outcomes.)

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Is the “movement” real? The demand side

The appetite among HNWIs for “Plan B” protections is not hypothetical. Industry data and enforcement trends point to persistent demand for alternative passports and residencies amid wars, sanctions, and tax policy shifts. That demand adapted when EU doors narrowed (e.g., pivot to Caribbean/Oceania or to residency-by-investment), which is precisely why watchdogs urge harmonized standards and interoperable checks.

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Caribbean inflection point: coordination or race to the bottom?

After UK/EU scrutiny and regional reputational risk, the five OECS CBI states signed a March 20, 2024 Memorandum of Agreement to lift minimum prices and tighten integrity measures, with $200,000 set as the baseline contribution. Implementation rolled through 2024–2025—an attempt to end destructive undercutting and raise standards. Whether this sticks will determine if the Caribbean becomes the model for clean, development-aligned CBI—or the next cautionary chapter.

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The playbook to protect sovereignty (and still raise capital)

1) Treat citizenship as constitutional, not commercial.
Codify in primary legislation that naturalization cannot be granted solely for payment, and that public-interest tests and independent vetting are mandatory and reviewable. The EU court’s line on Malta offers a clear legal philosophy: citizenship isn’t a commodity.

2) Regional due diligence clearinghouse.
Create a Caribbean-wide (or SIDS-wide) KYC/AML hub with pooled intelligence, adverse-media scanning, and beneficial-ownership look-through—funded by a fixed levy on each approved file. FATF/OECD have already mapped the risk typologies to build from.

3) End diplomatic-passport abuse.
Absolute bans on selling or informally allocating diplomatic status; publish a live register of all diplomatic passport holders and the grounds on which they were issued—learning from the Comoros debacle.

4) No sovereignty carve-outs without sunset & supremacy clauses.
Any special economic zone must: (a) affirm constitutional supremacy; (b) exclude justice, policing, immigration, natural resources, and environmental regulation from delegation; (c) cap arbitration exposure; (d) include five-year sunsets with parliamentary re-approval and full public impact audits. The ZEDE battles show why.

5) Publish the pipeline.
Every CBI/SEZ approval should have a public term sheet: who benefits, where the money goes, and what is delivered when. Migration reversals and visa-waiver losses thrive in opacity; transparency is the cheapest insurance policy.

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Bottom line

There is a global movement by very high-net-worth actors to buy resilience and regulatory shelter. When the offering is merely a quicker route to mobility or tax planning, strong states price and police it. When it drifts into commoditized citizenship, diplomatic fraud, or quasi-sovereign enclaves inside developing nations, the line between investment and influence-peddling blurs—and small states pay the heaviest price when the backlash comes. The pattern is now well-documented across continents: Cyprus to Malta, Comoros to Vanuatu, and ZEDE Honduras. The next chapter in the Caribbean and other SIDS will hinge on whether leaders choose coordination, transparency, and constitutional guardrails over short-term windfalls promised by globe-trotting “new sovereigns.”

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Sources & further reading

• FATF: Misuse of CBI/RBI Programmes; OECD: Misuse of Citizenship and Residency by Investment Programmes (2023).
• EU v. Malta (“golden passports”) — ECJ ruling & analysis (May 2025).
• Cyprus ends its program after undercover probe (Oct 2020).
• EU fully ends Vanuatu visa exemption over investor-citizenship risks (Dec 2024).
• Caribbean CBI Memorandum of Agreement (Mar 20, 2024) and subsequent harmonization.
• Honduras ZEDE/Próspera litigation and constitutional ruling (2024–2025).

*Got a lead, document, or whistleblower tip related to CBI or “private city” deals in the Caribbean? Our Investigations Desk treats sources with strict confidentiality.*