Canada has consistently been ranked as one of the most desirable countries for immigrants to relocate over the years and it continues to attract the world’s wealthiest astute investors through their Immigrant Investor Programs (IIP’s). However, since the current Conservative government first came into power in 2006, and after winning their first majority government in 2011, the Minister of Immigration, Jason Kenney has pushed through a series of amendments to the Immigration law, which was seen by many as a ‘closing of the doors’ policy.
From launching stakeholder consultations on all immigration programs, and announcing new policies on human smugglers to revoking citizenship from those who cheated the system through false declarations on their residence or citizenship application, Minister Kenney has well and truly cracked the whip and not just theoretically. He has also promised punishments of up to five years in prison and/or penalty fines of $100,000 CAD. The federal and Quebec government have also doubled the financial requirements for their respective immigrant investor Programs. Raising the minimal required personal net worth of potential immigrant investors from 800,000 CAD to 1.6M CAD and the passive investment in government bonds without interest from 400,000 to 800,000 CAD.
On the 1st of July this year, the federal Ministry of Immigration, CIC, went a step further by announcing that the investor category would be capped to only 700 applications per year (in 2010 alone, Quebec and federal investor programs prior to these changes received about 15,000 applications). As expected, given the demand for this program, especially from Chinese nationals, the imposed cap was reached within just a few days of its implementation.
So where does that leave wealthy investors who want a second citizenship and residence for Canada? This now means that the only available program for investors is the Quebec IIP and most experts warn that this door will not stay open for too much longer either.
INVESTORS REALITY
The reality is that Canada is still adapting to the unprecedented worldwide movement of people and their capital over the past century. Since the creation of the immigrant investors Program (IIP’s) by the Province of Quebec in 1984, world wide figures of international migrants doubled to more then 200 million people and experts predict that this number will also double in the next 15 years. It must be noted that a small number of that migrant population, less then 0.05%, are considered high net worth investors, but the drivers of this hyper-mobility are the same regardless of class: it’s the inter-country inequality in terms of political stability, economical growth, better quality of life, more opportunities for job or entrepreneurs, better medial and education systems that make Canada the most desirable country to live and work in.
Global citizen speaks with Armand Arton; a leading financial advisor who specializes in immigrant investor Programs for Arton Capital, where he is founder and CEO to evaluate the latest amendments to the Canadian immigration law.
As a financial entrepreneur and leader in his industry, Arton exemplifies the true meaning of a Global citizen. Born in Bulgaria, with an Armenian background he was raised in Morocco and France before he continued his education in Canada, where his family immigrated in the early 90s. His entrepreneurial spirit made him one of the founders of the first mutual fund, managed by students in HEC University and at just 19, he became one of the youngest investment advisors in BMO Nesbitt Burns-one of the most prestigious financial firms in Canada.
Arton’s reputation as a successful lobbyist with the government and experience in helping thousands of ultra high net worth immigrant investors, as well as being a fellow of the Canadian Securities Institute prompted other countries to seek Arton’s advice on how to create similar programs to attract the wealthiest families from around the world to invest in their countries. This subsequently became one of the leading products of the firm, Sovereign Investor Platform: advisory Services for Government agencies, which few countries were using to refine their immigration policies.
What makes Canada such a sought after destination for the wealthiest people around the world looking for second residence and citizenship?
Over the years Canada has been ranked as one of the best places to live in terms of quality of life, safety, excellent and affordable education and medical systems and other parameters calculated by the Un ranking. However in light of the current global financial crises, what attracted the most investors is the growing economy, booming real estate and natural resources exploration, strong Canadian dollar and stable banking and financial systems, which today is considered as one of the safest in the G7 countries. The quality and reputation of the Canadian passport, is also the key reason for many to choose the immigrant investors Program. However over the last years, the government has tightened the rules and requirement to obtain the passport and it will become only more difficult in the years ahead.
What message is the government trying to send by implementing the quota of 700 applicants in the investor category?
Canadian immigration is currently at a crossroads and the initiatives of Minister Kenney to have a nationwide consultation to revise the current system to select our immigrants, and to crack down on fraudulent consultants and criminal applicants is a golden opportunity for the country to further open its door to those who would like to make Canada a leader of the 21st century. Canada needs to change its filter system, if it wants to attract the “crème de la crème” of the smartest and wealthiest people around the world.
We are presently in consultation with the authorities as their financial partners about the future of the investor and entrepreneur Programs and the amendments that are needed in order to stay competitive on an international level.
However, we have to show due diligence with the increased number of applicants from the Mena region following the recent uprisings. Considering the UN sanctions against a large list of individuals and companies from that region, we are increasing the background verification and source of funds audit for each client from that region.
What other options are available for wealthy investors who wish to settle in Canada?
Investors should keep in mind that Quebec, as a Province have their own investor Program and the Ministry of Immigration of Quebec (MICC) has not yet indicated whether they will impose a similar quota. Quebec is still open for business and many consultants, lawyers and other partners of ours are advising their clients to apply as soon as possible for the Quebec IIP before they close up as well.
As a result of being in constant communication with different government agencies, we believe that if a very large number of applicants apply for the QCIIP, it’s likely this will too be capped before the end of the year. There are no other valid and transparent ways to apply as passive investors today and our job is to make sure that only the best applicants, with the necessary supporting documents are submitted to the authorities.
Can you describe briefly the pros and cons of the Quebec Investor Program vs. other countries’ programs such as the US and Bulgaria (EU)?
The long history and proven reputation and track record of the program attract many families. The efficiency of the collaboration between governmental agencies and the existence of Private Public Partnerships with financial intermediaries like ours, make the process very efficient and fast. The selection process today takes between 3 and 6 months to be selected by the provincial authorities. Another benefit is that we can finance the required investment for fixed interest and service fee of about 180,000 CAD something that other countries like the US or Singapore does not allow in their investors programs.
Through this financial leverage, investors can increase their available capital for other investments with higher returns. However, there are drawbacks also to the program such as, the requirement to demonstrate the source of the funds is very strict and demanding in terms of documentation. About 30% of applicants are refused because they can’t prove and document the history of the accumulation of their assets. Once an investor is accepted to the IIP, they are given permanent residence status. The regulation in order to maintain that status requires applicants and their family to maintain physical residence in Canada for two years out of five and in order to qualify for citizenship three years out of four. As a result of the latest changes in regulation these requirements are now fully reinforced and verified, so for some investors who have to run their business around the globe this will indeed be a major drawback. However, this is the primary reason why the investor Program of Bulgaria, the latest EU member country, is more popular than ever, as they waive investors and families from the requirement of physical residence in Bulgaria in order to qualify for citizenship.
If a high net worth investor were seeking second residence and citizenship today, what program would you recommend?
In the process of advising our clients we first have to understand their needs in order to make the proper recommendation. We need to know what motivates them to take such an important decision in their life. Some consider the investor programs for the urgent need of easy traveling without visas: we recommend to these fast economic citizenships Programs like the St Kitts and Nevis passport, which can be obtained within six months. Other clients are planning for longer term, for the better education of their kids and possibilities to give them the right passport that will not limit them later in their life; to them we recommend Canada or UK. Some investors cannot afford to physically live in these countries as per the requirements for the citizenship and passport, so for them the Bulgarian Program is the best option.
We have clients that are applying in two and even three different programs simultaneously and investing over a million dollars in fees and investments in order to secure the best options for their families, considering their mobility freedom and personal tax optimization.