CARICOM heads of government have stressed that all countries engaging in citizenship by investment programs (CIP) must "cooperate and co-ordinate" regionally, as they called on St. Kitts and Nevis to enhance its regulatory regime with respect to its CIP.
The CIP was a topic of discussion among Caribbean heads of government at a recent CARICOM meeting held in Antigua from July 1-4, at a time when The Bahamas is believed to be considering some form of CIP program to stimulate investment and growth in the local economy.
While acknowledging the importance of the CIP program to CARICOM member states such as St. Kitts and Nevis "at a time of acute economic and financial stress" the regional leaders highlighted the need for strict regulation.
"Heads of government emphasized their strong support for the efforts of St. Kitts and Nevis to enhance its regulatory regime in relation to its CIP, fully cognizant of the need to adhere to the most rigorous international standards to safeguard the integrity of the country and the program.
"Heads of government urged all countries engaging in such a program to co-operate and co-ordinate their regulatory systems with respect to both the CIP and to financial services generally, given the imperative of enhancing the security of the region while ensuring the protection and expansion of their revenue base."
St. Kitts and Nevis has been engaged in damage control in relation to its CIP following an advisory issued by the U.S. Treasury Department's Financial Crimes Enforcement Network Office (FINCEN) to U.S. financial institutions warning them to closely scrutinize any business conducted with people holding St. Kitts passports.
According to the May 20 advisory, institutions were alerted that "certain foreign individuals are abusing the citizenship by investment program sponsored by the Federation of St. Kitts and Nevis (SKN) to obtain SKN passports for the purpose of engaging in illicit financial activity".
Prime Minister Douglas told reporters that St. Kitts and Nevis will establish an advisory board comprised of eminent citizens of the twin island federation from both public and private sectors in order to protect and defend the country's CIP program.
Economic citizenship programs are operated by a number of CARICOM countries, including Antigua and Barbuda, Dominica and Grenada, as well as St. Kitts and Nevis. Others, including The Bahamas and Saint Lucia, are actively looking at adopting similar programs.
While the Bahamian government has not issued a formal statement on the matter, a close adviser to the prime minister, attorney Sean McWeeney Q.C. argued in May that some form of investor citizenship program could be a major boost to the local economy by further encouraging the establishment of high net worth individuals in The Bahamas.
However, McWeeney suggested that The Bahamas should not pursue the SKN approach, but instead one which includes high investment thresholds that encourage "quality not quantity".
Guardian Business understands that ongoing discussions are being had between the government and private sector over what form such an initiative could take, although there are concerns that any such program could become a political football due to the emotive nature of citizenship.
McWeeney's statements were strongly supported by stakeholders in a number of key sectors, including financial services, tourism and real estate, who suggested that implementing such a program may be necessary to help the local economy keep pace with competitors.
During his budget communication, the minister of financial services and trade said that encouraging growth in the economy will require a "sustainable, credible and transparent residency program" in The Bahamas that would attract high net worth individuals to live, invest and do business here.
The advisory surrounding the St. Kitts program highlights some of the traps The Bahamas will need to be careful to avoid, should it pursue a program along these lines.

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