Corruption In Vanuatu

12 January 2022

Fact statement from the European Commission. Commission proposes partial suspension of visa waiver agreement with Vanuatu to address risks linked to golden passport schemes 

The Commission is proposing today a partial suspension of the application of the agreement with the Republic of Vanuatu allowing citizens of Vanuatu to travel to the EU without a visa for stays of up to 90 days in any 180-period. This is necessary to mitigate the risks posed by Vanuatu's investor citizenship (or “golden passports”) schemes on the security of the EU and its Member States. Today's proposal follows extensive exchanges with the authorities of Vanuatu, including prior warnings of the possibility of suspension. The schemes allow citizens of third countries to obtain Vanuatu citizenship - and thus also visa-free access to the EU - in exchange for a minimum investment of 130,000 USD.

Based on careful monitoring of the schemes and information received from Vanuatu, the Commission has concluded that Vanuatu's investor citizenship schemes present serious deficiencies and security failures, with:

• The granting of citizenship to applicants listed in Interpol's databases, which raises concerns about the reliability of the security screening;

• An average application processing time too short to allow for thorough screening; as well as no systematic exchange of information with the applicants' country of origin or main past residence before citizenship is granted;

• A very low rejection rate: up until 2020, only one application was rejected;

• The countries of origin of successful applicants including countries that are visa-required for the EU, with some that are typically excluded from other citizenship schemes.

As a result, Vanuatu's investor citizenship schemes allow individuals who would otherwise need a visa to travel to the EU to bypass the regular Schengen visa procedure and the in-depth assessment of individual migratory and security risks it entails.

Additionally, investor citizenship schemes operated by Vanuatu since 2015 are commercially promoted with the expressed purpose of granting visa-free access to the EU, while the visa waiver agreement is not aimed at allowing visa-required travellers to circumvent the visa requirement by acquiring Vanuatu citizenship.

The Commission has concluded on this basis that Vanuatu's investor citizenship schemes present heightened risks for the security of the EU and its Member States and is therefore proposing a partial and proportionate suspension of the visa waiver agreement. 

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Introduction: This investigation report aims to provide an overview of the corruption issues and the passport scam in Vanuatu. The investigation focuses on understanding the extent of corruption within the government, particularly in relation to the golden passport scheme, and identifying vulnerabilities that contribute to fraudulent activities.
Background: Vanuatu has faced longstanding challenges related to corruption, stemming from political instability, weak governance structures, and limited resources for oversight. The country's golden passport scheme, which offers citizenship to individuals through investment, has raised concerns about potential misuse and vulnerabilities to financial crime.
Corruption in Vanuatu: Corruption within the government of Vanuatu is a significant concern, with reports of bribery, embezzlement, and misappropriation of funds. Political instability since gaining independence has contributed to a culture of corruption, including nepotism and favoritism in government appointments and procurement processes.
Passport Scam: The golden passport scheme in Vanuatu presents vulnerabilities to fraudulent activities, including money laundering and financial crime. Individuals with links to fraud or sanctions may exploit the program to obtain Vanuatu citizenship, potentially facilitating illicit activities such as tax evasion and corruption.
Investigation Findings:

1. Lack of Due Diligence: There is evidence of inadequate due diligence processes in the golden passport scheme, allowing individuals with questionable backgrounds to obtain citizenship without proper scrutiny.

2. Secrecy Provisions: Vanuatu's strict secrecy provisions prevent beneficial owner information from being obtained by law enforcement agencies and regulators, creating opportunities for criminals to exploit the system.

3. Regulatory Oversight: Regulatory oversight of the golden passport scheme is limited, with weak enforcement mechanisms and a lack of transparency and accountability in the citizenship-by-investment process.

4. International Cooperation: While Vanuatu cooperates with international partners to address transnational crime, there are concerns about the effectiveness of collaboration efforts in combating corruption and fraudulent activities related to the passport scheme.

If you're considering doing business in Vanuatu, but are concerned about the risks associated with scams, corruption, and money laundering, here's some advice to help you make informed decisions:

1. Conduct Thorough Due Diligence: Before engaging in any business activities in Vanuatu, conduct comprehensive due diligence on potential partners, clients, and investment opportunities. Verify the credentials and reputation of individuals and companies you plan to work with and seek independent legal and financial advice if necessary.

2. Be Wary of Red Flags: Be alert to red flags that may indicate potential scams, corruption, or money laundering, such as requests for bribes or facilitation payments, unreasonably high returns on investment, or lack of transparency in business dealings. Trust your instincts and don't ignore any warning signs.

3. Seek Transparency and Accountability: Insist on transparency and accountability in all your business dealings in Vanuatu. Establish clear contracts, agreements, and payment terms, and ensure that all parties adhere to ethical and legal standards. Avoid engaging with businesses or individuals who are unwilling to provide transparency or operate in an opaque manner.

4. Know Your Rights and Responsibilities: Familiarize yourself with your rights and responsibilities as a business owner or investor in Vanuatu. Understand the legal and regulatory framework governing business activities, including anti-corruption and anti-money laundering laws, and ensure compliance with relevant regulations.

5. Consult with Experts: Seek advice and guidance from experienced professionals who are familiar with the business environment in Vanuatu. This may include lawyers, accountants, consultants, or business advisors who can provide valuable insights and assistance in navigating potential risks and challenges.

6. Stay Informed and Vigilant: Stay informed about developments related to scams, corruption, and money laundering in Vanuatu through reputable sources such as government agencies, international organizations, and industry associations. Remain vigilant and proactive in monitoring your business activities for any signs of wrongdoing or illicit behavior.

7. Consider Alternatives: If you're concerned about the risks associated with doing business in Vanuatu, consider exploring alternative markets or investment opportunities that offer greater transparency, stability, and regulatory oversight. Evaluate the pros and cons of different options and choose the one that best aligns with your risk tolerance and business objectives.

Ultimately, the decision to do business in Vanuatu or any other jurisdiction is a personal one that requires careful consideration of the potential risks and rewards. By taking proactive steps to mitigate risks and protect your interests, you can minimize the impact of scams, corruption, and money laundering on your business endeavors.