Chinese businesspeople who bought a second passport after a Google search and simple price comparison are learning they might have made a deadly mistake! Here we discuss how Chinese and Hong Kong citizens can buy a second passport the right way.
Recent revelations from the International Consortium of Investigative Journalists clearly prove that the Chinese government is now focusing on the acquisition of second passports by its nationals. You must take extreme care when selecting, acquiring and maintaining a Citizenship by Investment or Residence by Investment. Otherwise the Chinese government can use them as a weapon against you and your family’s wealth and well-being.
Lesperance and Associates in the Media in Asia
For many years a significant portion of my immigration clientele has come from Asia. My expertise has led to regular contact with the media who frequently seek out my opinion. Indeed, ever since the crisis in HK erupted I have been quoted frequently both in local and international press (SCMP, BBC, NYT) about how wealthy Asian individuals can protect themselves and their families. Not surprisingly the media attention resulted in many ‘cold call’ inquiries, but there inquiries were different different. My normal inquiries came almost exclusively as referrals from other clients and what I call “Centers of Influence” such as private bankers, family offices and private client tax/financial advisors. However, these new inquiries were from individuals without any connection to me or referred through my network.
Another striking difference is that these new cold call inquirers always began their correspondence with a question about a particular Second Passport or Golden Visa program. In contrast, my traditional inquirers almost always started with a description of their current situation, fears and goals.
I respond to these new inquirers with some open questions about their current situation. I discover what they are trying to achieve. But this time more often than not I would receive no response…..nothing. How odd!
Looking for the cheapest price when you buy a second passport? How this could be a deadly mistake.
This experience indicates that many of these inquirers were simply shopping for the cheapest price for a Citizenship by Investment or Residence by Investment that they had already decided upon. It also suggests to me that they did not regard me as an advisor so much as a vendor. This was apparent as they did not think it important that I know anything about their situation or their desires. This is a strong indication that there is a lack of appreciation of the complexity of their decision. This is a serious mistake in approach which could have catastrophic results.
My previous blog, “For HNW Chinese the need for a Back-Up Plan is profound: Don’t leave yourself and your family under two storm clouds of risk!“ describes how wealthy HK and Chinese nationals who want to protect their family’s well-being and wealth need to come to grips with the FACT that the Chinese government is ‘playing for keeps’. As a result, amateur ‘do it yourself’ plans will certainly fail. The ‘cost of failure’ could well be their family’s freedom and all their assets. Advice from ’salespeople’ who push real-estate linked ‘products’ will not be a recipe for success. They inevitably push the product that pays the highest commission, and that may not be in the client’s best interest. The reality is the market is full of unscrupulous salespeople. These individuals mislead victims into thinking that residence programs are actually citizenship or outright scam them.
The danger of the Chinese Government discovering second citizenship
Over the past few years the Chinese government has hinted that it has the ability to determine if a Chinese citizen had a second passport from certain countries. This ability was confirmed in practice in June when Chinese officials swooped into Vanuatu and arrested 6 Chinese nationals who had obtained a second passport from that Pacific island nation and thought they were safe there. Now the latest revelation from the International Consortium of Investigative Journalists uncovers the fact that China’s wholesale knowledge of second citizenship from various countries is being used to target certain groups of Chinese citizens.
How to buy a second passport the right way
What does all this mean in practice? The individual should seek proper advice on overseas identity and citizenship planning. If they don’t the Chinese government will undoubtedly become aware of their actions. They can then save this information for potential future use against individuals who hold second passports. Therefore, getting a second passport from a country where the government publishes the names of new citizens (e.g. Malta) or from a small country where the Chinese government can easily “obtain” the names of new citizens (e.g. Vanuatu, Caribbean island nations) is worse than throwing money away. In exchange for a false sense of security, new citizens are inadvertently handing the Chinese government the stick to beat them with.
When considering a second passport or residence, remember that the purpose of the exercise is to protect your family. This protection must be robust both in times of crisis and over a lifetime. Your first step must be to calculate the “cost of failure”. You will quickly realize it is well worth spending some time, energy and money on qualified, experienced advice. Moreover, this advice should always be from a source who is NOT commission driven. When dealing with protecting your family and your wealth, don’t bring a rubber knife to a gunfight….bring Seal Team Six!