“Golden passports” are back in the spotlight: what Australia’s Tranche 2 AML reforms should learn from the U.S. visa freeze
On 14 January 2026, the U.S. State Department announced it will pause immigrant visa processing for citizens of 75 countries while it reassesses screening under the long‑standing “public charge” provisions. The suspension is due to start 21 January and does not apply to short‑term (non‑immigrant) visas. Multiple outlets and wire services confirmed the move and timing.
Among the affected nations are four Caribbean states that operate citizenship‑by‑investment (CBI) or “golden passport” programs: Grenada, St Kitts & Nevis, St Lucia, and Antigua & Barbuda (each cited on the full country lists carried by several outlets that obtained the State Department memo).
Why does this matter for Australia? Because Tranche 2 AML/CTF reforms will shortly bring real estate professionals, lawyers, conveyancers, accountants, dealers in precious metals & stones, and trust & company service providers (TCSPs) into scope with full customer due diligence (CDD) and enhanced CDD (ECDD) duties.
Golden passports = higher ML/TF risk (and why ECDD should be the default)
FATF and the OECD’s joint report on investment migration is unambiguous: CBI/RBI programs create elevated ML/TF risks. Criminals exploit them to launder identity, gain mobility, open bank accounts, form shell companies, and move or shield assets across borders. The report documents identity‑laundering typologies, professional‑enabler abuse, and real‑estate fraud patterns connected to CBI/RBI.
Key FATF/OECD findings relevant to Australian reporting entities include:
· Identity laundering via secondary passports (including alternate spellings and name changes) frustrates screening and beneficial‑ownership checks.
· Enhanced freedom of movement + access to new financial systems helps criminals layer and integrate funds.
· Real‑estate investment linked to CBI/RBI is repeatedly misused through over‑/undervaluation and circular funds (“money merry‑go‑rounds”).
· Weak post‑issuance monitoring and revocation processes in some programs allow continued misuse even after red flags emerge.
Bottom line: When a customer obtained citizenship via investment, that fact should be treated as a strong indicator of heightened ML/TF risk. Under AUSTRAC’s reforms guidance, high‑risk customers require ECDD—and your policies should explain when and how you apply it.
Recap: what the U.S. did—and how it intersects with CBI programs
· What happened: A pause on immigrant visa processing from 75 countries begins 21 Jan while screening is reassessed; non‑immigrant visas are not affected.
· Why now: The State Department linked the move to “public charge” screening; this continues a tightening trend that varied by administration.
· CBI angle: Outlets publishing the full list identify Grenada, St Kitts & Nevis, St Lucia, and Antigua & Barbuda—all CBI jurisdictions—among the 75.
What AUSTRAC expects under Tranche 2—and where ECDD fits
AUSTRAC’s reform guidance set out who becomes regulated and what you must do (enrol, maintain an AML/CTF program, conduct initial and ongoing CDD/ECDD, report, and keep records). Enhanced CDD is mandatory where the ML/TF risk is high, for foreign PEPs, for prescribed foreign countries, and in other risk‑escalating circumstances—with specific measures and record‑keeping spelled out in the reforms guidance.
Practical ECDD triggers tied to golden passports
Use the following triggers:
1. Customer declares or exhibits CBI/RBI citizenship (e.g., Grenada, St Kitts & Nevis, St Lucia, Antigua & Barbuda): treat as high‑risk and apply ECDD.
2. Multiple passports / recent name changes inconsistent across documents (identity‑laundering risk).
3. Real‑estate transactions with unusual pricing or quick flips; use of escrows controlled by developers/agents linked to CBI investments.
4. Funds flows via third‑party remitters, informal value transfer, or opaque offshore vehicles.
An ECDD playbook you can lift into your AML/CTF program
1) Deepen identification & verification
· Capture all current and prior nationalities (not just the passport presented) and ask whether citizenship was obtained via investment; retain supporting evidence.
· Record all known aliases/prior names and cross‑match spellings across documents.
2) Source‑of‑funds and source‑of‑wealth (SoF/SoW)
· Obtain documentary evidence of SoF/SoW with transaction‑level corroboration (e.g., sale agreements, audited statements, tax returns).
· For real estate, corroborate valuation, counterparty independence and settlement statements to detect over/undervaluation and circular flows.
3) Geography & sanctions/PEP overlay
· Screen for PEP status and sanctions; evaluate country risk (including prescribed foreign countries) and apply senior‑management approval for onboarding/continuation.
4) Payment scrutiny
· Require transparent banking from the customer’s own account; reject third‑party payments, cash‑intensive routes, and informal transfer methods.
5) Ongoing monitoring
· Apply event‑driven reviews (new passport presented; change in residence; adverse media).
· Build CBI “flags” in your customer file to trigger enhanced periodic reviews. (FATF/OECD advocate post‑grant monitoring precisely because risks evolve.)
6) Reporting & record‑keeping
· Where suspicion forms, lodge an SMR; note that SMRs don’t replace ECDD—keep enhanced measures in place while monitoring risk.
What this means specifically for Tranche 2 sectors
Real estate (agencies, developers, buyer’s agents)
· Expect buyers or beneficial owners presenting CBI passports or structures with CBI links. Build CBI‑specific questions into forms. Scrutinise related‑party developers and escrow arrangements to avoid being the last line of defence against over/undervaluation typologies.
Lawyers, conveyancers & accountants
· When onboarding CBI‑linked clients/entities, perform enhanced SoF/SoW and UBO mapping to the natural person—and record all nationalities and identity histories. Watch for professional enablers and concierge services in the chain.
TCSPs & dealers in precious metals/stones
· Treat high‑value portable assets funded via CBI‑linked wealth as higher risk; align payments policies and inventory controls with ECDD outcomes.
Key dates and next steps for Australian firms
· Now: Review AUSTRAC’s ECDD (Reform) guidance and draft your policies to define CBI/RBI as a high‑risk indicator requiring ECDD and senior‑management sign‑off.
· Throughout 2025–26: Follow AUSTRAC’s reform updates and practical materials for newly regulated entities; enrolment and program build activities are staged ahead of commencement.
· From 1 July 2026: Tranche 2 obligations commence for real estate, legal, accounting, dealers in precious metals/stones, and TCSPs. Ensure your CDD/ECDD, reporting, and record‑keeping controls are live and tested.
FAQs
Does a golden passport automatically make someone a criminal?
No. But FATF/OECD conclude that CBI/RBI elevate ML/TF risk due to identity‑laundering and mobility advantages; risk‑based ECDD is the defensible posture.
Is ECDD optional if I’ve filed an SMR?
No. AUSTRAC notes that submitting an SMR doesn’t manage ongoing risk; you still need to apply ECDD and maintain monitoring.
Will ECDD be required for all customers from the 75 countries?
No. AUSTRAC requires risk‑based application of ECDD. However, CBI status (regardless of country) is a clear risk escalator that should trigger enhanced measures.
The takeaway
The U.S. visa freeze has thrust golden passports back into the compliance conversation. Australia’s Tranche 2 timeline means real estate agencies, law firms, accountants, dealers, and TCSPs need documented ECDD that treats citizenship‑by‑investment as a high‑risk indicator—with sharpened identity controls, SoF/SoW testing, payment hygiene, and post‑onboarding monitoring to match.
Don’t wait until Q2 to begin your preparations. Tranche 2 AML/CTF obligations go live on 1 July 2026—and the learning curve is real. If you’re still unsure where to start in January 2026, book your free, no‑obligation consultation with AML Advisers today. We’ll map your risk, prioritise your gaps, and give you a practical, staged plan to be AML‑ready before 1 July.
