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Failure to conduct obligatory audits puts Portuguese investor programme in a tough spot

On 16 April, the Portuguese parliament unanimously voted to hold a hearing of the Portuguese Minister of Internal Administration Eduardo Cabrita over the absence of audits on the Portuguese residence by investment (RBI) programme. According to Art. 65-I Decree 15-A/2015, the government’s Inspectorate General of Home Affairs (IGAI) is required to conduct a yearly audit on the procedures of the RBI programme, but the Portuguese radio station TSF has revealed last week that such audits have not been conducted since the first audit report was released in 2014. Remarkably, this deficit was already emphasized in January 2019 by the European Commission in its report on investor residency and citizenship programmes.

According to TSF, IGAI has stated that it has been unable to conduct further audits to the programme due to continuous amendments of the procedural guidelines of the programme. Among Portuguese parliamentarians, the lack of audits had led to concerns about the transparency of the Portuguese programme. These concerns were further heightened by a leaked full version of the 2014 audit report, obtained by TSF. The leaked report contained several critical remarks on the RBI programme, as it stated that the programme’s procedural rules were “sporadic, dispersed and unclear” and condemned the potential concentration of powers among a small number of actors. Although procedural rules have been reformed since then, it remains unclear to what extent these issues have been tackled due to the lack of follow-up reports.

The revelations could lead to concrete changes of the RBI programme procedures, as the Portuguese Minister of Foreign Affairs Augusto Santos Silva has stated in a response that the RBI programme is being improved and better monitored. This could entail the imposition of more stringent due diligence requirements on applicants in the future. In addition to that, alterations regarding fiscal policies and the sharing of asset information might also be implemented, as Santos Silva mentioned that reforms have taken into account the OECD’s criticism on the Portuguese RBI programme’s potential for the avoidance of CRS obligations. The Minister also stretched that there is no evidence that the program has been used for illicit or criminal purposes.

Author: Luuk van der Baaren

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