International Law Firm Sees Market for Second Citizenship

What do you get the Cambodian who has everything? Big house. Fancy car. A few million dollars in the bank.

A Canadian law firm with offices around the world and plans to set up shop in Phnom Penh within the year is hoping it’s a second passport to the West.

By September or October, Harvey Law Group is hoping to be the first law firm operating in the country to specialize in selling the 1 percent of the 1 percent on the benefits of buying their way into countries to which most Cambodians can only dream of moving.

For a cool $232,000 and up, it will help Cambodians land residence or citizenship for them and their immediate families in Canada, the U.S. or Australia, the three countries for which most of the firm’s clients in Southeast Asia are clamoring.

And as the ranks of Cambodia’s richest swell, they want the same, Bastien Trelcat, a managing partner with Harvey Law, told reporters at a media conference at the plush Sofitel Phnom Penh Phokeethra hotel on Tuesday announcing the firm’s imminent expansion into the country.

“[C]ambodian citizens, entrepreneur businessmen…have the same behavior pattern than any other high net worth citizen around the world,” he said. “They are making money in their own country. They have a house, they have a car. They have everything they want in their own country. The next thing they want is, they think about their kids’ education. They think about how to expand their business at least regionally. They want to go on holidays, so they don’t want to apply for visa, or they don’t want to see restrictions. They are businessmen. They want solutions.”

The residence and citizenship-by-investment programs on offer could be the answer.

“We help Southeast Asian people to set up abroad, to relocate their business, to find new options on a worldwide scale, to send their kids towards other countries for education purposes, and we do this through investment,” said Guillaume Matz, a senior associate at Harvey Law.

The firm has already worked with some Cambodians out of its offices in Hanoi and Hong Kong. To find more, and to serve them better, it wants a presence in Cambodia itself. It plans on asking the Justice Ministry for a license in the coming days.

At those prices, the programs are clearly not for everyone.

Mr. Trelcat would not speculate on how many clients he hoped to find here. But he estimated a local market—those who might want a second residence or passport and can afford it—at a few thousand.

“I cannot tell you if it’s 1,000, if it’s 10,000. It’s definitely more than 1,000 people,” he said. “[Y]ou are targeting clients who are those who have a net worth of $3 to $5 million. That would give you an idea of who we are targeting.”

For the countries offering the programs, they’re an increasingly popular way of attracting foreign investment into business startups, real estate projects or government bonds. For investors, especially those from developing countries like Cambodia, they’re a path to visa-free travel to most Western countries, investment opportunities in stable markets, and a new way of giving their children a better education.

The three countries Harvey Law plans on pushing in Cambodia all have some basic requirements, including proof that the money being invested is clean.

“And this is actually our value: We will help you show that the source of your funds is legal,” Mr. Trelcat said.

That will be a valuable service in Cambodia, which regularly ranks among the most corrupt countries in the world, and where much of the dirty money is widely believed to be concentrated at the top.

Mr. Matz said Australia, Canada and the U.S. also required their clients to live in the country for some time, depending on the particular program.

But some citizenship-by-investment programs, particularly those in the Caribbean, don’t. Mr. Matz said Harvey Law was ready to help its clients navigate them all, and had with many.

Such lax residency rules, coupled with tight restrictions on revealing the identities of investors, has also earned the burgeoning citizenship-by-investment industry a reputation for helping the unscrupulous evade taxes and launder money.

In a report released this year on the impacts of overseas corruption on London’s property market, Transparency International U.K. said programs were “vulnerable to abuse by those seeking to launder illicit wealth.”

A recent report commissioned by some members of the European Parliament found that Malta, another country with a popular citizenship-by-investment program, helped multinational firms avoid paying nearly $16 billion in taxes between 2012 and 2015.

In May, Bloomberg reported that passports on sale by Cyprus were still popular with wealthy Russians despite some efforts to curb abuses, thanks in part to persistently attractive tax rates. The month before, a U.S. lawmaker on the House Intelligence Committee looking into allegations of Moscow’s meddling in the country’s elections called Cyprus the center of Russian money laundering.

But Mr. Matz insisted the programs were not about hiding assets, blaming the stigma on misinformation. “I can understand this point of view because most people do not really know about…the essence of these kinds of programs,” he said.

“If you look to the Cambodian passport, or the Vietnamese passport, based on history these passports do not allow you to travel freely, while passports from Antigua and Barbuda, Grenada, Dominica will help you to have mobility worldwide because they are former British colonies, so it’s the Commonwealth system. The idea of investing to get citizenship can be something that, if you don’t have the insights from the bottom, it can be seen as a way that it’s not very…it’s something that you can’t easily talk about.”

Mr. Matz cited a recent article in The Guardian about the U.K.’s residenceand citizenship-by-investment programs as an example. He said the headline claimed citizenship could be had for 2 .5 million dollars when the sum secured temporary residence.

The headline of the online article actually has no sum in the headline. The sub-headline, and the article, makes it clear that the 2.5 million dollars gets you residence.

“So there is a lot of talk, discussion. You can read a lot about it,” he said. “The reality is very different, I would say.”

Mr. Matz said his firm was ready to help its clients with programs around the world, including those on offer by Cyprus and Malta. He said his firm had no business with any programs with unsavory practices.

“Not in the programs we practice in,” he said. “The countries we are focusing on, no.”

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