(CNN) – It turns out money doesn't just buy a glamorous Caribbean vacation or a killer suite in Quebec – it can also buy a home.
Instead, they enter Citizenship through Investment Programs (CIPs), where investing in a country's economy can provide easy access to stronger passports.
It is a controversial but flourishing industry. On October 4th, one of the most anticipated new programs, Montenegro, announced that it is accepting applications.
This small Mediterranean nation, known for its dramatic mountains and picturesque coastal cities, offers 2,000 applications the chance to cram a passport.
The cost? Candidates must invest at least $ 274,000 in development projects.
They also have to pay 100,000 euros per application, which will finance development in underdeveloped areas.
"Most people who make this kind of investment are big net worth entrepreneurs with a net worth of about $ 2 to $ 15 million."
How CIPs Are Made
Montenegro is the youngest country to introduce a citizen through an investment program.
Courtesy Anisha Shah
For those who have less distinguished passports, CIPs offer an alternative.
The legal framework allows foreigners to obtain door-to-door passports with large financial contributions, usually in infrastructure development or government bonds.
The idea began in 1984, when Saint Christopher and Nevis – a nation of two islands in the Caribbean – introduced the original CIP. The practice became more popular in 2009, when the country began to heavily market its opportunities.
"The Saint Christopher and Nevis program is the oldest, so it is considered the platinum model," Katz said.
"There are a lot of CIPs in the Caribbean because they just need the money and they don't have many other resources that they can use to attract foreign direct investment."
Over the years, such programs have become more common in developed countries – the United States, Canada and the United Kingdom offer publications, as do some countries in Europe.
From Austria, Antigua and Barbuda, Malta, Cyprus and Dominica, all versions of CIPs are actively marketed and, Katz said, "Many other countries are considering adopting such programs. The Balkans are looking at them. "
How does it work
The island of two islands St. Kitts and Nevis introduced the CIP program in 1984.
Apex Capital Partners
In 2017, Katz estimates that around 5,000 people annually acquire citizenship abroad through CIPs.
Katz himself is one of them. Originally an American citizen, the businessman acquired citizenship in Israel and Canada where he lived for long periods. Later, he acquired citizenship of St. Kitts and Nevis through real estate investments.
He is also a citizen of Antigua because he bought a home – where he now lives with his family.
"I lived in Antigua because I found a good school there for my son," he says.
"When I bought the house, I realized that acquiring citizenship was a smarter decision than getting a residence permit that would require constant renewals."
It may seem easy to pay money and save passports, but rigorous application procedures can take months – if not years.
Typically, candidates will undergo thorough financial and criminal assessments to ensure that the money is earned legally, prior to residence or citizenship approval.
It may not come as a surprise that the US CIP program is among the most difficult. Candidates must meet a residence requirement of five years before they are eligible to apply for citizenship – something that is not guaranteed.
"All nationalities are eligible for the US investor migration program – most applicants come from China, but many come from Iran, Nigeria, Russia, Mexico and Egypt," says Katz.
"It may take years for the stay to be approved."
The best passports
CIPs range from $ 100,000 on the island of Dominica to at least $ 2.15 million in Cyprus – and the best passports in terms of mobility tend to be the most expensive.
"Cyprus is one of the most expensive for a number of reasons: for one, the right to live in Europe is considered to be of high value," Katz explained.
"In addition, investment in Cyprus is real estate and investors feel that the Cyprus real estate market is at very good prices and that investing in it can lead to good returns."
The Mediterranean nation is also valuable for easy access to EU housing, fast processing times, and nonsense documentation.
Other popular passports include Portugal, where the country's Gold Visa Program provides a two-year residence permit and fast citizenship, extending courtesy to the immediate family.
The tax? Residents of Wannabe must buy the property is valued at $ 550,000 (or $ 384,000 reduced option, which means investing in an approved property that requires renovation).
Meanwhile, countries like Antigua and Barbuda in the Caribbean are cheaper – with a single $ 100,000 contribution to the National Development Fund required.
Why does he do it?
If you are already owning land in Cyprus or Portugal, a CIP is like a two in one deal.
You will walk away with a piece of property in a new five-star resort, as well as a new passport.
There are professional benefits as well. A business traveler with a politically troubled passport may not have the time to waste weeks or months to approve the exact visas.
Instead, it may feel like a worthwhile investment to buy $ 560,000 in government bonds in Bulgaria and enjoy uninterrupted travel to 170 jurisdictions – making travel significantly more profitable.
"Business travelers need the ability to be very mobile and not limited to applying for a visa in all countries where they need to travel," Katz said.
"For example, without traveling easily, a Chinese who has to go to work in Paris and London must first go to the French Embassy and apply for a visa and then to the British Embassy to do the same."
Keeping the options open
German passports are the strongest, giving residents in 177 countries visa-free access.
Alex Grimm / Getty Images
For US passport holders, for example, a second passport may be useful if an American travels to an unstable country or wants to live and work in Europe.
Americans can hold multiple passports, but if they want to avoid US taxes – or double taxation, for those living abroad – they must give up their citizenship.
"Many find it frustrating that America is taxing its citizens, even if the individual lives abroad, making it one of only two countries to do so," Katz said. (Etrirea is the other.)
"Undertaking an alternative citizenship allows you to give up your US citizenship and stop paying taxes."
Likewise, wealthy families with restricted passports in the Middle East, for example, could opt to invest in a passport from Dominica to save time and travel the world freer.
Or they might consider the investment a kind of security – a support plan in case of sanctions, war or natural disasters.
"It is somehow considered an insurance policy among the many high value individuals who believe in both economic diversification and citizenship diversification," he adds.
"It's something that gives some protection from a dark day that could happen one day."
The final status symbol
There are some who simply collect passports, like any other status symbol, from cars to summer homes.
"It shows that it has reached a certain economic level that allows them to invest in a second citizenship," Katz said.
"Like buying an expensive car, it serves a purpose but also shows that one can afford it."
The only high-profit group that does not collect passports? Billionaires.
"Billionaires will usually have these issues taken care of when they are still 'ordinary' millionaires," Katz said.
"It's generally something they start thinking about when they reach a net worth of a million or two."
The price of CIPs
CIP expectations provide financial support to countries affected by capital and personal benefits to investors. But it is not without question.
Kate Hooper, a deputy political analyst at the Washington Institute for Migration's International Institute for Migration, says the mixed adoption of these programs implies a government commitment to identify sources of income.
"Accurate due diligence procedures tend not to be made public, and many reports have raised concerns about how effective these procedures are in examining people and killing dirty money," Hooper says.
"Over the years, there have been some cases where citizenship has been granted to people without proper control."
Another issue, he says, is that CIPs have put a clear price on residence permits.
"For example, the perspective of the sale of EU citizenship prompted the EU to oppose Malta's CIP at its introduction, only to be undermined when Malta agreed to add certain additional citizenship conditions, such as minimum residence requirements."
Unintended side effects
Some experts are also concerned about economic and political side effects.
George DeMartino, professor of international economics and ethics at the University of Denver, suggested that CIPs could cause unwanted side effects.
"These programs do not provide a profitable solution to the problem of lack of capital in the poorest countries," DeMartino said in a 2017 interview.
"They are equally capable of representing your beggar-neighbor strategies – and this problem is exacerbated when the country with CIP is relatively wealthy and investors come from countries with relatively low incomes," DeMartino said.
There is also a potentially more serious problem, he says, involving politics.
"Programs like these threaten to diminish political fraternity by giving special privileges to the privileged," DeMartino explains.
"They allow those who have the least need to immigrate and acquire citizenship in a new country the greater opportunity to do so, while those who are much more desperate to immigrate, such as those who face poor financial conditions at home, are completely excluded from these benefits. Programs are not the cause of this inequality, but they reinforce it. "
This story was originally published in September 2017. Updated in October 2019.