Why “Sovereign Insurance” Matters More Than Visa-Free Travel

Europe Just Fired a Warning Shot

I’ve been saying it for years: Europe is going to punish countries that offer citizenship by investment (CBI). And it finally happened: The European Union has just fired what may prove to be the fatal shot at the Caribbean citizenship-by-investment industry.

On June 25^th, the European Commission sent a diplomatic letter to the five CBI countries in the Caribbean, saying that if they don’t phase out their programmes by June 1, 2028, they will lose visa-free access to the Schengen Zone. The letter also demands that no further CBI passports be issued to anyone whose primary passport doesn’t grant Schengen access.

The straw that broke the camel’s back was in December 2025, when the European Commission issued new Visa Waiver rules. Under them, simply having a CBI program is grounds for loss of visa-free access to Schengen.

The European Commission’s action means that if these countries don’t end their CBI programs, holders of their passports—including citizens by birth or naturalization—will need a visa to get into the Schengen Zone.

Europe’s step comes at a transitional period for global CBI programs. The shift is moving away from clients who want visa-free access towards those who want a form of sovereign insurance.

Europe and other countries have long complained that most people who acquire Caribbean CBI are from countries without Schengen access, like China, Russia, and Iran. A CBI passport is highly valuable to such individuals—particularly those who want to enter Europe for business purposes. Schengen access is why they’re willing to pay top dollar for a CBI passport. It’s been obvious that eventually Europe would act, especially since Russia’s invasion of Ukraine.

But CBI’s centre of gravity has shifted. Countries in Latin America (Argentina), Africa (Botswana), and the Pacific Basin (Nauru) have launched CBI programs. Most of them already lack Schengen access. Their programs are designed to attract Americans and others whose primary passport gives them Schengen access, but who want a plan B—insurance—if things fall apart at home. For this rapidly growing market, Schengen access is immaterial.

Another challenge to CBI is the ongoing shift from paper to electronic border controls.

Canada, for example, has had a digital immigration system since 2023. This has allowed it to identify hundreds of people whose primary passport is from a country not entitled to visa-free access. When such individuals arrive in Canada on their CBI passport, the system flags them, and they are sent back to where they came from.

This demolishes the main selling point of Caribbean CBI: buyers don’t just get a new passport… they get a new “identity” for travel purposes. But once an individual’s details are digitally linked across multiple countries’ immigration systems, those identities are merged.

Every major nation currently has or is developing a program like Canada’s. Once its teething problems are solved, Europe’s European Travel Information and Authorisation System (ETIAS) will weed out people who have acquired a second passport via CBI. It won’t matter that the passport they’re carrying doesn’t require a Schengen visa.

The upshot is that Caribbean CBI is on its last legs… but not necessarily CBI in general. Some commentators believe otherwise, claiming the EU is bluffing, and will continue to negotiate for more stringent vetting of CBI applicants rather than a complete ban. They argue that CBI income is so critical to the Caribbean island nations that Europe will allow them to continue as an act of diplomatic goodwill.

I don’t believe that for one second. The rapid rise of nativist populism in Europe means that bureaucrats in Brussels must give far more weight to public opinion at home, which wants to limit immigration. Compared to that, the Caribbean nations have little leverage.

So, what should you do if you’ve been considering acquiring a second passport by investment?

If you’re American or Canadian, the EU’s action doesn’t change anything. You can still get visa-free access to Schengen on your primary passport. Your main consideration should be whether the country where you get a CBI passport suits you personally, and from a tax perspective.

On the other hand, if you’re from a country that doesn’t currently have visa free access to Schengen, you should think carefully about splashing out hundreds of thousands of dollars for a document that might not do you any good.