Law firms are “very surprised” at the UK’s sudden decision to suspend its top tier of investor visas in a bid to tackle money laundering and organised crime.
The Tier 1 Investor visa program will be suspended for new applicants from midnight on 7 December as the UK Home Office try to make improvements to the scheme, which has proved popular with wealthy Russian oligarchs and Chinese investors.
Edward Wanambwa, head of the immigration team at law firm Russell-Cooke, said: “Suspending such a popular and longstanding visa category, and without any prior notice, is very surprising.
“There are no doubt many individuals who were preparing to apply under the previous Tier 1 Investor rules and who now need to reconsider their UK immigration options in the face of a suspended visa category.
“We will need to wait and see what the new Tier 1 Investor rules provide for, but it seems that those who still wish to reside in the UK on the basis of solely investing money here will be faced with a significantly more challenging set of eligibility criteria coupled with a far more burdensome visa application process.”
The visa has been available to those with access to at least £2m ($2.5m, €2.24m) to invest in the UK. It’s open to those from outside the European Economic Area and Switzerland.
The Home Office is looking to make changes which will require applicants to provide audits of their financial and business interests and will exclude government bonds as a qualifying investment.
The suspension will lift once the changes, due in 2019, have been put in place.
Immigration Minister, Caroline Nokes, said in a statement: “We will not tolerate people who do not play by the rules and seek to abuse the system.
“The new measures will make sure that only genuine investors, who intend to support UK businesses, can benefit from our immigration system.”
International Adviser reported that the European Commission is “extremely concerned” about member states offering citizenship to rich investors as they are seen as a potential “security threat”.
Checks not robust
Kerry Garcia, partner and immigration specialist at Stevens & Bolton, said: “There have been previous reports of money laundering in relation to Tier 1 Investor, so it is not entirely unexpected that the Home Office is taking action to address this.
“However, the sudden nature of the suspension is surprising and, so far as I’m aware, there has been no consultation regarding this.
“At the moment, checks on the source of funds used for the investment are not always very robust. For example, it’s possible to provide a deed to show that the money was gifted to the applicant but there are generally no further checks on the origin of the funds undertaken by the Home Office.
“It would appear that they rely on the banks and other financial institutions to undertake such checks.”
Lack of impact
Garcia added: “This suspension will inevitably impact a small number of wealthy individuals wishing to come to the UK and it is likely that many will simply not be able to come to the UK.
“The Investor category is popular because it is very flexible. There is no other immigration category for non-EEA applicants which allows this level of flexibility.”
James Walker, partner of private clients team at accountancy firm Buzzacott, added: “It would appear that Tier 1 Investor Visas were not working quite as hoped because the programme has been suspended until new, better focussed, rules are introduced in 2019.
“The new rules are likely to require the funds to be invested into UK trading businesses, rather than providing the opportunity to simply acquire UK government bonds and will be important if the UK is to continue to attract wealthy EU families once we leave the EU.
“Will these be as attractive once access to the EU has gone? This will remain to be seen.”
Rose Carey, partner at Charles Russell Speechlys, said: “While the Government has framed today’s announcement as part of a crackdown on financial crime, in reality the majority of people using investor visas are legitimate business people whose investment is invaluable for the UK economy and employment.
“At a time when the Government is supposedly emphasising that the UK remains ‘open for business’, to announce the halting of the scheme less than 24 hours before the deadline for applications conversely sends out a negative message which deters international investment.
“It also provides another example of ministers’ increasing tendency to act without consultation with stakeholders.”
In November, International Adviser reported that Quilter Cheviot, the discretionary fund management arm of Quilter, had closed its Tier 1 Investor Visa business to new clients.