The UK has scrapped the Tier 1 investor visa scheme months after the Home Office carried out a legacy review of the programme over “security concerns”.
The scheme will be shut to all new applicants from all nationalities with immediate effect. The programme has been popular with wealthy Russian oligarchs and Chinese investors.
The visa has been available to those with access to at least £2m ($2.72m, €2.39m) to invest in the UK from outside the European Economic Area (EEA) and Switzerland. Applicants were required to prove that they have had control of the required £2m for at least two years, rather than 90 days, or provide evidence of the source of the funds.
The Home Office said it will be making reforms to the innovator visa route, part of the government’s points-based immigration system.
Priti Patel, home secretary, said in a statement on 17 February 2022: “I have zero tolerance for abuse of our immigration system. Under my new plan for immigration, I want to ensure the British people have confidence in the system, including stopping corrupt elites who threaten our national security and push dirty money around our cities.
“Closing this route is just the start of our renewed crackdown on fraud and illicit finance. We will be publishing a fraud action plan, while the forthcoming Economic Crime Bill will crackdown on people abusing our financial institutions and better protect the taxpayer.”
Settlement in the UK will “now be conditional on applicants executing an investment strategy that can show genuine job creation and other tangible economic impacts, passively holding UK investments will no longer be enough to obtain settlement”, the Home Office added.
Antonia Torr, partner and head of immigration services at Howard Kennedy, told IA: “Closing the Tier 1 investor visa route does have all the hallmarks of being a political move.
“As a result of Home Office reforms a few years ago, investors have to prove the source of their wealth as part of the visa application process and so it is not entirely clear why there would be concerns over money laundering if all processes were being properly followed.
“It is also noteworthy that the past few years have seen a decline in the number of Russians applying for this visa and so really it will be other nationalities who will be impacted by this decision. As a move to place pressure on Russia, this may not have the impact that the secretary of state anticipates.”
Bhavneeta Limbachia, immigration lawyer at law firm Russell-Cooke, said: “The current visa allows for an expedited route to settlement in the UK based on the amount of investment injected into the UK economy.
“Foreign investors may now need to consider alternative UK business routes, such as the innovator visa, or the Scale-up visa, due to be implemented this spring. Overall, it is evident that the government’s focus has shifted from investment to skills-based visas in line with their objective to attract the ‘best and brightest’ to the UK.”
The ‘golden visa’ scheme has come under a lot of scrutiny over the last few years due to its links with money laundering and organised crime, as well as a reported lack of due diligence on applications.
In December 2018, the UK decided to suspend the Tier 1 investor visa – but then u-turned on this decision within days and reform the scheme in March 2019 to protect Britain from “illegally obtained funds”.
At the time, the Home Office said it was looking to separate money launderers from “genuine investors”, who should have access to a viable visa scheme.
But in July 2021, the UK said it was carrying out a review of all Tier 1 investor visas granted before 5 April 2015. The Home Office confirmed on 17 February 2022 that findings from the review will be published in “due course”.
Mandeep Khroud, a specialist immigration solicitor at Irwin Mitchell, told IA: “The investor category has provided a valuable and flexible route for those intending to live, work, study and settle in the UK. It is likely that people currently in the UK as Tier 1 investors will be able to remain on that route to permanent residence.
“However, moving forward individuals who might have made use of the investor category will need to apply under more specific visa categories, limiting their activity in the UK.”
Financial firms have also encountered issues with the scheme.
But, in March 2021, the Financial Conduct Authority (FCA) imposed a number of restrictions on Dolfin Financial after it “identified a number of serious concerns around the way that Dolfin operates its business, including the firm’s Tier 1 investor visa business activities and financial crime controls”.
Several months later Smith & Williamson was appointed administrator of Dolfin Financial UK.
Tackle money laundering
Charlie Fowler, senior associate at Collyer Bristow, said: “The government is right to step up its efforts to tackle money-laundering, and its drive for increased transparency is an important part of that work. However, hopefully it will not be to the detriment of those who are not exploiting the system.
“One wonders whether, rather than reversing the investor visa category, it can instead be revised to place greater requirements on applicants that ensure that only ‘clean’ money is invested in the UK.”
Danielle Reece-Greenhalgh, senior associate at law firm Corker Binning, added: “The Tier 1 visa regime has received close scrutiny since its inception, with Russian and Chinese investors making up the vast majority of its users.
“Concerns over illicit wealth led to a tightening of the regime in 2015, but the Home Office has remained entirely reliant on the AML procedures of UK banks and financial institutions to ensure that the scheme is not being used to launder the proceeds of crime into the UK.
“The scrapping of the ‘golden visa’ is a radical solution, but fails to address the underlying problem as to the efficacy of the UK’s money laundering controls.”