Home Office cracks down on Tier 1 (Investor) Visas because of Money Laundering concerns

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                                          Home Office cracks down on Tier 1 (Investor) Visas because of Money Laundering concerns

Article written by Kezia Daley

Senior Associate in the Immigration department


Several news reports have announced that as from Midnight on 6th December 2018 the Tier 1 (Investor) immigration category for all new applicants has been suspended.

The Government itself is yet to publish a full statement and the Home Office has not yet updated its website.

However it appears the main concern for the Home Office is that it has reason to believe the scheme is being used as a means to launder money into the UK.

What is the Tier 1 (Investor) route?

The Investor Visa route requires an investment of £2m in return for a five-year route to settlement, while those paying £5m wait only three years, and investors of £10m can apply after two years. The funds must be invested in UK Government bonds, share capital or loan capital in an active and trading UK registered company or companies.

Why the suspension?

Concerns were raised following an increase in applications under the route. The last three quarters of 2018 have seen a vast increase. From July this year over 400 applications were made which has shown that despite Brexit there has been a strong trend in Investor Visa applicants. This sparked concern that much of the funds being invested were proceeds of ill-gotten gains with a large proportion of investments coming out of Russia and China.

With a number of banks and wealth managers withdrawing from the Tier 1 (Investor) visa space due to the heightened risks, increased need to execute strict money laundering checks and due diligence it is hardly surprising the Home Office has now taken this step to investigate the scheme.

What does the Home Office propose to do with the scheme?

Following the suspension it has been announced that tighter rules will be imposed in 2019, including comprehensive audits of all financial and business interests. It has been reported that the firms who will carry out such audits will be “suitably regulated UK auditing firms” who have “no involvement with any qualifying investments or the visa application”.

There will also be a new provision for pooled investments, which are supported by government, to back projects with a clear economic benefit to the UK, such as supporting small and medium businesses.

A notable change will be that those investing will have to have held the required funds for a minimum of two years.

Conclusion

This measure to suspend the Tier 1 (Investor) route is clearly a response to money laundering and not against the principle itself. As many professionals in the Immigration sphere have said improvements to the investor route are welcomed if they will stop ill-gotten gains being invested in the UK.

Immigration Minister Caroline Nokes, has made it very clear that she is “bringing forward these new measures which will make sure that only genuine investors, who intend to support UK businesses, can benefit from our immigration system.”

She has also stated that the UK will always be open to “legitimate and genuine investors” but will not tolerate “people who do not play by the rules and seek to abuse the system”.

Duncan Hames, director of policy at Transparency International UK commented that

“Any new investor visa system must be water-tight, and subject to independent checks to ensure it does not become a red carpet for those who seek to use the UK as a safe haven for their ill-gotten gains”.

The suspension of the Tier 1 (Investor) visa does not mark an end to the route as there is still hope for anyone who wishes to invest in the UK in the future.

However if you are considering moving to the UK under this route do not dismay as the Tier 1 (Entrepreneur) route is still available. This route  only requires a minimum investment of £200,000 into an existing business or new venture and can still lead to settlement after five years.

If you wish to discuss how the present suspension of the Tier 1 (Investor) visa route may affect you or if you were considering this route and would now like to consider alternative available options please contact Kezia Daley in our Immigration team.

Email:Kezia.daley@dwfmbeckman.com
Tel: 020 7408 8888