Prime Minister Announces Review of the Tier 1 Investor Visa Category

On the afternoon of 19 March 2018, the House of Commons debated the laundering of dirty money in the UK, in the context of amendments to the Sanctions and Anti-Money Laundering Bill, a British counterpart to the USA Magnitsky Act. This followed the recent poisoning of Sergei Skripal, and his daughter, in Salisbury. During the debate, the Tier 1 Investor visa route came under heavy fire, ultimately prompting a review of the Tier 1 investor visa.

Review of the Tier 1 Investor visa

Ben Wallace MP, Minister for Security and Economic Crime, was asked, “What steps will the Minister take to enable us to understand where the £2 million-plus comes from, so that we can be assured it is not dirty money and that these are not unsavoury individuals?” The response included a variety of measures which boiled down to better due diligence and tackling transnational criminals through a more co-ordinated Government response; CIFAS and Government registers, such as the police national computer, were also mentioned. Importantly, in response to sweeping generalisations regarding Russian investors, Ben Wallace MP noted that the government must recognise the rule of law and cannot target individuals without evidence.

On 26 March 2018, the question was put to the Prime Minister, Theresa May, directly, asking if she would commit to strengthen checks on the wealth for the “2,500 oligarchs that have acquired [Tier 1] visas in less than 10 years”.  The Prime Minister’s response was, “My right hon. Friend the Home Secretary has in hand a review of that particular tier of investor visas”.

Previous Safeguards

The Tier 1 Investor visa in its current points-based system inception was introduced on 30 June 2008. During the financial crisis, the Tier 1 route was intended to attract foreign investors, entrepreneurs and exceptional talent, to boost the UK’s economy and promote growth. Investors, who generally invest in Government bonds, continue to effectively provide a 2, 3 or 5 year loan to the Government. Importantly, the UK further benefits from taxation of the Investor, and from the Investor’s consumption in the UK. The Tier 1 Investor route helps encourage high net worth individuals and their families, to reside and settle in the UK, and contribute to the economy once settled.

Prior to 6 November 2014, to enter the Tier 1 Investor route an applicant had to have funds available for a total investment of £1 million. Now, to enter the route, a prospective Investor needs to make a total investment of £2 million for settlement in the UK within 5 years. There is also an accelerated settlement option within 3 years, which requires an investment of £5 million, or in 2 years with an investment of £10 million.

While much has been made of the fact that wealthy individuals or oligarchs have invested millions in real estate in London, such an investment would not count towards their Tier 1 investment, which must be in UK government bonds, share capital or loan capital in active UK companies. Currently, no investment in companies engaged in property investment, management or development is permissible. If the applicant is under the previous rules of a £1 million investment, only the unmortgaged portion of the Applicant’s main home, up to a value of £250,000 can be counted towards their investment.

Much of the money laundering and lack of transparency concerns have been directed at what Transparency International UK has termed the ‘blind faith’ period prior the commencement of the current safeguards on 1 September 2015, during which the Home Office relied on the commitment of the applicant to transfer their funds to a UK bank account after they were awarded the Tier 1 Investor visa. The Home Office relied on checks carried out by the banks, and the banks relied on the grant of leave to enter as an Investor as evidence that the individual was suitable to open an account.

Current Safeguards

Since 1 September 2015, further requirements to enter this route considered the provenance of the funds, requiring that there not be reasonable grounds to believe that:

• Any of the money held by, or made available to, the Applicant, has been acquired by means which would constitute unlawful conduct in the UK ; or
• Where the money has been made available by another party, that the character, conduct or associations of that party are such that approval of the application would not be conducive to the public good.

There are additional requirements to prove the source of the funds where the applicant has not held the funds for at least 3 consecutive months before the date of application. Specified evidence is required for showing a gift, deeds of sale, evidence from a business, a will, divorce settlement, award or winnings or other sources. The applicant must supply every item of specified evidence to establish the source of the money and the Home Office may contact the source to confirm the information.

Furthermore, it should be remembered that the Tier 1 (Investor) route requires a criminal record certificate, for any country a proposed Investor, or his adult dependant, has stayed in for a total of 12 months or more (they do not have to be consecutive months), in the last 10 years. This certificate must have been issued within 6 months of the application.

Notably, the criminal record certificate only safeguards against persons with convictions. However, applicants for leave to enter or remain in the UK are also subject to the general grounds for refusal at paragraphs 320 to 322 of the Immigration Rules. These grounds include making false representations, submitting false documents, using deception, offending, or the catchall of undesirability based on conduct, character, associations or the fact that a person represents a threat to national security.

Should investors have long-term plans for their future in the UK, and wish to naturalise as British citizens, the UK’s system departs from citizenship-for-sale schemes in other countries. Investors will still be subject to the normal naturalisation procedure, which has a residence and good character requirement.

Suggested Safeguards

In the aforementioned debate of 19 March 2018, Wes Streeting MP, stated that many Tier 1 Investor visas were granted to “Russians during a period when almost no background checks were carried out” and asked what would be done by the Government to look at these cases retrospectively. Transparency International UK’s suggestion was for “public disclosures of who is investing, how much they are investing in and their financial interests and assets” and that “[r]etrospective checks should be undertaken on historical Tier 1 Investor visas… and consideration given to publishing their details”. The careful phrasing is perhaps indicative of the realisation that such drastic action would likely pose an unjustified breach of the privacy of investors.

Furthermore, while retroactive lawmaking and aggravated penalties are technically possible given the sovereignty of Parliament, Article 7 of the European Convention on Human Rights should be borne in mind, particularly if criminal offences are contemplated for alleged money launderers. Parliament should endeavour to ensure that the Rules regulating immigration are sufficiently clear and precise so that immigrants, who are already in a precarious position as opposed to other members of society, can ascertain the requirements for entering, remaining, settling, and naturalising in the UK and plan their lives accordingly.

Contact our Immigration Barristers

For expert advice in relation to the Tier 1 Investor visa and meeting the requirements of source of funds, at the entry, extension or settlement stage, contact our Immigration Barristers in London on 0203 617 9173 or complete our enquiry form.