Personal Immigration

The UK bank account ‘rule’ for Tier 1 Investors – what does it really mean?

Tier 1 Investor visa applicants are now required to have opened an account with a UK regulated bank before submitting their investor visa application. The Immigration Rules require that the account must have been opened with a bank and for the purpose of investing not less than £2 million in the UK. The rules also require that the bank must be regulated by the FCA for the purpose of accepting deposits. However, a policy document published by the Home Office suggests that these ‘rules’ should not in fact be read as imposing mandatory requirements at all.

The Legal Requirement

Paragraph 59 of Appendix A to the Immigration Rules provides that in the case of an application for entry clearance or leave to remain as a Tier 1 Investor made under the Immigration Rules in force since 6 November 2014, the applicant must provide an original letter issued by an authorised official of a UK regulated bank, on the official letter-headed paper of the institution, which:

(a) is dated within the three months immediately before the date of the application;

(b) states the applicant’s name and account number; and

(c) confirms that:

(i) the applicant has opened an account with that bank for the purpose of investing not less than £2 million in the UK; and

(ii) the bank is regulated by the Financial Conduct Authority for the purposes of accepting deposits.

What is a ‘UK regulated bank’?

The first anomaly in the UK bank account ‘rule’ is that a ‘UK regulated bank’ does not actually need to be a bank at all. Paragraph 64 of the Tier 1 Investor Policy Guidance confirms that for the purpose of meeting the UK bank account rule, a ‘UK regulated bank’ is to be defined as ‘a UK-based FCA regulated financial institution’. UK-based FCA regulated financial institutions are listed on the Financial Services Register (see paragraph A11 of Appendix A to the Tier 1 Investor Policy Guidance) and encompass banks, building societies, insurers, independent financial advisers, mutual societies and investment managers and stockbrokers. Therefore, the bank account rule may be satisfied with a letter from a wealth management organisation, for example, rather than from a bank in the traditional sense.

Accounts with institutions that can make investments but not hold deposits

A literal reading of paragraph 59(c)(ii) of Appendix A to the Immigration Rules suggests that it imposes a mandatory requirement that the UK-based FCA regulated financial institution must be regulated by the FCA ‘for the purposes [sic] of accepting deposits’.   However, paragraph 65 of the Tier 1 Investor Policy Guidance confirms that if an investor has opened an account with an institution that does not itself accept deposits but can make investments (for example, a wealth management organisation using an underlying custodian bank), then the bank letter can be sent from the investing institution (the wealth management organisation) instead, provided that the institution can rely on the customer due diligence undertaken by the deposit-holding body (the underlying custodian bank). The investing institution should have agreed on that reliance with the deposit-holding body, and be able to access the due diligence information on request. However, contrary to the wording of paragraph 59(c)(ii) of Appendix A to the Immigration Rules, the UK-based FCA regulated financial institution does not need to be capable of accepting deposits.

Accounts with institutions that can hold deposits but not make investments

A literal reading of paragraph 59(c)(i) of Appendix A to the Immigration Rules would suggest that it imposes a mandatory requirement that the investor visa applicant must have opened an account for the purpose of that bank making an investment, rather than merely holding money on deposit. However, paragraph 66 of the Tier 1 Investor Policy Guidance confirms that if the investor has opened an account with an institution that accepts deposits but does not make investments (for example, banks that do not offer an investment function), then the bank letter can be sent from the institution with whom they have opened the deposit account. The letter must still confirm that the institution is satisfied that the investor has opened an account for the purpose of investing not less than £2 million in the UK (even where the qualifying investments will not be made from the account opened), but contrary to the wording of paragraph 59(c)(i) of Appendix A to the Immigration Rules, the UK-based FCA regulated financial institution that produces the letter does not need to be capable of making investments.

Pre-existing accounts

Paragraph 59(c)(i) of the Immigration Rules can also be read as imposing a requirement that any UK bank account should be a new account which is opened with the intention of investing not more than £2 million in the UK. However, paragraph 67 of the Tier 1 Investor Policy Guidance confirms that if the investor visa applicant has previously opened an account that meets the requirements of paragraph 59 of Appendix A to the Immigration Rules, then the required letter can acknowledge that the account was opened previously but will be used for the purpose of investing not less than £2 million in the UK. Pre-existing accounts can therefore be relied upon.

So what does the UK bank account rule mean?

Despite what the relevant Immigration Rule says, Home Office policy therefore is that Tier 1 Investor visa applicants can open an account with any FCA regulated financial institution, not necessarily a bank in the traditional sense. The financial institution does not need to be capable of holding deposits provided that it is capable of making investments. Equally, however, the financial institution may be a deposit accepting institution only. And, there is no requirement to open a new account; pre-existing accounts can be relied upon.

Is the UK bank account rule workable in practice?

Why the Immigration Rule setting out the UK bank account rule has been drafted subject to so many qualifications outside the rules is not clear. It would be more appropriate for the scope of the bank account rule to be made clear within the Immigration Rules themselves, rather than this being left to a series of ‘clarifications’ hidden away within Home Office policy guidance where they risk being missed by applicants, advisors and Home Office caseworkers alike.

And one further problem persists. Both the Immigration Rules and Policy Guidance assume that FCA-regulated financial institutions will be willing to confirm that an investor visa applicant’s funds will be used for the purpose of investing not less than £2 million in the UK. It remains to be seen whether they will or will not, but requiring an FCA-regulated financial institution to confirm a third party’s intentions may be a step too far for many, regardless of the wealth of their client.

Contact Us

For advice and assistance in relation to an application for entry clearance, leave to remain or settlement as a Tier 1 Investor, contact our business immigration barristers on 0203 617 9173 or email info@richmondchambers.com.

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