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Tier 1 Investor Visa: Anti-Money Laundering Provisions

A recent investigation by Channel 4’s Dispatches alleged serious failings in the Tier 1 Investor visa scheme, with the Home Office supposedly delegating anti-money laundering checks to banks and investment managers, whilst legal advisors counselled potential clients that sensitive information regarding source of funds need not be disclosed.

Much has been written elsewhere about the advice provided by the representatives featured.  Equally striking from a legal perspective though was the suggestion that a Tier 1 Investor visa can be obtained, in the words of the reporter, simply “by opening a bank account in the UK and agreeing to invest £2m into British companies.

The reality is, of course, that the Immigration Rules are not only far more nuanced, but offer far more protection against money laundering than Channel 4’s report would have led many to believe.  

Tier 1 Investor visa: anti-money laundering provisions

Tier 1 Investor visa: source of funds

All Tier 1 Investor visa applicants are required to provide the Home Office with evidence of the source of their wealth.

Where the funds to be invested have been under the applicant’s control for a consecutive 2-year period of time, the applicant must provide, depending on the circumstances of their application, either a portfolio report or letter from a UK FCA regulated financial institution, documentary evidence of their holdings, personal bank statements on official bank stationary from a bank that is regulated by the official regulatory body for the country in which the institution operates and the funds are located or a confirmation letter from such a bank.  In all cases the evidence must cover a consecutive 2-year period of time.

In addition, if the investment funds are held overseas, the Tier 1 Investor visa applicant must also provide a letter from a bank or financial institution that is regulated by the official regulatory body for the country in which the institution operates and the funds are located.  The letter must confirm both the beneficial owner of the funds and that the funds are freely transferable to the UK.

Where the funds to be invested have been under the applicant’s control for less than 2 years, a Tier 1 Investor visa applicant is required to provide additional evidence that the money is under their control and that they are free to invest it.  The exact evidence required varies depending upon the source of the funds.  However, where funds have been received in the last 2 years by way of a gift, for example, a Tier 1 Investor visa applicant must provide an irrevocable memorandum of gift supported by a confirmation letter from a legal adviser permitted to practise in the country where the gift was made.  Both documents must satisfy various strict evidential requirements of the Immigration Rules.

Tier 1 Investor visa: provenance of funds

In addition to the requirement to prove the source of funds, paragraph 245EB(e) of the Immigration Rules vests the Home Office with power to refuse any application for entry clearance as a Tier 1 Investor if it has reasonable grounds to believe that either:

(i) “the applicant is or was not in control of and at liberty to freely invest the money”; or

(ii)  “[the money] has been acquired by means of conduct which is unlawful in the UK or would constitute unlawful conduct if it occurred in the UK”; or

(iii)  “[the money] has been or will be transferred internationally by means which are unlawful in any of the countries involved”.

Tier 1 Investor visa: conduct, character and associations

At the same time, paragraph 245EB(a) of the Immigration Rules provides that: “The applicant must not fall for refusal under the general grounds for refusal.”  

The general grounds for refusal are set out in Part 9 of the Immigration Rules and provide at paragraph 320(19) that entry clearance should normally be refused where:

(19) The immigration officer deems the exclusion of the person from the United Kingdom to be conducive to the public good. For example, because the person’s conduct (including convictions which do not fall within paragraph 320(2)), character, associations, or other reasons, make it undesirable to grant them leave to enter.

Guidance issued to Home Office caseworkers confirms that caseworkers considering Tier 1 Investor visa applications must consider refusing an Investor visa applicant under paragraph 320(19) when “admitting the person may lead to a breach of UK law”.   Moreover, although caseworkers must be able to show that their decision was based on sufficiently reliable information, “intelligence given by UK law enforcement agencies or relevant and reliable open-source information may give sufficient grounds for your refusal.”

In Ivlev, R (on the application of) v Entry Clearance Officer, New York [2013] EWHC 1162 (Admin) the claimant’s application as a Tier 1 General migrant was refused under paragraph 320(19).  Mr Justice Sales held that the decision maker had a wide power of evaluative judgement to assess what might or might not be conducive to the public good under this paragraph and a wide discretion.  The view that it was conducive to the public good to avoid taking the risk of admitting someone who might be prepared to engage in serious criminal activities was legitimate.

Tier 1 Investor visa: the bank account rule

Finally, it should be recalled that paragraph 59 of Appendix A to the Immigration Rules stipulates that in addition to the evidence relating to money to invest, an applicant for a Tier 1 Investor visa must provide a letter issued by an authorised official of a UK regulated bank, on the official letter-headed paper of the institution, which confirms, amongst other things, that “the bank has carried out all required due diligence checks and Know Your Customer enquiries in relation to the applicant”.  The required anti-money laundering checks are those mandated by the Financial Conduct Authority.

Comment: Tier 1 Investor anti-money laundering

The suggestion made by Channel 4 that “overseas tycoons can exploit the so-called golden visa system to buy the right to live in Britain even if they have links to the Russian President Vladimir Putin or provide critical components to the Chinese military” is therefore arguably misleading.

The reality is that the Home Office has available to it a veritable armoury of legal provisions that it can deploy to defend our shores against international money laundering.

The Immigration Rules require all Tier 1 Investor visa applicants to prove both the source and provenance of their investment funds.  If a UK Investor visa applicant cannot provide the required evidence to show how long they have held their funds for or where their funds have come from, or if the evidence is not in the required format or does not contain all the required information, then their application for a Tier 1 Investor visa will fall to be refused.

At the same time, where there is evidence that the applicant may not genuinely be in control of their money, or the funds have been obtained otherwise than by legal means, or the funds have, or will be, unlawfully transferred to the UK, then the power to refuse is enshrined in law.

Finally, as we have seen, the Home Office also has a wide discretionary power to refuse any application for a Tier 1 Investor visa on the ground that admitting the applicant to the UK ‘may’ or ‘might’ lead to a breach of UK law, whilst the strict FCA compliance requirements imposed on financial institutions only serve to complement the already robust anti-money laundering provisions of UK immigration law.

The Home Office is apparently working on introducing an ‘independent wealth audit requirement’, carried out by a UK-regulated auditor, before an investor can make a Tier 1 Investor visa application.  That stringent anti-money laundering protection is desirable is non-contentious.  Whether this particular measure is necessary in light of the existing legal framework, is less clear cut. 

Contact our Investment Immigration Barristers

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