Tier 1 Investor Visa: The UK bank account rule
Tier 1 Investor visa applicants are required to have opened a UK bank account before submitting their initial Tier 1 Investor visa application. In this post, we look at the basic requirements of the UK bank account rule for Tier 1 Investors and the various ways in which the UK bank account rule may be satisfied.
Tier 1 Investor UK bank account rule: the legal requirement
The Immigration Rules for Tier 1 Investors require that in an initial application for entry clearance or leave to remain as a Tier 1 Investor, the applicant must provide a letter issued by an authorised official of a UK regulated bank, on the official letter-headed paper of the institution.
The letter must be dated within the three months immediately before the date of the application and confirm that:
(i) the applicant has opened a UK bank account for the purposes of investing not less than £2 million in the UK;
(ii) the UK bank is regulated by the Financial Conduct Authority for the purposes of accepting deposits; and
(iii) the UK bank has carried out all required due diligence checks and Know Your Customer enquiries in relation to the applicant.
However, a policy document published by the Home Office suggests that the so-called UK bank account rule is more flexible than it may initially appear.
UK Bank Account rule for Tier 1 Investors: 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. Policy Guidance issued by the Home Office 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 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.
UK Investor Visa Bank Account Requirement: Accounts with institutions that can make investments but not hold deposits
A literal reading of the Immigration Rules suggests that they impose 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, Home Office 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 the Immigration Rules, the UK-based FCA regulated financial institution does not need to be capable of accepting deposits.
UK Bank Account for Investors: Accounts with institutions that can hold deposits but not make investments
A literal reading of the Immigration Rules would also suggest that they impose 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, Home Office 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 the Immigration Rules, the UK-based FCA regulated financial institution that produces the letter does not need to be capable of making investments.
Tier 1 Investor UK Bank Account: Pre-existing bank accounts
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, Home Office Policy Guidance confirms that if the investor visa applicant has previously opened an account that meets the requirements of 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 the strict wording of the relevant Immigration Rule, Home Office policy therefore is that Tier 1 Investor visa applicants can open a bank 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 our Immigration Barristers & Lawyers in London
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 via our enquiry form below.