Visas aimed at enticing foreign investors with fast-track residency in the UK are being scrapped with immediate effect, the UK home secretary confirmed yesterday (17 February).
Priti Patel said the move was part of a crackdown on illicit finance and fraud. It comes in the wake of calls to limit the ability of wealthy Russian individuals to deposit large sums in UK banks.
But London law firms have criticised the decision, pointing out that Russian investors only accounted for 10% of the visas and that there is a lack of evidence of the visa being used to further corruption and criminality.
The decision is seen as part of the effort to increase pressure on Russian leader Vladimir Putin and his associates as the country concentrates military forces on its border with Ukraine.
However, the government now says the decision is part of a new plan for immigration.
The Tier 1 (investor) visa, often called a “golden visa”, offers residency to those investing £2m or more in the UK, and allows their families to join them. Visa holders can apply for permanent residency in the UK depending on how much they invest.
A £2m investment allows an application within five years, shortened to three years with £5m or two years if £10m is invested.
The scheme was introduced in 2008 to encourage wealthy people from outside the EU to invest in the UK but has been under review as it is thought it is open to abuse.
The government now says the visa route “failed to deliver for the UK people and gave opportunities for corrupt elites to access the UK”.
Patel added: “Under my new plan for immigration, I want to ensure the British people have confidence in the system, including stopping corrupt elites who threaten our national security and push dirty money around our cities.”
She said a fraud action plan would be created, alongside the forthcoming Economic Crime Bill.
The Home Office said settlement in the UK would now be conditional on applicants “executing an investment strategy that can show genuine job creation and other tangible economic impacts.” Merely holding UK investments passively would “no longer be enough to obtain settlement”.
Opposition politicians, including Lib Dem foreign affairs spokesperson Layla Moran and Labour shadow home secretary Yvette Cooper, called for the review into the visa scheme to be published. Moran said: “Shutting the door to Putin’s cronies is not enough – too many of them have already walked through it with virtually no questions asked.”
It seems unfair that overseas nationals from all countries will be denied this route because of what is happening in Russia” – Chetal Patel, Bates Wells
The Home Office has issued 2,581 investor visas to Russian citizens since the scheme was introduced in 2008.
In 2020, parliament’s intelligence and security committee argued for a “more robust” approach to approving Tier 1 visas as part of a report on Russian influence in the UK.
One City law firm criticised the decision to scrap the scheme, however, arguing that the move would unfairly punish international investors from other countries.
Chetal Patel, immigration partner at Bates Wells, pointed out that Russian nationals represented a minority of investor visas, comprising just 10% of all investor visas issued in the past year.
She added that overseas investors from many different countries would be limited in their options should they wish to come to the UK. New programmes, set to be introduced in spring, are aimed at entrepreneurs and won’t provide routes for investors.
Suggesting that the investor visa scheme is synonymous with corruption, money laundering and fraud is not at all accurate” – Kyra Motley, Boodle Hatfield
Patel said: “Ending Golden Visas would impact all nationalities. It seems unfair that overseas nationals from all countries will be denied this route because of what is happening in Russia. A blanket ban would be cutting off one’s nose to spite their face.
“Since the introduction of Golden Visas in 2008, the UK has benefitted from billions of pounds of investment. It would be enormously damaging to the UK economy if this was to be cut off.”
Kyra Motley, partner of Boodle Hatfield a leading private wealth law firm, agreed: “On a conservative calculation, the Investor Visa scheme has brought in over £17bn of investment into the UK over the last decade,” she said. “That is a substantial success.
“We ought to be trying to attract more such foreign investors not driving them away.”
She added that it appeared the Home Office had shut the scheme before any consultation and without publishing any statistics or other evidence of the misuse of scheme.
Motley said: “Suggesting that the investor visa scheme is synonymous with corruption, money laundering and fraud is not at all accurate. Nor does it seem accurate to suggest that the Investor Visa scheme undermines national security.”
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