The Home Office has announced reforms to the golden visas schemes for wealthy investors as the UK targets dirty money in the wake of the Skripal attack.
Under reforms to the Tier 1 (Investor) scheme, applicants will be required to prove they have control of the £2m they are required to have for two years, rather than 90 days, or provide evidence of the source of those funds.
The tier-one “investor visa” route has in the past attracted many wealthy Chinese and Russian investors who have resettled in the UK. However, in an attempted crackdown on money-laundering, the scheme has been under review since the UK’s relations with Russia deteriorated after the poisoning of former Russian agent Sergei Skripal in Salisbury last year.
Russian oligarch Roman Abramovich, owner of Chelsea football club and friend of Russian President Vladimir Putin, withdrew his golden visa application earlier this year as relations between the two countries went south over the Salisbury spy poisoning.
He was also denied residency in Switzerland after police warned officials of a possible “threat to public security” and the risk to the country’s reputation.
The number of Russians granted tier-one visas fell from 46 in 2017 to 29 last year, the lowest number since they were introduced in 2008.
The reformed scheme will be operational from 29 March.
The renewed effort follows an embarrassing debacle last year when it announced their suspension before being forced to backtrack days later.
The Home Office has also announced that two new visa routes, the startup visa and the innovator route, will also take effect from 29 March. The startup visa will be open to those starting a business for the first time in the UK, replacing the Tier 1 (Graduate Entrepreneur) route.
It will apply for people of any background, not just graduates, and they will have double the amount of time, two years, to make their business a success before they need to make a further application.
The Innovator route will be for more experienced business people who have £50,000 to invest in their business, down from the £200,000 required under the previous scheme.
Caroline Nokes, immigration minister, said her priority was “making sure that talented business people continue to see the UK as an attractive destination to develop their businesses”.
Rose Carey, Partner at Charles Russell Speechlys and specialist in business immigration for corporate and high net worth clients, said investors would welcome many of the changes made.
“Investors will now have to show source of wealth for two years rather than the current 3 months. In reality, investors already have to provide a comprehensive source of wealth evidence to the banks and so this change just means that they will need to provide the information at an earlier stage in the application. UK banks will need to confirm they have conducted Know Your Client and Due Diligence checks when opening the UK bank account for the investor, but these checks are something the bank has to do anyway as part of its FCA regulation”, she said.
With the Tier 1 Entrepeneur visa becoming an increasingly tricky process, Carey added that “as such, the replacement of the scheme with the new Start-Up and Innovator categories which require independent assessment and endorsement by experts will be a positive change. Endorsement by independent expert bodies has worked well in other visa categories, for example the Tier 1 Exceptional Talent visa, which requires endorsement by an expert body.
“With Brexit looming and the difficulties this has posed for the economy, encouraging investment from outside the EU is important. Equally, demonstrating that the UK is open for businesses will be a welcome message.”
Nadine Goldfoot, Partner at Fragomen, said: “The Home Office is making welcoming practical changes for entrepreneurs and they’re doing the right thing. It makes such a difference when experts assess applications, rather than officials being expected to decide what makes good business. But the Home Office must ensure that the endorsement process is streamlined, pragmatic and doesn’t stifle innovation.”
“The current Tier 1 Entrepreneur route still has an important role to play for those who want to invest £200,000, in more established businesses.”
“The question many ask is, what is the Home Office seeking to achieve by increasing the length of time monies must be held? If it is to address the compliance concerns on and source of funds, it’s hard to see how these changes will achieve this.”