UK home secretary Priti Patel, said on 17 February at 3.17pm that she had closed down the Tier 1 Investor visa system "over security concerns", as the industry continued to absorb and react to the short notice crackdown spurred by the threat of a Russian incursion into Ukraine.
In the tweet, she said: "I've closed the Tier 1 Investor visa with immediate effect following our review of all those granted. This is just the start of our renewed crackdown on fraud & illicit finance. Our upcoming Fraud Action Plan and the Economic Crime Bill will better protect the taxpayer."
The Home Office further said in a fuller statement on 17 February that "the Home Secretary has taken decisive action to shut the Tier 1 Investor visa route to all new applicants from all nationalities with immediate effect".
"The route had allowed entry and stay in the UK if an applicant invested funds in share capital or loan capital in active and trading UK registered companies, it said.
"It has been under constant review and some cases had given rise to security concerns, including people acquiring their wealth illegitimately and being associated with wider corruption.
"While work has been done to reform the route in order to prevent abuse, the Home Office has acted to close it today."
The statement added: "This demonstrates the government's New Plan for Immigration in action - being firm against those wanting to abuse the immigration system while those who want to come to the UK and play by the rules will have that opportunity.
"The Home Office will be making reforms to the Innovator route, part of the new points-based immigration system, to provide an ambitious investment route which works more effectively in support of the UK's economy.
"Findings of a Home Office review, which looked at all Tier 1 Investor visas granted from when the scheme launched in 2008 up to 5 April 2015 when the route was reformed, will be published in due course."
Patel said: "I have zero tolerance for abuse of our immigration system. 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.
"Closing this route is just the start of our renewed crackdown on fraud and illicit finance. We will be publishing a fraud action plan, while the forthcoming Economic Crime Bill will crackdown on people abusing our financial institutions and better protect the taxpayer.
She continued: "Since its introduction, the Investor visa route has been reformed to improve its value to the UK economy and to reduce the exposure of the route to illicit finance.
"The introduction of the points-based immigration system has allowed us to target investors we want in the country. Improvements will be made to the Innovator visa route to support this.
"Settlement will now be conditional on applicants executing an investment strategy that can show genuine job creation and other tangible economic impacts, passively holding UK investments will no longer be enough to obtain settlement. "
The BBC had previously cited a government source who confirmed reports of an announcement next week on Tier 1 investor visas, which offer residency to those spending at least £2m.
Tijen Ahmet, legal director and business immigration specialist at law firm, Shakespeare Martineau, said: "Axing this scheme, especially at such short notice, will have a significant long-term impact on the UK economy at an already unsteady time.
"With no alternative visa route at present, this not only impacts future investments, but those already in progress. Legitimate overseas investors will now be left high and dry, not to mention the many families that were planning to move to the UK this year having already invested in real estate and secured places in UK schools for their children.
"While the UK's innovator visa route could provide alternative access to the UK for high-net-worth Europeans who can no longer take advantage of Free Movement, this provides much less flexibility for wealthy foreign investors, requiring them to set up and run a business in the UK. The golden visa scheme was also the only one that had no English language requirement, allowing recipients the freedom to work, study and do business in the UK, and provided applicants with a fast track to UK residency. The loss of this is significant.
"It's unlikely that the scheme will be replaced with an alternative at present as the closure was triggered by concerns over it being open to abuse, despite the fact that the Home Office previously reformed the scheme with a view to prevent corruption. More must be done to keep the UK an attractive place to live, work and invest."
Charlie Fowler, senior associate at Collyer Bristow LLP, said: "There has been a long-standing perception that the route is open to abuse for those looking to launder money, and it appears that the threat of a Russian incursion into Ukraine has expedited plans to bring the route to an end.
"It is worth remembering that the Government did previously announce plans in 2018 to scrap Investor visas, only to row back from that position almost immediately. Instead, stricter rules were introduced in March 2019 specifically to tackle concerns over money-laundering and the source of funds invested, and a further review has been underway more recently.
"Still, the perception has remained in some quarters that the Investor visa route is being exploited, in particular by applicants from Russia and China. After an understandable lull in 2020, 100 Investor visas were issued in 2021, of which 23 were granted to applicants from mainland China and 12 from Russia. Of the 56 Investor visas issued in the final quarter of 2019, 48% went to individuals from the same two countries."
He added: "The problem for the Government is that many Investor visa holders have, of course, acquired their wealth by legitimate means.
"They are happy to secure access to the UK by investing significant sums in UK businesses, at a time when inward investment is vital to an economy still coming to terms with Brexit and the impact of the Covid-19 pandemic.
"The concern for those individuals (and the family members they have brought with them to the UK), is what will happen to them if Investor visas are indeed scrapped. The expectation is that their rights will not be affected by any changes in the rules, but the latest updates from the Government must offer reassurance on that front.
"More broadly, an overseas national does not require an Investor visa to invest in the UK, so the visas are unlikely to be the only means of laundering money through UK investment. However, the Government appears to be concerned that it has very little control over which individuals are able to use the visa as a route to UK residence.
"The Government is right to step up its efforts to tackle money-laundering, and its drive for increased transparency is an important part of that work. However, hopefully it will not be to the detriment of those who are not exploiting the system. One wonders whether, rather than reversing the Investor visa category, it can instead be revised to place greater requirements on applicants that ensure that only 'clean' money is invested in the UK. We await further clarification from the Government about what its intentions are."
While Danielle Reece-Greenhalgh, senior associate at law firm Corker Binning, said: "The Tier 1 visa regime has received close scrutiny since its inception, with Russian and Chinese investors making up the vast majority of its users.
"Concerns over illicit wealth led to a tightening of the regime in 2015, but the Home Office has remained entirely reliant on the AML procedures of UK banks and financial institutions to ensure that the scheme is not being used to launder the proceeds of crime into the UK.
"The scrapping of the ‘golden visa' is a radical solution, but fails to address the underlying problem as to the efficacy of the UK's money laundering controls."
Tijen Ahmet, legal director and business immigration specialist at law firm, Shakespeare Martineau, also commented:"Axing this scheme, especially at such short notice, will have a significant long-term impact on the UK economy at an already unsteady time.
"With no alternative visa route at present, this not only impacts future investments, but those already in progress. Legitimate overseas investors will now be left high and dry, not to mention the many families that were planning to move to the UK this year having already invested in real estate and secured places in UK schools for their children.
"While the UK's innovator visa route could provide alternative access to the UK for high-net-worth Europeans who can no longer take advantage of Free Movement, this provides much less flexibility for wealthy foreign investors, requiring them to set up and run a business in the UK. The golden visa scheme was also the only one that had no English language requirement, allowing recipients the freedom to work, study and do business in the UK, and provided applicants with a fast track to UK residency. The loss of this is significant.
"It's unlikely that the scheme will be replaced with an alternative at present as the closure was triggered by concerns over it being open to abuse, despite the fact that the Home Office previously reformed the scheme with a view to prevent corruption. More must be done to keep the UK an attractive place to live, work and invest."
