Senior lawyers have reacted to the news that the UK government is to scrap fast-track residency via the so-called ‘golden visa' scheme amid pressure over UK links to Russia.
The BBC 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.
In early reaction to the government's planned move, 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 o f 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."
