Transparency International has published a new report looking at the UK Investor visa Tier 1 scheme.

Tier 1 Investor visa allows applicants to settle permanently in the UK on the basis that they invest £2 million or more in UK government bonds, share capital or loan capital in active and trading UK registered companies. Applicants can invest up to £10 million and, depending on the amount they invest, they can potentially acquire indefinite leave to remain in the UK in either five (£2m), three (£5m) or two years (£10m).

While the current UK government continues to impose more and more restrictions on all other visa categories, the Tier 1 Investor route currently appears to be the easiest way into the UK.

First introduced in 2008, the number of successful Tier 1 investor applicants have increased from just 153 in 2009 to 1,173 in 2014 and 60% of all investor visas have been granted to either Russian or Chinese nationals contributing to about £1.88bn worth of investments.

However, it is now being suggested by, among others, the Russian and Chinese governments themselves that it is highly likely that substantial amounts of corrupt wealth stolen from China and Russia have been laundered through the UK investor visa programme. Despite this, there are currently NO active investigations by the UK authorities into funds laundered into the UK of the proceeds of corruption stolen from China and Russia.

Forget the EU and American sanctions against Russia, one just have to look at the fact that a total of £3.15bn have entered the UK’s economy through the Tier 1 Investor route since 2008 to understand why the government does not seem to be taking much of an interested in where do these foreign investments actually come from.

In fact, the UK government has accepted that its anti-money laundering system has “significant weaknesses in its supervisory structure and in terms of the level of compliance and reporting standards across relevant private sectors”. David Cameron has over the last few years pledged to tackle tax evasion and money laundering. According to the UK prime minister: “transparency is the answer”.

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Consequently, there was another set of changes introduced to the Immigration Rules in September 2015. The requirement to prove absence of prior criminal records before being granted a visa appears to be the only change that might have a potential effect on Tier 1 investor visa applicants. However, one struggles to see it having any major effect particularly on individuals involved in state level corruption, where the highest levels of government officials are complicit.

Despite the fact that the current government appears to recognise the risks posed by money laundering in the UK, the situation is unlikely to change in the near future as money still appear to talk loudly in our society. This was very entertainingly highlighted by the very recent Channel 4 documentary showing a number of the major London estate agencies appearing to willingly disregard obvious signs of the funds in question being the proceeds of theft and corruption when presented with an undercover Russian investigator posing as a high-net worth individual interested in London property market.

If there is a genuine concern over corrupt wealth entering the UK, the current government will need to consider the 10 recommendations made by the Transparency International, which can be broadly summarised into the following main points:

Greater integrity and transparency in the Tier 1 Investor visa scheme;
Improvement of mechanisms for international cooperation to identify and recover corrupt assets;
Improvement in the law enforcement capacity and the effectiveness of anti-money laundering supervision in the UK.

Otherwise, what appears to be happening at the moment is that immigration rules are being easily abused by individuals laundering money on international scale, whilst, genuinely talented entrepreneurs who are trying to bring bright new ideas and create jobs in the UK are struggling to comply with the Entrepreneur visa requirements and the government’s continuous tightening of the immigration rules.

Emil Manasyan (Associate @ Edmans & Co)

Copyright Edmans & Co Ltd regulated by the Office of the Immigration Services Commissioner (OISC).