Update: This is very strange. The Tier 1 Investor Visa scheme was not suspended at midnight on 7 December 2018 despite the Home Office saying it would be. Watch this space!
Even before the decision to suspend the Tier 1 Investor visa scheme a number of investment related companies had decided that they did not wish to continue to be involved in the scheme. It may be worth looking at other Tier 1 visa schemes such as the Tier 1 Entrepreneur visa and the Tier 2 Sponsor Licence and Tier 2 visa scheme. Birmingham-based wealth management firm, Quilter Cheviot, scrapped its Tier 1 investor visa services recently, amid concerns over competitors offering open investment accounts to wealthy foreign investors, prior to the completion of due diligence checks. The firm’s decision has once again shed light on attempts to abuse the Tier 1 investor visa programme.
Sanwar Ali workpermit.com comment:
Due to concerns over money laundering and financial crime the Tier 1 Investor visa route will be suspended from midnight today 7 December 2018. Some had commented that for many of the people under the Tier 1 Investor scheme it was uncertain where the money had come from. It seems likely that the Tier 1 Investor visa scheme will reopen some time in 2019. The Tier 1 Entrepreneur visa scheme will continue to be available for applicants. It seems that Tier 1 investor applicants will need to deal with a great deal of scrutiny into how they made their money in the future. Probably the most famous Tier 1 Investor Russian Israeli Roman Abromovich already left the UK for Israel earlier this year.
Earlier this year, a number of high-profile millionaire and billionaire Russian investors – including Chelsea Football Club owner, Roman Abramovich – were subject to a Tier 1 investor visa investigation, as the UK Home Office sought to clampdown on ‘dirty money’ being used to fund investments.
Under current Tier 1 investor visa rules, wealthy foreign investors can come to the UK for up to three years with a £2 million or more investment in an actively trading, UK registered company. There’s an option to extend the visa by a further two years, leading to eligibility for indefinite leave to remain in the UK.
Tier 1 visa services dwindling
It’s understood that a number of wealth management firms and private banks offer Tier 1 investor visa services, however, the number is declining. According to a report published by Wealth Manager, more and more wealth management firms and private banks are scrapping their Tier 1 investor visa services as they make very little money from them.
The way funds have to be invested makes the Tier 1 visa investor programme very complex and involves a lot of paperwork. Investors are required to provide extensive evidence that they have the required investment funds as part of their investor visa application, and there are a number of criteria applicants have to meet to be eligible.
Almost 50% of Tier 1 investor applications originate in China and Russia
According to Home Office statistics, nearly 50% of Tier 1 investor visa applications are made by Chinese and Russian nationals. However, these countries are considered ‘high-risk’ by the Home Office for potential money laundering and concerns over the origin of investment funds.
These factors represent huge obstacles for wealth management firms and private banks offering Tier 1 investor visa services.
One firm said: “A number of our clients, including ultra-high net worth individuals, struggle to open accounts, amid concerns over money laundering and sensitive political issues.”
Meanwhile, the doubling of the investment threshold from £1 - £2 million in November 2014 has made access to the Tier 1 investor visa even more difficult for Chinese nationals, with China’s government clamping down hard on money leaving the country.
Tier 1 Investors investing more than £2 million
According to Wealth Manager, clients using Tier 1 investor visa services tend to have more to invest than the required £2 million. Firms offering the service aim to build a rapport with clients in an effort to get them to invest in a more profitable part of their business.
An industry insider said: “Many wealth firms adopt a buy and hold strategy. It doesn’t make them much money, but at least it doesn’t cost much and it lowers their risk exposure.”
It’s this type of strategy that has reportedly led to Quilter Cheviot scrapping its Tier 1 investor visa services, as their competitors have increasingly started offering pre-accounts, which have become commonplace for luring in new clients.
An industry expert, who wanted to remain anonymous, said: “The issue of companies opening up accounts before due diligence checks are complete has been an issue for a while now, especially among the big wealth management firms.”
“The trouble is, while most of those accounts will be clean money, good people and there won’t be any issues, until you’ve done the proper checks you just don’t know. It’s just not worth the risk,” the industry expert added.
However, an industry insider told Wealth Manager that the likelihood of failing due diligence checks once a pre-account had been opened, is minimal. The industry insider said that this was because the investor will have already been granted a Tier 1 visa to enter the UK.
Further information, help, and advice for other Tier 1 Visa schemes
Workpermit.com’s team of specialists has 30 years of experience in immigration services, and has helped thousands of people to study, work, invest and live in the UK. We represent clients under Section 84 of the 1999 Immigration Act, and we can advise and assist with your UK visa application.