Offshore
UK Suspends "Golden Visas" - Industry Reactions

The move prompted a number of law firms and other industry practitioners to comment, ranging from cautious optimism to concern that this will backfire.
Yesterday the UK government stunned practitioners in the space of
what are called “golden visas” when it announced that the Tier 1
Investor Visa regime
will be suspended from today. The government says it is
concerned that the regime is being abused, and is revamping the
system. The specific date for when the scheme could resume is not
yet confirmed.
The UK has operated its programme since 2008, and a large number
of jurisdictions now run these schemes, such as Spain, Malta,
Singapore, the US, Montenegro, St Kitts and Nevis, and Grenada.
They typically are pitched at high net worth investors. These
schemes have been controversial at times and some, such as the
Canadian programme, have been put on hold. This is now a
multi-million revenue earner for a clutch of advisory firms.
As expected, a number of organisations have reacted to the UK
move. Here is a selection.
Bruno L’ecuyer, CEO of the Investment
Migration Council
“The UK government may not have much influence with the European
Parliament these days, but it has provided an object lesson in
how to manage investor migration sensibly and for the benefit of
its citizens. According to reports, potential investors will have
to agree to undergo a thorough audit of their financial assets,
proving they have control of the required capital for at least
two years, and will require audits to be undertaken by suitably
regulated UK firms.
Most notably, it appears the UK government recognises the value
of investment migration and desires any investment made by
individuals to have a greater impact on the UK economy, which is
why it is apparently looking at scrapping its own government bond
option in favour of directing investment into active and trading
UK companies.
The IMC welcomes comments made by immigration minister Caroline
Nokes, that the UK will always be open to legitimate and genuine
investors who are committed to helping the economy and businesses
grow, and we urge the European Parliament and European Commission
to take note.
In October this year, the European Parliamentary Research Service
(EPRS) released a report that made it abundantly clear the
European Parliament regards investment migration as an inherently
corrupt practice.
The EU’s recourse was to recommend that CBI programmes be phased
out entirely. By contrast, the UK is recommending a process
of due diligence that goes far beyond other forms of granting
residence or citizenship rights, but still protects the
legitimate movement of capital and people, which is essential to
the contemporary global economic model.
Ahmed Ajina, associate at Seddons
There have long been concerns regarding the source of funds of
Tier 1 Investors, and the Home Office will argue that the
proposed changes will go a long way in combating financial crime,
money laundering and corruption. The changes however could
dissuade genuine investors, who have obtained their funds
lawfully, from investing in the UK as the increased number of
hurdles in place may lead to them investing in arguably more
straightforward investment programmes offered by countries within
the European Union.
Denis Nagy, Dolfin chief
executive
Regulation can often be improved once it is clearer how it is
working in practice and these proposed changes to the UK Investor
Visa scheme are a perfect example,” said Dolfin CEO Denis Nagy.
“The focus we’re now seeing on investments into UK corporate debt
and equities at the expense of gilts is an excellent idea since
it encourages investment in actual UK businesses. I’m also
intrigued by the mooted ideas around pooled investments which
sound like they could be a boon to smaller businesses who might
particularly need it in a post-Brexit landscape.
James Badcock, partner and head of private client
services at Collyer
Bristow
Investor visas are collateral damage in the crackdown on
money-laundering which has brought us unexplained wealth orders
and the national economic crime centre. Investor visas were not
some sort of money-launderers loophole. This suspension shows a
lack of faith in the effectiveness of general anti-money
laundering measures in other areas of the system - for example
bank account opening or the rules which apply to
professionals.
It is noteworthy that there is now no means by which many
non-working persons of independent means can apply to live in the
UK. The government does not seem opposed to the principle of
investor visas. Those who wish to apply in future will be hoping
any new investment requirements are not so over-engineered that
the investment becomes unattractive. That would in fact make the
regime even more the preserve of the super-rich for whom £2
million is small change.