LONDON — The British government is preparing to suspend a special visa program that allows wealthy investors to fast-track their settlement in the country, part of a new drive to crack down on money laundering.
The Tier 1 visas will be suspended from midnight on Dec. 7 until the Home Office introduces tighter restrictions to tackle corruption and organized crime.
“We will not tolerate people who do not play by the rules and seek to abuse the system,” Immigration Minister Caroline Nokes said in a statement on Thursday.
What are Tier 1 visas?
They are not called “golden visas” for nothing. They provide a faster route for wealthy investors coming from outside the European Union and Switzerland to settle in Britain.
The program was introduced in 2008 to attract wealthy foreign nationals willing to invest large amounts of capital in Britain. Billions of pounds have poured into London over the past decade, following an influx of global elites who have benefited from the program.
It peaked in 2014, after 1,172 visas were granted.
The visa program has been especially popular among Russian oligarchs and wealthy people from China and the United Arab Emirates. More than 1,000 investment visas were granted in the 12-month period ending in September 2018.
Can you afford a golden visa?
To qualify, foreign nationals must put down a minimum of 2 million pounds (around $2.5 million) as an investment in Britain.
Such an investment in United Kingdom bonds, share capital or companies allows investors to apply for permanent residency within five years.
For a £5 million investment, they can apply for permanent residency after three years.
An investment of £10 million can open the door to permanent residency after two years.
After that, the nationals theoretically could apply for citizenship.
Is there a Russian link?
The visa program has always had its critics, with anticorruption campaigners railing against Britain’s openness to ill-gotten riches from overseas and the foreigners who invest them. But it reached a fever pitch after a former Russian spy, Sergei V. Skripal, was poisoned on British soil with a nerve agent in Salisbury, England.
Prime Minister Theresa May’s government signaled then that it would review the cases of 700 Russians who were granted visas to live in Britain under the Tier 1 visa scheme. Soon afterward, the visa renewal for the Russian billionaire owner of the Chelsea football team, Roman Abramovich, was mysteriously delayed.
Mr. Abramovich later surfaced in Israel, where he had apparently immigrated under the law of return, which guarantees citizenship to any Jew wanting to move there.
What are the problems?
Criticism of the program can be traced as far back as 2014, after visa applications soared. The government’s Migration Advisory Committee filed a report that said the scheme brought limited economic benefits because most of the investors had bought fixed-interest loan securities known as gilts, meaning that they were effectively loaning the government money instead of investing in the country.
“We do not need such investment to fund the deficit. We are selling around £300 million of gilts every day — therefore the capital market is working very efficiently,” the report said.
While investors and their families spend money in Britain and generate revenue, the favorable impacts are typically exaggerated, the committee found. As the benefits were being questioned, the authorities grew concerned over the origins of funds being invested into the country.
This year, the government introduced “unexplained wealth orders,” forcing those suspected of serious crimes to explain the provenance of their wealth and assets.
The National Crime Agency estimated that £100 billion in “dirty money” was being funneled into Britain each year, mainly from Russian, Nigeria, Pakistan and the Far East.
What restrictions are planned?
After the visa program is suspended on Friday, the Home Office will conduct an investigation before reintroducing it with stricter regulations.
Under the new rules, visa applicants will have to provide audits of all their financial and business interests using firms registered in the United Kingdom, and show that they have had control of their funds for at least two years, the Home Office said.
Changes will also be introduced to increase the benefits of the investment to British companies.