U.K.’s Russia Report Demands Major Rethink of ‘Golden Visas’
(Bloomberg) -- A costly visa favored by Russian oligarchs and other wealthy investors should be completely revised because it was widely exploited and applicants weren’t adequately vetted, according to a report that laid out the scale of the country’s infiltration in U.K. society and politics.
“The U.K. welcomed Russian money, and few questions -- if any -- were asked about the provenance of this considerable wealth,” according to the report published on Tuesday by a panel of lawmakers. “One key measure would be an overhaul of the Tier 1 (Investor) visa program -- there needs to be a more robust approach to the approval process for these visas.”
The program, which is open to those from outside the European Economic Area and Switzerland, is appealing to ultra-rich foreigners as it allows recipients to stay in the U.K. for three years and four months in exchange for a 2 million-pound ($2.5 million) investment.
London has long been a particularly appealing jurisdiction for billionaire Russians to do business, hold their wealth and educate their children, so much so that the capital has been nicknamed Londongrad. The report not only criticized the embrace of Russian oligarchs but the cottage industry of “enablers” that formed around it.
“Any measures now being taken by the government are not preventative but rather constitute damage limitation,” the report said. “Lawyers, accountants, estate agents and PR professionals have played a role, wittingly or unwittingly, in the extension of Russian influence which is often linked to promoting the nefarious interests of the Russian state.”
Any visa changes could hamper other wealthy foreigners from around the world seeking a foothold in Britain. Chinese investors have increasingly turned to the visa in recent years, which has drawn the attention of Westminster before.
The Home Office announced a suspension in late 2018 to implement changes designed to mitigate money laundering and organized crime threats. It later reversed course.
Still, many regard the report’s findings as already out of date after Prime Minister Boris Johnson dragged his feet over its publication.
“The U.K. Investor visa category has gone through some changes already last year,” Farzin Yazdi, head of investor visa at Shard Capital Partners LLP, said by email.
The U.K. has issued about 1,000 tier 1 investor visas in the past three years and about 100 applicants were Russian compared to around 500 from China, according to data from the U.K. Home Office compiled by Shard Capital.
Overall numbers have fallen sharply since 2015 after the government introduced new anti-money laundering due diligence checks and doubled the required investment.
The report also criticized a tool introduced by the National Crime Agency -- the U.K.’s version of the FBI -- in 2018 to combat money laundering. Unexplained Wealth Orders force individuals, with assets worth more than 50,000 pounds, to prove their funds are from legitimate sources. Failure to comply with the order can allow a court to freeze the assets.
While the Orders appear to provide the NCA “with more clout and greater powers, the reality is that it is highly probable that the oligarchy will have the financial means to ensure their lawyers -- a key group of professional enablers -- find ways to circumvent this legislation,” the report said.
In April, the family of Kazakhstan’s former president overturned a freeze on their 80 million-pound property portfolio, in what was likely the first time a wealth order has been successfully challenged.
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