New report says Russian and Chinese Tier 1 investors highly likely to have laundered corrupt wealth into the UK
The UK chapter of the anti-corruption watchdog Transparency International said in a new report this week that substantial amounts of corrupt wealth stolen from China and Russia are highly likely to have been laundered into the UK through the Tier 1 Investor visa system.
You can read the 28-page report, Gold Rush: Investment visas and corrupt capital flows into the UK, here.
Image credit: UK GovernmentUnder the Tier 1 Investor visa system (introduced in 2008), foreign investors can secure a grant of leave to remain in the UK if they invest a minimum of £2 million in UK Government bonds, share capital or loan capital in active and trading UK registered companies. After a certain number of years, investors can then apply for permanent residency in the UK (two years for those investing £10m or more, three years for £5m and five years for under £5m).
Transparency International UK says in its report that Home Office data shows that annual approvals for Tier 1 Investor visas have increased from 153 in 2009 to 1,173 in 2014. At least £3.15 billion has entered the UK through the scheme.
Out of the 3,048 visas granted by the UK since the scheme began in 2008, 60% have been awarded to Chinese and Russian nationals.
Transparency International UK says that both jurisdictions have higher than average corruption risks associated to them and it is reasonable to infer that a proportion of money invested into the UK by Russian and Chinese Tier 1 investors is linked to crimes of corruption.
The report states: "Despite the risk of money laundering through the Tier 1 Investor visa process, there have been serious failings in the scheme's system of due diligence checks, which have created loopholes for the vast majority of investors, and there is still no adequate and transparent system of upfront money laundering checks for golden visa applicants."
The report calls for greater integrity and transparency in the Tier 1 Investor visa system.
Transparency International UK recommends that the Home Office should require up-front and public declarations of legitimate income and legal sources of wealth, and that the UK Government should establish a preventative and intelligence-led 'visa denial' list for individuals that the security services have identified are highly likely to be involved in systemic corruption.
While Transparency International UK welcomed the September 2015 change to the Immigration Rules requiring that applicants prove they have no criminal records before being granted a visa, it says this will have no effect on individuals involved in grand corruption, where the highest levels of government are complicit and where no prior conviction may exist.
Earlier this year, Transparency International UK highlighted how a Channel 4 documentary showed London estate agents appearing to turn a blind eye to theft and corruption when presented with an undercover Russian investigator posing as a high-end property buyer.