How the golden visa scheme let Russian money pour into the UK

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In 2018, in retaliation for the Novichok poisoning of Sergei and Yulia Skripal in Salisbury, the Home Office promised to review the visas of 700 Russian expats. These Russian citizens, who came to Britain between 2008 and 2015, had benefited from the Tier 1 visa programme – a route to residency – also known as “golden visas” – for wealthy foreigners willing to invest millions of pounds in the UK.
Now, despite several changes in the years following the poisoning, the Intelligence and Security Committee’s report into Russian activity in the UK has once again recommended the scheme’s overhaul. It claims that the Tier 1 scheme, and similar previous schemes stretching back to the early 90s, turned London into a “laundromat” for corrupt foreign money, and cemented Russian influence in the UK’s business and social scene as the “new normal”. It is likely, the report states, that such a move would at this point only constitute “damage limitation”.

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The golden visa programme was introduced in 2008, along with other reforms to the immigration system, to simplify routes to residency and citizenship in the UK. At the time, the stated aim of this programme was to “boost the UK’s economy by attracting and retaining the ‘brightest and best’ workers or business people.” Qualifying was straightforward. Foreign nationals had to invest a minimum of £1 million (raised to £2m in November 2014) in the UK – in bonds, share capital or companies. With a £2m investment, they could apply to settle within five years; with £5m, the wait reduced to three years; with £10m, it was just two years.
Between 2008 and 2015, just over 3,000 individuals came through the scheme, peaking in 2014, in which 1,172 visas were granted. Twenty-three per cent (705) of the people granted residency during that period were Russian. Transparency International, a non-profit that investigates global corruption, labels this a “blind faith” period.
“We found out, through our research and investigation back in 2015, that when someone would apply for a visa, the Home Office would grant the visa before the money had been invested through a UK bank,” says Rachel Davies, head of advocacy at Transparency International. “They would just trust that the banks would do their normal anti-money laundering due diligence that they have to do under law.” It turned out that the banks didn’t. They trusted the fact that the Home Office had granted the person a visa; they didn’t check the money either.
Though no list of Russian figures who have benefited from this scheme has been released, there have been high profile examples. Roman Abramovich, the owner of Chelsea football club, is probably the most famous – he secured Israeli citizenship after the UK government failed to renew his visa in 2018.

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A conservative estimate of the amount of money from Russian actors that flooded into the UK during this period is £729m, though Davies emphasises that it’s likely much higher than that. Not all the Russians that have used the scheme are linked to criminality and corruption, but those who are and managed to slip through the net represent a threat on two levels: money laundering and political influence.
The former is a worldwide problem – the Global Financial Integrity, a research authority, estimated that in 2012 around £54 billion of illicit wealth was moved out of China and around £6.2bn from Russia. Three years later, in 2015, China’s central bank estimated that £82bn of suspected corrupt wealth was laundered out of the country every year, while the Central Bank of Russia said the annual outflows of illicit money from Russia could be as high as £31bn. The UK’s National Crime Agencyestimates that £100bn in “dirty money” is funnelled into the UK each year, mainly from Russia, Nigeria, Pakistan and the Far East.
This has provided dirty money with a safe haven. “Imagine someone who is in Russia or China, and they are involved in illegal activities – let’s say drug trafficking,” says Alina Tryfonidou, a professor of law at the University of Reading. “The scheme actually provides an opportunity for them to both use the money in some way, and then also to have the chance to move somewhere else if they feel they’re going to be caught in their country of nationality.”
This investment generates a second problem: political capital. Since the 90s, the Intelligence and Security Committee’s report says that Russian citizens with close links to Russian president Vladimir Putin invested in building influence across a wide swathe of the British establishment – PR firms, charities, academic and cultural institutions, contributing to a “reputation laundering” process. And with British citizenship came the right to donate to British political parties. “Some of them will be totally legit, and some of them will have links to Putin or corruption or criminality,” says Davies. “And they may now be citizens of the UK, hobnobbing with politicians, sending their kids to the same private schools, moving in their circles and having influence in the UK.”

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This is why curtailing the Tier 1 scheme puts direct pressure on Putin, explains James Nixey, director of Chatham House’s Russia and Eurasia Programme. “They may or may not be taking orders from the inner circle of the Kremlin, but that’s not the point,” says Nixey. “If you are putting pressure on these Russian clans in their various forms, and you’re disrupting activity, you’re making them less wealthy. You decrease the pie, which ultimately is what Putin dishes out – this makes his life that much harder.”
The Home Office has made several reforms to the scheme. In early 2015 the UK government changed the rules – applicants had to open a UK bank account before they applied for a visa, closing the previous “blind faith” loophole. (The number of visas granted promptly dropped down to around 800). From March 2019, banks have had to provide a letter to the government to confirm that they’ve done all the due diligence checks on the source of the funds before the visa is approved. The government also expanded the requirements for evidence of the origin of funds – they now carry out checks going back two years, rather than merely requiring that the applicant has held the money for 90 days before investing, as was previously the case.
A Home Office spokesperson says that the government will be reviewing all Tier 1 investor visas granted before these reforms were made. “The government will not tolerate any foreign interference in the running of our sovereign state and has taken action at every level to defend the UK, including from illicit finance.”
Despite this, the issuing of golden visas has risen to a five-year high, with the Home Office granting 255 people Tier 1 investor visas in the first half of 2019 alone. “We need more transparency about the review they’ve told us they conducted on successful applicants during the blind faith period,” says Davies. “The overhaul was too late for the 3,000 people who came into the country between 2008 and 2015, with no checks on the source of their wealth.”
Will Bedingfield is a staff writer for WIRED. He tweets from @WillBedingfield
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