Virginia, US

On 27 March 2018, the Prime Minister gave oral evidence before the Commons Liaison Committee on Russia and the aftermath of the Salisbury incident, during which she was questioned on the grant of Tier 1 (Investor) visas to around 700 Russian nationals between 2008 and 2015.

Yvette Cooper MP asked if the Home Office intended to do a retrospective source of money check on these granted applications. The Prime Minister did not promise such an investigation into these specific cases but advised that a more general review of the Tier 1 (Investor) scheme was underway by Home Secretary, Amber Rudd MP. The review goes beyond the specific Russia issue, and the Prime Minister stated, “It is right that we look generally to see whether this is a part of our visa regime that is being used properly or whether there are loopholes in it for people to be able to use it as access to the UK when otherwise we would not be granting them access (see question 6).When pressed upon the issue of whether the review would or should look at individual cases where finances were in question, the Prime Minister advised that she would “ask the Home Office to provide further information”.

The scope of the review is not fully known but the investor scheme has already seen significant tightening of regulatory regimes around it. As is commonly known applicants must of course now open UK bank accounts prior to applying. In order to do so they must satisfy UK regulated financial institutions due diligence processes. New civil powers also came into force on 31 January 2018 enabling the High Court to grant an Unexplained Wealth Order (“UWO”) on satisfaction of a number of tests. It is effectively an investigative tool.

A UWO requires a person who is reasonably suspected of involvement in, or of being connected to a person involved in, serious crime to explain the nature and extent of their interest in particular property, and to explain how the property was obtained, where there are reasonable grounds to suspect that the respondent’s known lawfully obtained income would be insufficient to allow the respondent to obtain the property. The test for involvement with serious crime is by reference to Part 1 of the Serious Crime Act 2007. A UWO can also be applied to politicians or officials from outside the European Economic Area (EEA), or those associated with them i.e. Politically Exposed Persons (PEPs). A UWO made in relation to a non-EEA PEP would not require suspicion of serious criminality.

The ability to apply for a UWO is limited to those agencies defined as an “enforcement authority”, which does not include the Home Office currently but does include Her Majesty’s Revenue and Customs. Although the Home Office cannot apply directly for an Order, agencies, including the enforcement authorities, will be required to consider their legal powers and abilities to share information. This is both when referring information to each other either to support an application for a UWO, or to consider civil or criminal action in regards to the information obtained in UWO.

Of course also, the European Union’s Fourth Anti-Money Laundering Directive came into force on 26th June 2017. The Directive includes some fundamental changes to the anti-money laundering procedures, rules on PEPs, including changes to CDD, a central register for beneficial owners and a focus on risk assessments.

It remains to be seen whether the Home Office review will find that sufficient checks are now in place or whether further restrictions are to be introduced for Tier 1 (Investors).

Learn more about Nadine Goldfoot.