What is a golden visa? Why UK has scrapped investor scheme visas amid Russia-Ukraine crisis over Europe

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There have been concerns golden visas allowed foreign criminals and kleptocrats to launder money and posed a security threat to the UK

London is one of the biggest financial capitals in the world.

Since the collapse of the Soviet Union in the early 1990s, it has become a key hub for money from former USSR republics, including Russia.

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These connections to oligarchs have come under increasing scrutiny in recent weeks as the potential for a war between Russia and Ukraine has grown.

On Tuesday (22 February), UK Prime Minister Boris Johnson announced financial sanctions against Russian banks and individuals - although some have called for tougher penalties against the country.

There have also been questions about the Conservative Party’s links to Russian oligarchs who have connections to Russian President Vladimir Putin.

Russian oligarchs linked to Vladimir Putin have been storing their assets in the UK thanks to golden visa schemes (image: AFP/Getty Images)Russian oligarchs linked to Vladimir Putin have been storing their assets in the UK thanks to golden visa schemes (image: AFP/Getty Images)
Russian oligarchs linked to Vladimir Putin have been storing their assets in the UK thanks to golden visa schemes (image: AFP/Getty Images) | Sputnik/AFP via Getty Images

It all follows the immediate shutdown of a ‘golden visa’ immigration route for wealthy foreign investors.

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But what exactly were golden visas - and why was the scheme closed down?

Here’s what you need to know.

What were golden visas?

Golden visas, or Tier 1 investor visas, were a fast track immigration route for wealthy foreign investors.

Launched in 2008 to encourage investment in the UK from non-EU individuals, applicants would have to show they had at least £2m to invest in the UK in exchange for residency rights that could be turned into full citizenship.

With £2m in the bank, you could expect a maximum wait of five years for residency rights - a wait time which would be cut to just two years if you had a kitty of at least £10m.

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Between 2008 and 2015 the system was overseen by law firms and wealth managers, before the Government took on greater oversight in 2015.

This light-touch regulation is said by the Chatham House International Affairs Think Tank to have opened the UK up to money laundering and security risks.

And despite a Government crackdown on abuse of the scheme by Russian oligarchs that was pledged in 2015, online news outlet OpenDemocracy has reported that 200 Russian millionaires still managed to make it through the immigration route over the last seven years.

Over the scheme’s lifetime, 12,000 golden visas were given out, with Chinese and Russian nationals forming the two biggest groups of applicants.

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According to the anti-corruption group Spotlight on Corruption, 6,312 golden visas have been under review by the Home Office due to potential national security risks.

Why was the scheme shut down?

The golden visa scheme was shut down with immediate effect by the Home Secretary Priti Patel on Thursday (17 February).

People who already hold the visas can still apply to settle in the UK indefinitely, have their visa extended for two years or bring family members into the UK - although there have been suggestions some visas could be revoked if they are held by people close to Putin.

The immigration route had already been under review since 2018, when UK-Russia relations were damaged by the poisoning of former Russian spy Sergei Skripal and his daughter in Salisbury.

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Rules for the scheme were also tightened in 2019, with applicants having to prove they hold a UK bank account - but there have been questions about why the Government did not go further.

Announcing the scheme’s closure, Ms Patel told the BBC it was part of a “renewed crackdown on fraud and illicit finance”.

She added: “I want to ensure the British people have confidence in the system, including stopping corrupt elites who threaten our national security and push dirty money around our cities.”

The risk of the scheme being abused has been raised multiple times over the past decade - most notably in 2020 when the FinCEN leak of financial data allegedly revealed London banks allowed criminals and close associates of leaders of rogue states - like President Vladimir Putin - to hide their ill gotten gains.

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The claims were denied at the time by the banks involved, including HSBC and Barclays.

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