The UK Government is cracking down on the “Golden Visa” scheme for foreigners seeking a fast-track move to the UK after concerns over money laundering crime.
The Tier 1 investor visas were introduced 10 years ago to encourage wealthy people from outside the EU to invest in Britain. A £2 million investment bought a visa and indefinite leave to remain after five years.
The scheme will be suspended temporarily until an audit process is introduced next year, officials said.
"We will not tolerate people who do not play by the rules and seek to abuse the system," Immigration Minister Caroline Nokes said, announcing the suspension would come into effect at midnight on Friday.
"That is why I am bringing forward these new measures which will make sure that only genuine investors, who intend to support UK businesses, can benefit from our immigration system."
More than 1,000 Tier 1 visas were issued in 2017 with the highest numbers going to Chinese and Russian investors.
The scheme previously required that applicants had a UK bank account and were of "good character".
From next year, independent, regulated auditors will assess applicants' financial and business interests and check they have had control of the funds for at least two years, according to the Home Office.
In future there will be a provision for pooled investments, supported by the government, to back projects with a "clear economic benefit to the UK" such as supporting small and medium-sized businesses.
Applicants will no longer be able to invest in government bonds as part of the reforms, and must invest in active and trading UK companies.
Golden visas have been coming under mounting criticism for providing an easy route into the UK and other countries for oligarchs and the super-rich looking to launder wealth of dubious origins.
A report by lobby group Transparency International report showed the EU is poorly managing the schemes, which have seen 6,000 people and 100,000 new residents in Europe over the past decade.
While huge volumes of money are involved, checks for money laundering and corrupt and illegal origins of the investment have to be especially rigorous, Transparency said. In fact, “scandals are rarely far from these schemes”, it noted.
Apart from the UK, Spain, Hungary, Latvia and Portugal have granted the highest number of golden visas to investors and their families.
|RATE THIS ARTICLE|
THIS WEEK'S TOP STORIES
PAM (Private Asset Managers) and its sister website PAMonline combine to provide "...the best guide available to the leading firms in private client fund management" (FINANCIAL TIMES). PAM compares managers on a level playing field by key data such as fees and charges, minimum investment thresholds and so on.