Ministers have suspended the UK’s Tier 1 investor visa until an audit process and new rules have been established following concerns that the scheme induced money laundering.

Tier 1 investor visas were introduced in 2008 to allow wealthy people from outside the EU to gain entry into the UK in return for investment. The visa scheme meant if an individual spent £2m on UK bonds or equities they could earn indefinite leave to remain in the UK after five years.

To gain Tier 1 visa investor visa, applicants used to have to apply three months before their arrival into the UK after paying a fee of £1,623. However, this could be fast-tracked at a cost of £12,733.

Caroline Nokes, the immigration minister said: “We will not tolerate people who do not play by the rules and seek to abuse the system. 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.”

The suspension will come into effect on Friday the 7th of December 2018.

After this a new audit process means that future investors applying for the visa will need to provide transparent audits of all their financial and business interests. These audits will then be carried out by UK auditing firms separately.

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Applicants will also need to show evidence of having full control of their £2m for at least two years.

Controversy surrounds the Tier 1 investor

The introduction of ‘golden visas’, as Tier 1 visas are known, rose fears that they would leave the UK open to money laundering and corruption.

However, James Badcock, partner and head of Private Client Services at Collyer Bristow, says this is misguided. “Investor visas are collateral damage in the crackdown on money-laundering which has brought us unexplained wealth orders and the national economic crime centre.

“Investor visas were not some sort of money-launderers loophole. This suspension shows a lack of faith in the effectiveness of general anti-money laundering measures in other areas of the system.”

According to Home Office data more than 1,000 Tier 1 visas were given out in 2017 with the highest number going to Chinese and Russian investors.

Other government initiatives to combat corruption are also underway. The Financial Conduct Authority released its annual report for the year ending March 2018, stating their aim to make the UK financial markets hostile for criminals by placing a number of safeguards and directives across institutions and major banks.