There are numerous legitimate reasons for foreign nationals to make investments into the UK economy—stability of the financial system, expanding businesses, or family ties, for instance. Unfortunately, the British program that allows residency by economic investment through the UK Visas and Immigration’s Tier 1 (Investor) program (better known as the “golden visa”) has come under increasing scrutiny over the last decade for providing criminals easy access to the economy for money laundering. Now, as of 29 March 2019, the UK has significantly tightened its requirements for wealthy foreign nationals seeking UK residency.
The past year already demonstrated the UK government toughening its stance. For example, when the golden visa of Russian oligarch Roman Abramovitch (owner of Chelsea Football Club and a fixture on Forbes’s list of the world’s wealthiest people) expired in April 2018, the government declined to renew it.
Under the new rules, individuals looking to obtain a golden visa will face a more burdensome and demanding process. But while the heightened requirements will require additional legwork, qualified, genuine applicants will find that with the right guidance, expertise, and planning, they should still be able to obtain the visa.
Demonstrating a Legitimate Source of Wealth
While the new requirements should not deter legitimate applicants, those who do apply will now need to do more not only to prove that they have wealth, but also to verify its source. This will include proving the following:
- The applicant has control over assets worth at least ₤2 million (US $2.6 million), held in a regulated financial institution, that will be invested in the UK. The revised list of acceptable investments no longer includes UK government bonds, which were previously allowed and were especially popular for their availability and liquidity.
- The applicant has controlled the assets for at least the past two years consecutively (previously, the minimum period of control was 90 days).
- If applicants cannot prove such control, they must provide evidence of the source of the assets.
The assets, if held outside the UK and not denominated in pounds sterling, are convertible into pounds sterling and transferable for deposit with a UK-regulated bank following approval of the application.
- The applicant has opened an account with a UK-regulated bank at time of application, and the bank has carried out all required due diligence checks and Know Your Customer (KYC) inquiries related to the applicant.
The UK government has published in-depth guidance documents on golden visa requirements, including one for applicants and one for Home Office staff.
Be Thorough and Transparent
These new requirements may seem daunting, but to boost their chances of success, when disclosing financial information, applicants should use an approach that emphasizes thoughtful transparency. The first step is to determine (1) precisely what the requirements are, and (2) how the requirements can be met in a way that makes the reviewer’s task simpler. It also helps to work with experienced professionals who can help navigate the potentially challenging process.
When preparing an application, applicants should keep in mind these general guidelines:
- Applicants are not being asked to provide a statement of their total wealth. ₤2 million in assets controlled for the last two years is all that must be substantiated.
- All documentation should be easy to understand. It should be comprehensive and logical. If the originals are not in English or Welsh, copies of the originals along with full translations that can be independently verified should be provided.
- In choosing the assets to be reviewed, boring is better. Assets such as cash and long-term bank deposits are much simpler to explain and substantiate than more complicated items such as partnership interests or real estate, which may be held via complex structures.
- Applicants should be ready to provide further assistance to the reviewer if asked.
A Timeless Principle
The UK’s stricter requirements for its golden visa are intended to discourage would-be money launderers from seeking UK residency, while still providing an avenue for legitimate applicants to access the UK economy.
Applicants can improve their chances of success by meeting the requirements in a thorough, fully transparent manner. Doing so, in turn, underscores a timeless principle that wealthy individuals and families would be well advised to remember: Keeping your financial house in order not only saves time and money, but also positions you to take advantage of opportunities as they arise.