£2 Million passport - Welcome to Britain: Dispatches

22 July 2019

An investigation by Dispatches exposes serious failings in the Home Office immigration system which allows wealthy foreign nationals to become British citizens in exchange for a £2m investment.

Channel 4 Dispatches and The Sunday Times went undercover to hear how overseas tycoons can exploit the so-called golden visa system to buy the right to live in Britain even if they have links to the Russian President Vladimir Putin or provide critical components to the Chinese military.

An undercover reporter posed as a prospective client looking to obtain golden visas for fictional wealthy relatives and secretly filmed legal and financial advisers boasting about the ease of securing golden visas for foreign clients. In some cases, advisers revealed that the Home Office didn’t need to know sensitive information, such as an admission that one individual had helped Putin’s inner circle move money overseas or that another had supplied parts for advanced Chinese weaponry.

The revelations will place pressure on Sajid Javid, the Home Secretary, to scrap or clean up the golden visa regime, officially known as Tier 1 Investor Visas.  In December, his department briefly suspended the scheme amidst concern that it was being abused but days later the Home Office performed a u-turn.

The National Crime Agency estimates that £90 billion is laundered through Britain every year by foreign wealthy individuals who are attempting to conceal corruption, crime and tax evasion.

Dame Margaret Hodge MP, the former chair of the House of Commons’ Public Accounts Committee and Labour MP, has called for the scheme to be suspended.

“I think there has to be an immediate audit of all those who have got access into the country through the golden visa route… I don’t think there are sufficient checks, I don’t think our policing is sufficiently strong. I don’t think the Home Office should outsource its responsibilities to do the due diligence.”

Supporters of golden visas claim they bring much-needed foreign investment into the UK but they came under the spotlight after the Skripal poisonings in Salisbury last year. Political concern focused on the number of Russians who were living in the UK and whether some of these had links to questionable money.

A Freedom of Information request by Dispatches revealed that almost 1,000 Russians have been granted a golden visa in the last decade.

A foreign tycoon can obtain a golden visa by opening a bank account in the UK and agreeing to invest £2m into British companies.

 

Undercover at Westkin, a firm of immigration lawyers:

Solicitors often file golden visa applications to the Home Office on behalf of their clients.  We contacted several law firms pretending to be acting for a rich Russian uncle. We said he was ‘uneasy about divulging the full source of [his] money because of political sensitivities.’

Several companies agreed to an initial meeting, the first was Houman Mehr who is an advisor for Westkin:

Reporter:                    This person made his money via the inner circle of Putin’s people.

HM:                           Circle of?

Reporter:                   Putin’s people.

HM:                           Okay, yes

Reporter:                    He helped manage their wealth and move it overseas. He’s a great business person, but he doesn’t want to divulge, again,                                  the source of his funding.

HM:                           What can he show? What does he have in terms of… err

Reporter:                   He’s got his property, assets, through the sale of assets…

HM:                           Here’s the thing, if he’s already got property in his name, and he sells that property that’s really as far back as they go.

 

Undercover at Quastel Midgen:

We presented details of the same Russian uncle to Tanya Laidlaw, a partner at Quastel Midgen, an immigration solicitor that has obtained golden visas for dozens of Russian applicants

Reporter:                     There’s another relative in Vladisvostok who has relations, again, in Moscow

TL:                              Uh-huh

Reporter:                    … has helped members of Putin’s inner circle with overseas managing of funds, getting them out overseas… Is that also a                                   worrisome part of are we ok with his application?

TL:                       I don’t think it should be a problem… Many people who applied in the past didn’t have such a clean past, I must say. Not necessarily with me, but with everyone… So, I personally think that it is worth trying to open bank account. Once bank account is open, that’s more of less you in… You’ll try with one bank, bank is saying no. You try it with another, maybe the other one will say yes.

Reporter:               And you’ve helped others in certain situations?

TL:                              Yes

Reporter:               You have?

TL:                              Absolutely

 

Undercover at Knightsbridge Wealth:

Dispatches next met with Alexander Wade of Knightsbridge Wealth. His job is to provide financial advice to golden visa applicants and liaise with banks and investment funds.

We added an additional detail, presenting Mr Wade with hard evidence of our Kremlin connections.

Reporter:               This Russian family member… there is a picture of him shaking hands with Putin

AW:                           Uh-huh

Reporter:               Now in confidence, the backstory there was he was helping members of Putin’s inner circle do some off-shore transaction, move money overseas.

AW:                           Uh-huh

Reporter:               This was the moment where they had the handshake

AW:                           Yeah

Reporter:               Now, what do we do with that? If that’s online what do we do?

AW:                           Um, okay so the photo’s online. Erm, what’s the photo linked to online?

Reporter:               It’s just like a… this person meets Putin

AW:                           That’s absolutely fine

Reporter:               So we don’t have to tell them the whole reason as to…

AW:                           No

Reporter:               Ok

AW:                           There’s photos of me online shaking hands with government ministers. It doesn’t mean I’m doing any transactions. As long as there’s an explanation.

                 

Leading expert on financial crime

Jonathan Fisher QC, Professor of Law, “Well it’s of concern because you’ve got your red flashing light, which relates to the explanation the client has given. What you’ve got now is a professional advisor indicating to the client that what they are prepared to do is put a different complexion on that… that’s very euphemistic language to say let’s change the story.

 

Home Office Involvement:

The Home Office have effectively delegated a large part of the policing of the golden visa system. Moreover, the rules state applicants don’t have to open an account with a High Street bank – it can be with a smaller, specialist investment firm.

• A number of immigration advisors told us some of these specialist firms would be more likely to take a creative and flexible approach.

HM:                           Some of the bigger banks, to be honest with you, can be quite difficult to deal with…er, very rigid, If I use a diplomatic term. But really just depends on what the client wants to do…

Reporter:               And if we’re not looking at too much scrutiny then your advice would be?

HM:                           Go with our guys

Mr Mehr then introduced us to Shard Capital, an investment fund specialising in golden visas. 

They talked us through the stringent checks they would do.

HM:                           If you get past these guys, then getting past the government is, is easy peasy.

Reporter:               That, that’s it right?

HM:                           They’re relying on these guys…

Rafael:                    You can say that, we can’t.

Reporter:              These are men.  They’ll decide what to do. These are the gatekeepers right?

HM:                           Because, the Home Office, you have to understand the context.  There’s not a financial team at the Home Office right. 

Farzin:                     They’re civil servants. 

HM:  They probably don’t have an idea of what complex financial products are or source of wealth.  They’re seeing a letter from a well known institution like these guys that we clear them for money laundering, AML everything else.  They might Google the person’s name just because that’s what they’re used to.  Nothing comes up.  Maybe an Interpol check.  That’s it.  They’re not going any deeper than that.

We asked a legal expert how this compared with other areas of financial regulation? ;

Jonathan Fisher, QC, “I find that extraordinary and rather surprising. …. I would say it’s out of line with the general approach in the Anti Money Laundering regime. First of all you have to be very careful within the regime to rely upon another party. In fact, the regime is at pains to make the point that the due diligence requirements are solely with you and that you can’t delegate them. So, to see the Home Office delegating is surprising in itself.

At another meeting, we were told that the more we invested, the more flexible some specialist investment funds would be.

Reporter:              And if we are putting in £5 million, £10 million, does that make it easier for banks or investment firms to take on the risk of risky applications?

HM:                            Officially, no. Unofficially, yes.

The solicitors and advisors we spoke to stressed that they would abide by the rules of the regulatory authorities and do detailed due diligence checks.

Proposed changes to the system:

In the face of criticism, last December, Immigration Minister Caroline Nokes suspended Tier 1 visas. She boldly declared, “we will not tolerate people who do not play by the rules and seek to abuse the system.”

Just 4 days later, without explanation, Nokes backed down and quietly restored the scheme.  

Instead in March the Home Office announced a tightening of the rules. Among other changes financial institutions must now provide written confirmation due diligence has been carried out. But most people Dispatches filmed undercover said the reforms would make little difference.

Reporter:               You’re saying there’s not much of a change?

AW:                           No, if you speak to any lawyer, none of them talk about the changes that… Investment’s always changing.  But it’s quite minor and it’s little tweaks.  But there’s always change so there’s nothing on the 29th of March that is seen in the immigration world as being significant.

Investment fund Shard Capital stressed to us that none of the reforms introduced over the last five years have radically changed the system.

Reporter:              I heard it used to be like the wild wild west.  Houman was saying that.

HM:                           It was incredibly easy at one point. 

Farzin:                     It’s still easy, frankly.

Reporter:              It’s still easy?

Rafael:                    It was a joke at one point.

Farzin:                     In terms of requirements from the applicant it’s easy. There’s very little to be done as opposed to the other visa categories.

It was repeatedly stressed to us that the Home Office only needs to know about the £2 million you are investing – not your overall wealth.

AW                            The query will be where the money’s come from. Has the money come from those sources. We’re not talking about – if someone’s worth 50 million, you don’t have to worry about 50 million, you have to worry about 2 million. This money coming to the UK. We have to find a way of it being legitimate.

TL                               We're taking 2 million. We'll talk about 2 million. We're not going to be talking about those hundreds and hundreds of millions that you also have elsewhere. Not our concern.

Jonathan Fisher QC, “I just find it very surprising … If we are talking about visas and people coming into this country on the back of investment visas, we should surely, almost as a matter of common sense, be asking for details of source of wealth, not simply source of funds, limited to the £2 million.

Legal response:

Jonathan Fisher QC, “I would say that what you’ve shown is that there’s a systemic weakness in the system … the home office needs to revise its guidelines and it needs to do that quickly

Margaret Hodge MP, “Looking at the evidence you’ve accumulated I think there has to be an immediate audit of all those who have, uh, got access into the country through the golden visa route and I think there has to be an independent implementation of the checks through the Home Office directly so that we can be satisfied so checks are properly executed.”

Right to replies:

The companies say these were exploratory meetings and they did not accept our undercover reporter as a client. They stress, had the application progressed, they would have complied with the rules.

Tanya Laidlaw of Quastels said they are “extremely confident that the firm’s vigorous due diligence processes would have identified any investment funds that did not meet the required standard of the Home Office’s visa application process and would have refused to act for the potential investor.”

Westkin said while the wording used was regrettable, at no point did they “suggest Immigration rules could be broken, rather that the correct documentation required was not onerous.” Westkin said “where a scenario is complex… we seek guidance… from the Home Office”

Knightsbridge Wealth said they had “robust procedures to determine the legitimacy of any potential client” and always undertake full background checks and are meticulous determining the origin of their wealth. They say they “were never given the names or details of the underlying clients” but even so “a red flag was raised and Knightsbridge was concerned”

Shard Capital said: “Our firm has a robust client onboarding system, which fully complies with FCA requirements,” and they did not onboard our investor. They added, “during the one-hour meeting, the team made clear indications that it was not comfortable with the line of questioning.”

The Home Office said:

“We will not tolerate the immigration system being abused by those who have acquired their money through corrupt means.” They maintain their checks on an Investor visa applicants’ character, conduct and associations go far beyond those they make for other routes. They added they are “working on introducing an ‘independent wealth audit requirement’, carried out by a UK-regulated auditor, before an investor can make a visa application.” They say they will carry out a review of historic cases.

NOTES TO EDITORS:

How the ‘Golden Visa’ Scheme works:

• Demonstrate you have £2million from a legal source including business, gift, sale of art or lottery win.
• If the Home Office is satisfied that your presence in the country will not be harmful to the public good you get a golden visa.
• Within three months of obtaining the visa you must invest £2million in British companies.
• After 6 years living in the UK you can apply for British citizenship and passport.
• In the face of criticism of the scheme the rules were tightened in 2015, it became compulsory for applicants to open an account with a bank or financially regulated institution in Britain before applying.
• Financial institutions would be legally obliged to carry out due diligence on the applicant and the source of their wealth. If they had concerns they would refuse the applicant an account.
• As a result the Home Office would refuse them a visa.

£2 MILLION PASSPORT – WELCOME TO BRITAIN: DISPATCHES, Mon 22nd July, 8pm, Channel 4

Reporter: Antony Barnett

Producer: Katherine Haywood

Prod/Director: Richard Sanders

Exec Producer: Geoff Atkinson

Production Company: Vera Productions

Investigation conducted with The Sunday Times