Investor Visas: Money Laundering

Monday 9th May 2016 Lords Chamber

Question

14:51

Tabled by

[Baroness Ludford]

To ask Her Majesty’s Government what retrospective checks they intend to make, if any, into the financial backgrounds of foreign citizens, predominantly from Russia and China, who were granted United Kingdom residence through tier 1 investor visas, in the light of the reductions in applications and acceptances since the introduction of prior money-laundering checks in 2015.

[Lord Wallace of Saltaire (LD)]

My Lords, on behalf of my noble friend Lady Ludford, who is unwell, and at her request, I beg leave to ask the Question standing in her name on the Order Paper.

[The Advocate-General for Scotland (Lord Keen of Elie) (Con)]

While I cannot disclose the specifics of ongoing investigations, I can assure the noble Lord that the Home Office is working with partners across government and, where evidence of wrongdoing comes to light, robust action will be taken with respect to pre-April 2015 applications.

[Lord Wallace of Saltaire]

I welcome the implications of that statement. We are coming up to the anti-corruption summit, but it is clear from the numbers between 2011 and 2014—when, happily, the Government tightened the rules—that a number of Russian, Chinese and central Asian businessmen were in effect exporting corruption into Britain. It was a breach of British sovereignty, in effect, allowing these people to buy residence and, in some cases, citizenship. There are those who raise the question of criminals from abroad being allowed into this country. This was criminals from abroad being allowed to buy their way into the country. Does not that seem to be a very important issue for the Government to use their retrospective authority to investigate much more closely?

[Lord Keen of Elie]

With respect to the noble Lord, the proposition that no proper checks were carried out prior to April 2015—or, indeed, November 2014 —is not well founded. I believe that Transparency International, in one of its important pieces of work, referred to what it termed a “blind faith” period, but there was no such thing because persons wanting to invest in the United Kingdom pursuant to a tier 1 visa application were required to do that through either a broker, a bank or a lawyer, who would be regulated under the FCA and therefore bound to carry out relevant financial due diligence and anti-money laundering checks.

[Lord Howarth of Newport (Lab)]

My Lords, how effective does the Minister think that any checks will be as long as they are carried out by the very banks which the National Crime Agency informs us are laundering billions of dollars every year? If the anti-corruption summit, which we are told the British Virgin Islands, the Cayman Islands and Jersey have declined to attend, is to be anything more than gesture politics, will the Government follow it immediately by effective action: legislation to abolish the tier 1 visa racket and to require transparency of beneficial ownership of offshore companies and trusts?

[Lord Keen of Elie]

The Government have no plans to abolish the tier 1 route.

[Lord Tomlinson (Lab)]

Could the Minister remind Members of the House who have short memories who was in government with the Conservatives at the time we are talking about?

[Lord Keen of Elie]

Well, in fact the relevant tier 1 form of application goes back to 1994.

[Lord Foulkes of Cumnock (Lab)]

My Lords, there are schools, hospitals, nationality and honours. Is it possible for people with enough money to buy anything from a Tory Government?

[Lord Keen of Elie]

The question, in my respectful submission, is not well aimed, and there is no question of persons being able to buy their way into the United Kingdom. There is a means by which they can invest in the United Kingdom, but they are subject to very clear checks, which have been improved since 2014.

[Lord Paddick (LD)]

My Lords, I am greatly encouraged by what the Minister has said about investigations going on into pre-2015 cases. Can he tell the House how many tier 1 visas have been revoked as a result of those investigations?

[Lord Keen of Elie]

At the present time, I am not aware that any tier 1 visas have been revoked. Of course, tier 1 visas lead on to an application for indefinite leave to remain. When that application is made, one issue that is addressed is any suggestion of criminality.

[Lord Rosser (Lab)]

My Lords, as I understand it, according to the ONS, 76 fewer grants in the tier 1 investor category, which is the category for the really wealthy, were made in 2015, following changes introduced in November 2014, including the introduction of money laundering checks. In October 2015, Transparency International, to which the noble and learned Lord referred, said that,

“it is reasonable to infer that a proportion of money invested into the UK by Russian and Chinese Tier 1 investors is linked to crimes of corruption”.

Do the Government agree with that statement with respect to the situation prior to 2015 and, if they do not, why do they think that there has been such a significant reduction in the number of tier 1 investor grants made in 2015 compared with previous years?

[Lord Keen of Elie]

With respect, Transparency International’s report was looked at and considered by this Government. However, it referred to a period prior to April 2015 of “blind faith”. There was no such blind faith. As I indicated, when an overseas investor made a qualifying investment, he made it through a regulated authority and was therefore checked. As for the numbers, it will be a matter of notice that the sum required for investment has been doubled from £1 million to £2 million. Over and above that, the noble Lord will bear in mind the relevance of the exchange rate over the relevant period, as well. The rouble went from 50 roubles to the pound to 100 roubles to the pound, with the result that the required investment from someone in Russia is now 200 million roubles.

[Lord Anderson of Swansea (Lab)]

Clearly, that increased sum is unlikely to deter the sort of individuals who are the subject of this Question. Since there was a reduction, what was the reason for it, in the Government’s view?

[Lord Keen of Elie]

There are a number of reasons for the reduction. It is noteworthy that the reduction in the number of applications from Chinese nationals began in 2013, before any of these changes were made, and has progressively lowered thereafter. It may be attributed in part to capital controls being increased and improved in some of those countries.

[Lord Howarth of Newport]

The Minister said that the Government had no plans to abolish the tier 1 visa system. How does he justify that to ordinary Londoners, who see themselves priced out of the London housing market in consequence of large quantities of ill-gotten capital being imported into this country through the tier 1 visa system and invested in London housing?

[Lord Keen of Elie]

The premise underlying the question is fundamentally wrong. It is not necessary to have a tier 1 visa or visa application to invest in property in the United Kingdom. Conversely, an investment in property in the United Kingdom is not a qualifying investment for the purposes of a tier 1 visa application.

[Lord Wallace of Saltaire]

Have the Government noticed the Spanish Government’s prosecution of a number of Russians resident in Spain taking place over the last week? Is the Minister aware that the Panama papers have provided a good deal of new evidence on some people who are now British citizens and where their money came from within Russia?

[Lord Keen of Elie]

I am not going to comment on individual cases at this time.