The crackdown on golden visa schemes

Cash-for-visa schemes that provide wealthy suspected criminals with a “backdoor route” into Britain are to be targeted in a new government crackdown.

According to The Telegraph, Security Minister Tom Tugendhat has ordered a review of so-called golden visa schemes in other countries that allow “crime bosses and corrupt oligarchs” to buy citizenship and then “exploit” visa-waiver agreements to gain entry to the UK. The review focuses primarily on countries in the “Caribbean, Pacific and central America” where investors can secure citizenship for “as little as £60,000”, the paper reported.

Tugendhat told a Global Financial Integrity Conference in the US earlier this month that Britain “simply cannot have visa waivers with backdoor economies” and that any remaining “loopholes” would be closed.

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What are golden visas?

Golden visa schemes were devised to attract foreign investment in countries that in return offered fast-track residency and possible citizenship. “It seems to be a win-win arrangement,” said The Economist.

But Britain scrapped its own investor visa scheme in February last year amid concerns that it was “open to abuse”, said the BBC. Launched in 2008, the Tier 1 visa programme offered fast-track residency to foreign citizens who invested at least £2m in the UK.

Portugal and Ireland this month became the latest European countries to shut down their golden visa schemes, after the European Commission last year called on EU member states to stop selling citizenship to investors.

Dozens of other countries worldwide continue to offer golden visas, however, including Malta, Italy, Spain, and Greece.

The “biggest source of demand” has been from China, according to The Economist, and America’s scheme is the “most popular”. The waiting lists and investment thresholds for wealthier countries are usually greater, but citizenship-by-investment schemes are also “important sources of foreign exchange” for smaller countries.

Such investments usually come in the form of “purchasing a house there or making a large investment or donation”, said euronews. Most schemes also require applicants to have a clean criminal record, but critics have raised security concerns nonetheless.

Why are they controversial?

Although golden visa schemes have been launched in nations worldwide, they only “tend to last until a critical mass of vocal opponents conclude the costs outweigh the benefits”, said Fortune. Some critics claim such schemes have increased social pressures through “soaring housing prices, absentee homeowners and allegations of corruption”.

Portugal’s now-axed scheme, which required a property investment of €500,000, was deemed “too successful”, The Economist said. Introduced in 2012, the scheme saw more than €6bn pumped into Portugal’s economy, but has also been blamed for a housing crisis that has left “buying or renting property out of the reach of many locals”.

On the other hand, said The Times, some argue that the foreign investments have “transformed the country, especially Lisbon”.

But critics counter that golden visas may also provide “cover for money-laundering and tax evasion”, said The Economist.

What’s happening in the UK and EU?

The UK’s Tier 1 scheme was “under review for some time” before being shut down in a bid to “cut ties with Russia” in the run-up to the invasion of Ukraine last February. Then home secretary Priti Patel said the move was the start of a “renewed crackdown on fraud and illicit finance”.

The government is now trying to ensure that the crackdown extends to preventing criminals from entering the UK via countries on the visa-waiver programme. The “number of countries promoting such schemes has exploded” as potential investors hunt for new ways into the UK or EU Schengen area, said The Telegraph.

The European Commission called for an end to both golden visas and so-called golden passports last March, warning that some Russian nationals “who are subject to sanctions or are significantly supporting the war in Ukraine might have acquired EU citizenship or privileged access to the EU, including to travel freely in the Schengen area, under these schemes”.

Although the invasion appeared to have prompted the plea, the “multibillion-euro citizenship and visa industry” had been “long considered a security risk” by the EU, said Reuters.

The bloc had previously warned that such schemes “are a risk to security, transparency and the values that underpin the European Union project”, said euronews, and has threatened to suspend visa waiver programmes with some countries that allow easy access to the Schengen zone.