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5 December 2022

Wealthy Russians are once more buying their way into the UK

Failures in corporate oversight have let Russians bypass attempts to stop them moving their wealth and their families to Britain.

By Emma Haslett

Wealthy Russians have found a new route into the UK since the so-called golden visa scheme, which allowed wealthy individuals to “buy” their way into the UK, was scrapped in February. Analysis of Home Office immigration data by the New Statesman indicates that the number of Russians coming into the UK via the “skilled worker” visa, restrictions on which were eased in the wake of Brexit, almost doubled between the second and third quarters of this year, from 694 to 1,257.

The golden visa scheme became popular among wealthy elites, particularly from Russia. It was also highly controversial. According to the campaign group Spotlight on Corruption, 6,312 visas issued under the scheme were flagged for “possible national security risks”; the government has since admitted that ten Russians who were awarded golden visas are now subject to sanctions. At the time the scheme was scrapped Priti Patel, who was then the foreign secretary, said ending it would stop the “corrupt elites who threaten our national security and push dirty money around our cities”.

Figures published by the Home Office in November suggest wealthy Russians seeking to come to the UK have found a way around the problem. The tier 2 skilled worker visa allows people to set up a business, obtain a licence to sponsor a foreign “employee” (usually the original applicant), then bring that person and their family over to the UK. Figures published by the Home Office in November show the number of Russians using the tier 2 route has rapidly increased, rising to 1,257 in the third quarter of this year, from 544 during the same period a year earlier.

An immigration lawyer who spoke to the New Statesman on the condition of anonymity said wealthy Russians are using skilled worker visas “a lot”. “It’s a straightforward route,” they said. Part of that reason is its simplicity. “People open up their own companies, hire someone who is an office manager, who will be responsible for the license, because that’s one of the requirements. You can open up a company in the UK… and get yourself a work visa.”

There are two stages to the process: first, the person who wishes to come to the UK registers a new business here, hires “at least one suitable staff member” and then applies to the Home Office for a sponsorship licence to allow the business to sponsor the director – the person in question – to work in the UK.

After the licence has been issued, typically within four to eight weeks, stage two begins: an application for a skilled worker visa for the person, along with dependant visas for their family. After five years in the UK, they may become eligible for indefinite leave to remain. The cost for stage one – the application for the sponsorship licence – is roughly £20,000, while visa application and legal fees will cost another £50,000. That means a family of five can move permanently to the UK for around £70,000, according to correspondence seen by the New Statesman.

Joseph Sinclair, an associate researcher at Spotlight on Corruption who also works as an immigration lawyer, said: “As an immigration lawyer, you might try to package it in a way that you basically say, this is how the business runs, this is why it's important that we have this sort of role.”

Many Russians head to the Baltic countries, which are closer to home, or if they are very wealthy, Dubai. But despite the sanctions levelled against many wealthy Russians by the British government since the annexation of Crimea and the invasion of Ukraine, and the £2.3bn of aid the UK has sent to Ukraine, London remains reasonably attractive because “it’s still a secure place”, says Sinclair. “It comes down to things like the amenities. The schools are still there and willing to deal with them, and the security of London itself. It’s just something that they like.” Sinclair adds that Russians form about 20 per cent of his clientele – a number unchanged since the beginning of the invasion.

[See also: How Companies House became a haven for oligarchs]

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The new visa route is partly the result of Brexit. After Britain's exit from the EU caused a drop in the number of skilled workers coming to the UK, the government changed immigration rules in 2020 to remove a limit that had prevented anyone who owned more than 10 per cent of a company from applying for a skilled worker visa sponsored by the company they owned. For wealthy business owners looking for a route into the UK, this essentially introduced a new loophole. “[The government] relaxed a lot of the rules,” said the immigration lawyer.

Between the end of February and the middle of September this year, new companies were registered in the UK by 927 people with links to Russia and Belarus, according to data obtained by the New Statesman from the anti-money laundering platform Risk Alert 247. Graham Barrow, a former accountant and financial crime specialist who hosts the podcast The Dark Money Files, said that the British company registration system was already easy to exploit. “One of the ridiculous things about UK company law is that providing you have a UK resident address, there is no other requirement of any contact with the UK whatsoever,” he said.

For a Russian hoping to move to the UK, the first part of the scheme would be simple: it costs just £12 to incorporate a company in the UK, and although a UK address is a requirement, a company formation agent could provide that for them. “About 150,000 companies are registered every year, which have absolutely no economic connection to the UK. Not a single job, not a bank account – nothing,” said Barrow.

The next step for a Russian using this route would be to seek access to banking in the UK, as many Russian banks are frozen by governments outside of Russia. Barrow said that since the invasion it has been made “very difficult for somebody with Russian connections now to access banking [in the UK] through a newly-incorporated company”. But there’s a way around this: “You could go somewhere where they have an emergent banking system, particularly the electronic money institution systems, where they’re probably not as clever about doing their due diligence. They’ll see a UK company registered with Companies House and think, ‘It must be OK’.”

Having registered a UK company and a bank account, a Russian planning to enter the UK via a tier 2 visa would need to show that their company was contributing to the economy, in order for the skilled worker visa to be valid. In practice, however, Sinclair says it’s unlikely to be checked. “As long as you’re not hiring lots of people, or you’re not in a suspicious industry that has a tendency to hire illegal migrants, they tend to leave you to your own devices.”

Law firms providing advice are unlikely to see many repercussions. A report published in October by Spotlight on Corruption showed no law firms have ever been prosecuted for criminal breaches of anti-money laundering rules, despite the Solicitors’ Regulation Authority finding that 60 per cent of the firms it visited in 2020 and 2021 were not compliant with them. The total value of fines imposed on the entire £60bn legal sector between 2017 and 2020 was just over £620,000.

“It's concerning to see that workarounds still exist and that those with questionable wealth can get into the UK by the back door,” says Susan Hawley of Spotlight on Corruption. “We hope that immediate action is taken to identify these cases and properly screen their probity, and shut down further abuses of this visa route.”

The figures make it clear that wealthy Russians are still finding ways to buy their way into the British system. Meanwhile, campaigners are still awaiting the publication of a 2018 report on the golden visa scheme, which was due to review 3,000 visas handed out to foreign millionaires between June 2008 and April 2015 – including 700 Russians. In February the Home Office committed to publishing the report “in due course”, but amid the political turmoil of this year nothing has been heard since.

[See also: The brutal methods of Russia's Wagner Group]

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