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The UK government has scrapped “golden” residency visas for wealthy investors because of concerns they have been used as a back door to funnel dirty Russian money into the UK.
The visas, introduced in 2008, allow a route to permanent residency if applicants invest at least £2 million ($2.7m) but critics say they have been exploited as a way to launder illicit funds through the UK financial and housing sector.
The scheme was ended on Thursday to all nationalities amid increased tension with Russia amassing troops on its border with Ukraine. The decision followed a review of visas issued from 2008 to 2015.
Home Secretary Priti Patel said: “Closing this route is just the start of our renewed crackdown on fraud and illicit finance.
“We will be publishing a fraud action plan, while the forthcoming Economic Crime Bill will crack down on people abusing our financial institutions and better protect the taxpayer.”
More than 14,000 investor visas have been issued to Russians since the start of the scheme, the most of any country apart from China, official data shows.
The scheme allowed the applicant to live in the UK for more than three years but cleared the way for permanent residency in as little as two years with a £10m investment.
London’s vast financial sector, its network of lawyers and consultants and its light-touch regulations are regarded as attractive for investors trying to hide the source of their wealth.
In return, the UK accepted Russian money with “few questions asked about from where the money came”, said a parliamentary committee that scrutinises the UK intelligence and security services.
The system has led to an influx of Russian money that has allowed newcomers to build influence across British society in through business, charity, media and cultural links.
The number of visas hit a peak of nearly 1,200 — plus family members — in 2014 but numbers have fallen to below 400 in the subsequent years.
James Heappey, the Armed Forces Minister, said that during a period of acute competition with Russia “all of the things that have become normal in Anglo-Russian relations over the last 30 years will be up for review”.
The intelligence committee’s report said any attempt to unpick the mechanisms that allowed increased Russian influence amounted to mere damage limitation.
“Russian influence in the UK is 'the new normal’ and there are a lot of Russians with very close links to [President Vladimir] Putin who are well integrated into the UK business and social scene, and accepted because of their wealth,” the report said.
The opposition Labour party has criticised the failure of proper background checks on those applying for the golden visas.
Margaret Hodge, a Labour MP, said on Twitter: “We will never truly stand up to Putin abroad while we warmly welcome Kremlin cash at home.”