New evidence raises concern about security of UK’s visa scheme

Given that the UK is one of the most powerful countries in the world, particularly with respect to the financial services industry, one might expect it to be a leader in AML and anti-financial crime security measures. Yet, it seems that countries with far lower economic resources are running much greater security, or ‘due diligence,’ on foreign monies entering the economy.

New evidence has surfaced that the United Kingdom Home Office conducts alarmingly low security checks on investors entering the country on Tier 1 Investor Visas and student visas. An investigation has revealed the ease with which persons “charged with corruption” or with links to the Chinese military can buy the Investor Visas, whilst no due diligence at all is carried out on the students’ source of funds. The stark contrast between this and the security of similar programmes around the world raises questions about the reasoning behind the UK’s decision.

Last Friday, The Sunday Times revealed the results of an undercover investigation into the due diligence performed on applicants to the Tier 1 Investor Visa. Financial and legal advisors from six different immigration investment firms were secretly filmed and questioned on the process. According to them, it is “easy-peasy” to dodge the Visa’s anti-corruption checks, whilst the ‘security officials’ are actually untrained school leavers using Google searches. Successful clients they listed include “a member of the Gadaffi family, the son of a corrupt Thai government minister, an Egyptian charged with corruption, an Eritrean with possible links to military deals in Angola, and millionaires from Iran and Iraq whose businesses were affected by sanctions.”

The Investor Visa is run by the Home Office and enables foreign millionaires to settle in the UK for an investment of minimum £2 million and the production of a few documents. Student visas are another such source of investment, as international students in the UK spend on average £200,000 on a degree and often have more expensive lifestyles, particularly as regards their accommodation. Yet there appears to be no due diligence conducted on these students, whether studying at elite boarding schools or university. Significantly, no checks exist on the source of the funds used to pay for the education. When it is considered that, in 2018, there were 458,520 international students in the UK – a number that is increasing at approximately 3.6% a year – this is shocking.

In comparison, other similar programmes perform extensive due diligence on applicants, their source of funds, and their family members. In the Caribbean, citizenship by investment programmes operate very strict due diligence programmes. Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis, and St Lucia all require applicants’ full personal, residential, and employment histories, details of financial assets, past and current passports and visas, photographs, medicals, birth, degree, and police certificates, bank and employment references, and bank statements showing a year’s worth of transactions. All information must be evidenced by either original documents or those certified by an official body.

In direct contrast to the UK, the applications are checked by trained personnel, experienced in detecting financial crime, such as money laundering, fraud, and financial terrorism. In addition, all applications are examined by external, independent due diligence specialists. These currently include BDO, Exiger, FACT Due Diligence, S-RM, Sterling Diligence, and Thompson Reuters. All six provide specialist intelligence services, including identity verification, regulatory compliance, financial crime prevention, forensics, and the tracing of wealth. As global firms, they are able to carry out physical, on-the-ground checks, as well as online. Finally, applicants must pay a minimum of US$ 7,500 for the due diligence, regardless of the outcome of their application. This seems incomparable to the UK’s apparent use of Google by untrained employees. Moreover, this applies to all applicants, including those who invest US$ 150,000 – far lower than £2 million or £200,000 (US$ 249,000).

In Europe also, Malta and Bulgaria perform greater due diligence on investors to their citizenship by investment programmes than the UK does on its residence visas. Malta follows a similar process to the Caribbean nations; Bulgaria requires employment history covering five years, evidence of personal net worth, a CV, and a bank statement.

This state of affairs is perhaps even more surprising as the Migration Advisory Committee (MAC), an independent, non-time limited public body, is sponsored by the UK Home Office in order to advise on such matters, and has in the past advised on the Investor Visa. Yet so far it has not given adequate advice regarding the need to strengthen the security surrounding the Visa scheme or the need to actually conduct, at the very least, some financial due diligence on student visas.

The attractions of running a low level of security are obvious. Not only does it allow higher numbers of visa applicants, and therefore higher revenues, but it is faster and cost-effective. However, in doing so, countries like the UK risk allowing in corrupt or criminal persons and accepting dirty money. Indeed, when it is known what level of due diligence the UK could be doing, why do they appear so unwilling to do so?

Leading due diligence firms around the world

Below are six prominent due diligence firms hired by many visa and citizenship programmes, none of which are currently employed by the UK:

FACT Due Diligence is a crime prevention and detection firm offering a range of specialist intelligence services. Amongst others, these include due diligence and verification, financial crime including AML, anti-bribery, and fraud, regulatory compliance, online investigations, IP protection, forensics, data privacy, reputation and crisis management, and legal services. Due diligence includes tracing of wealth sources and investigation of financial and personal history and covers persons, businesses, and entities. Headquartered in London for almost four decades, FACT Due Diligence works nationally and overseas and is recognised by the UK Government as an established due diligence firm across the UK and Europe. Directors and executives come from intelligence and legal backgrounds and include qualified Accountants, Financial Investigators, and Forensic Investigation Practitioners. Advisors have held position such as Head of Interpol’s Economic Crime Department, United Nations Special Commission Weapons Instructor, senior roles at Europol, Detective Chief Superintendent, New Scotland Yard senior police officer, and Professor for Operational and Strategic Criminal Intelligence and Strategic Management at MEDAV GmbH – SAAB Defence AG. A number hold MBEs for their policing work, whilst others trained at the FBI National Academy and West Point Leadership and Command training.

Thomson Reuters is a professional legal, tax, compliance, government and media advisor which provides various businesses and organisation services. Risk services include fraud prevention and investigations, regulatory and compliance management, and data privacy. Thomson Reuters’ history originates from 1799 in London; today, it has 76 offices around the world and is headquartered in Toronto. Current directors have held titles such as Officer of the Order of Canada and twice the “most powerful woman in the world” according to Forbes Magazine, whilst current executives include the former Deputy General Counsel at IAC USA, Chartered and Certified Public Accountants, and award-winning business leaders.

BDO is an accountancy, tax, and business and risk advisory firm with 1000+ offices in 162 countries. Headquartered in Zaventem, Belgium, BDO’s risk advisory services range from financial crime and fraud investigations to financial reporting, IT outsourcing, and forensic services, and clients have included the US Securities and Exchange Commission, the Financial Conduct Authority, and the Competition and Markets Authority. Advisors include Chartered Accountants, Consulting Actuaries, former Inspectors at the UK Companies Investigations Branch, External Adviser to the United Nations Compensation Commission, and former Director of the London Fraud Forum.

Exiger is a risk, compliance, and global governance company, specialising in compliance, investigations, government services, due diligence, and technology solutions. Intelligence services range from AML and anti-bribery investigations, asset tracing, and investigative due diligence, to immigration, citizenship, and visa due diligence and fraud. Exiger’s head office is in New York and it has multiple offices abroad. Directors and executives originate from intelligence, law enforcement, and financial services, and have acted on behalf of the US Department of Justice and served as Chief of the Criminal Division in the US New York Attorney’s Office, Dow Jones Director of Risk and Compliance, Barclays Capital Financial Crimes Compliance Director, Head of Entity Verification at Bloomberg, and CEO of Clearpath Immigration.

S-RM is a risk and intelligence consultancy, offering private client, corporate intelligence, cyber security, and crisis management services with expertise in AML, fraud, regulatory compliance, and citizenship and visa due diligence. S-RM has six international offices, including its headquarters in London. Advisors include former British Army Captains and Majors, former Private Secretary to the UK Deputy Chief of Defence, Charted Accountants, former Ambassador to the EU Political and Security Committee, former Ambassador to the UK, and current Head of Risk Analysis at Pool Re, a governmental terrorism reinsurance scheme. A number hold MBEs or have been appointed CBE for their defence work abroad.

Sterling Diligence is a corporate due diligence, executive screening, and global investigations firm providing reputational and operational risk management services and specialising in due diligence. Due diligence services include pre-investment checks, executive level screening, and citizenship by investment investigations. The firm provides services worldwide and is headquartered in New York. Management and directors include certified Fraud Examiners, International Investigators, Licensed Private Investigators, and National Association of Professional Background Screeners, former E-Trade Financial Senior Fraud Service Specialist, a Director of Larimer County CrimeStoppers, former Senior Fraud Investigator at Empire Blue Cross Blue Shield, and former Forensic Scientist at the Unified Metropolitan Forensic Crime Laboratory.