Low-Skilled vs High-Net Worth Immigration: Uncovering a Global Truth

Today, immigration is a topic of controversy. Portrayed as a negative phenomenon by those wary of its effects on local jobs and culture, it is instead viewed positively by those who see it as necessary for economic growth and social revitalisation, with history weaving between these outlooks. Opinions converge more, however, on the matter of high net worth immigration. The United Kingdom is a case in point.

The United Kingdom

Battered by the human and economic cost of engaging in the Second World War, post-war United Kingdom was eager to attract immigrants of all socioeconomic strata to boost its labour market and provide more extensive public services. This openness was entrenched in the 1948 British Nationality Act which, passed only three years after the end of the conflict, enabled all citizens of the Commonwealth to live and work in the United Kingdom without being subjected to immigration controls. The result was absolute freedom of movement for large portions of the world’s population, ranging from persons from the Indian subcontinent to the Caribbean. The system worked, spelling success for entities such as the National Health Service (NHS), which relied heavily on foreign-born and trained staff. With time however, anxiety over unchecked migration changed attitudes towards citizens of the Commonwealth, and reductions in their right to enter and settle in the United Kingdom came in the form of the 1962 and 1968 Commonwealth Immigrants Acts, and later legislation such as the 1971 Immigration Act.

The United Kingdom obtained membership of the European Economic Community, later to become the European Union, on 1 January 1973. Therefore, as freedom of movement was being reduced for the Commonwealth, it was being espoused for Europe. Migration from Europe, at least initially, remained low, and was generally matched by British emigration to the rest of the Union. The trend changed after 1 May 2004, when the European Union was expanded to include Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia. A stronger UK economy, a highly-regarded education system, and growing employment opportunities also played an important role in encouraging immigration. Data collected by the International Passenger Survey (IPS) indicates that, between 2010 and 2016, an average of 495,000 non-UK nationals immigrated to the United Kingdom every year, while 190,000 British nationals emigrated each year. On 23 June 2016, a slim 51.9 percent majority of the United Kingdom voted to leave the Union, in what is now commonly known as the Brexit Referendum. 45 years after opening its doors to Europe, the United Kingdom’s policy on large-scale immigration has swung again.

Debates on the merits and drawbacks of freedom of movement for sizeable shares of the world’s population continue to dominate public discourse in the United Kingdom. Yet one category of immigrant operates outside these debates: the high net worth individual. High net worth individuals (HNWIs) are normally defined as persons with financial assets valued at US$1 million or more (not including the value of their primary residence). They are unlikely to be vying for medium or low-skilled jobs, and they are prone to spending more than the average citizen, both on private undertakings, such as business, hospitality, commerce or medical tourism, and by way of taxation. They also tend not to reside in the places they visit, having already built comfortable family homes in their countries of residence. Both sides tend to agree: inflows of HNWIs produce beneficial outcomes. Unsurprisingly, the United Kingdom’s residence by investment programme, known as the Tier 1 Investor Programme, has not been brought into question by Brexiteers and proponents of wide-ranging migration-limiting policies.

This does not mean that the Tier 1 Investor Programme has been fully uncontroversial. Global Witness, an NGO focused on exposing corruption, asserts that, between 2008 and 2015, the United Kingdom was “letting people in without sufficient security checks,” as the “Home Office assumed that the banks were doing the checks on the individuals” while UK banks assumed that, “because this individual was applying for a visa via the Home Office, the checks would be done further down the line.” This was confirmed by Lord Wallace of Saltaire, who characterises the Programme as “just one of the many ways in which illegally acquired money has flowed into London.” The issue is one of due diligence, solved by stringent background checks, rather than by reducing (or increasing) the number of applicants who obtain Tier 1 Investor Visas.

Elsewhere

The United Kingdom is not the only country to incentivise investment through immigration benefits. In Europe alone, Austria, Greece, Italy, Malta, Portugal, and Spain all encourage HNWI migration via their residence by investment programmes. In the United States, investors can obtain permanent residence via the EB-5 Investor Visa Programme, or temporary (but renewable) residence via the E-2 non-immigrant visa.

Some countries go a step further, offering not just residence, but direct citizenship. In Europe, Austria, Cyprus, and Malta have been administering citizenship by investment (CBI) programmes for years, while Moldova and Montenegro have announced new citizenship programmes for 2018. Citizenship by investment is also available in five Caribbean jurisdictions, Cambodia, Jordan, Turkey, and Vanuatu.

Among these countries, it is the Caribbean nations that stand out for their ability to deliver citizenship programmes that are attractive to HNWIs, significant to local economic growth, and – unlike the Tier 1 Investor Visa model – respected for their extensive due diligence. St Kitts and Nevis, a twin-island Federation in the West Indies, serves as a prime example. Having established its Citizenship by Investment Programme in 1984, the nation is celebrated as an industry leader in due diligence and a trendsetter in anti-money laundering and anti-terrorism financing best practices. The Commonwealth of Dominica, known as the nature island of the Caribbean, is equally famous for its vetting procedures, and its Citizenship by Investment Programme is a key component of its strategy to become the world’s first ever climate resilient nation. Dominica has been running its Programme for over 20 years.

Despite the long and respected history of these Caribbean citizenship programmes, there is still a common misconception that, by enabling individuals to enter the United Kingdom and Europe without obtaining a visa specific to the country, such programmes pose an economic or security risk to these countries. This conception is not borne from fact but stems from a conflation of general, low-skilled migration with HNWI migration, and misses a fundamental point of these programmes: the significant economic and security requirements. Insight from industry experts reveals that the requirements that applicants of Caribbean citizenship programmes must fulfil are far greater and more stringent than those of any European visa regime. For example, a HNWI applying to a Caribbean citizenship programme must donate a minimum of US$100,000, plus due diligence, processing, and professional fees. A person who can afford to do this is, as noted above, unlikely to be in need of a job in the United Kingdom or elsewhere. Indeed, typically businessmen and women, these persons are far more likely to create jobs and stimulate the economy of any location they choose to visit.

As regards security, all Caribbean programmes operate strict, multi-layered, and multi-jurisdictional due diligence procedures. Applicants are required to provide detailed evidence covering their employment, educational, personal, and residential histories and their source(s) of wealth, and must prove that they have clean criminal records. Biometric data in the form of fingerprints is required and applicants are checked against international wanted lists and terrorism databases. All evidence is inspected at multiple stages by international, national, and government bodies, all of whom are trained in detecting money laundering, financial terrorism, fraud, and other crimes. Such extensive and rigorous security checks are unique to Caribbean citizenship programmes. Rarely do the security procedures of European or United Kingdom visa regimes come close in depth or breadth to those conducted by the bodies who govern Caribbean citizenship programmes. Consequently, the HNWIs who enter Europe and the United Kingdom on Caribbean economic passports, and who are therefore not subject to those countries’ visa requirements, have already successfully passed far greater economic and security checks.

[caption id="attachment_12372" align="alignnone" width="1368"] The lifestyle of a HNW economic citizen is conducive to the economy[/caption]

Predictably, it is in countries that ensure applicant suitability and that use programme revenues sustainably that investment migration is most valued and the immigrant debate least felt. The reason is patent: HNWI immigration does not pose a threat, real or perceived, to the general population and it brings significant foreign investment, talent, and innovation to the country.