Four Risk Sectors of New Zealand Investor 1&2 Visas

Yun Jessica MengYun Jessica Meng, Licensed Immigration Adviser at IMME Limited, shares her insights on risk management for Migrant Investment Categories.

Following the initial peak in applications for New Zealand’s Migrant Investment Categories, the section 49 visas were issued in hesitation due to the country’s strict border controls and an underlying logic[1] that it is almost impossible to obtain an entry permission for offshore resident visa holders. Therefore a large backlog of applications are pending for decision making.

With the opening of the border in due course 2022 and the recruitment of New Zealand immigration officers, business specialists, to expand, we expect a relatively high volume of application decisions to be made this year, i.e., a large volume of approvals and declines. Although there are significant differences between Investor Plus Visa and Investor Visa in terms of the application process and specific requirements, such as the amount of investment and English, we find that the ultimate risks of a Migrant Investment application, whether it is investor 1 or investor 2, only occur in four aspects.

We therefore believe that to effectively assist the clients in obtaining a New Zealand resident visa under these categories, it is necessary to effectively sort out and avoid the following four types of risks.

To facilitate understanding, we also divide these four major types of risks into two parts, the first part is relevant to the applicant; and the other part is relevant to the funds. At the same time, the reason why New Zealand investor visa is a relatively complex systematic project is that it involves the dual identification of people and funds.

 

The First Part: Risks Relevant to The Applicant

LIAs and lawyers need to discern whether the applicant is qualified or not under the immigration instructions. Of course, the principal applicant and the secondary applicant all need to meet the health, character requirements. Moreover, there are two other things worth noting for these investors:

Firstly, the principal applicant should be a fit and proper person, which means the character requirements are broader than other categories.

The second point is for the principal applicant of Investor 2 category only. They must illustrate that they have a minimum of 3 years of business experience. That may be a conundrum for the newly rich in some high-tech jobs, who do not involve in “planning, organisation, control, senior change-management, direction-setting and mentoring” a business.

 

The Second Part: Risks Relevant to Funds

From the linear point of view of time, we can decompose this kind of risk into three stages:

 

Stage No. 1  Assets outside New Zealand

Assets that are outside New Zealand can take many forms: property, bank deposits, shares or stocks, etc. The risks of this stage are mainly about how to illustrate the funds are earned or acquired legally if the ownership is not a problem.

This is especially stressful for applicants from medium to high-risk regions identified by Immigration NZ, such as China. In our experience, if the LIAs and lawyers is familiar with on-the-ground processes and situation in that country, such as the local legal, financial and tax knowledge, it will have a lot of positive effect on the application, which means they can forecast the potential risks in the application process, prevent the risks come into being beforehand on another level.

 

Stage No. 2  In the Process of Funds Transfer

Once the AIP is granted, the applicant needs to cash out the nominated funds and remit them to New Zealand within the required timeframe.

To comply with international anti-money laundering obligations, New Zealand immigration instructions have strict regulations on the transferring process. There had been quite a few problems in this regard in the history of Migrant Investment Categories. For example, the country from which the most clients came from, China, implements foreign exchange controls. There was a lot of intellectual creativity regarding how to meet both the country’s regulatory requirements and the New Zealand Immigration code simultaneously. Unfortunately, there were some hard lessons.

Since Qualified Domestic Institutional Investor programs appeared as a bilaterally approved transfer channel by China and INZ, the risks in this area have been significantly reduced for applicants with nominated funds based in China.

However, applicants from other countries which do not have exchange controls should still pay attention to the remittance process by relevant norms. Otherwise, the application may be declined, or the remittance process may need to be redone even after an acceptable investment has been completed.

 

Stage No. 3  Funds enter New Zealand

When the funds enter New Zealand, applicants need to complete the investment within the specified time too. Compared with the rest of the world, the content of acceptable investments for New Zealand Investor Visas is much wider. For example, applicants don’t have to invest in mandated government bonds.

However, there are still some types of investments that are unacceptable, such as a term deposit. There are different levels of complexity in different investment categories. In most cases, we recommend the involvement of other professionals such as financial advisers.

In our view, the pressure faced by applications among the above four kinds of risks, varied considerably, especially for those with different physical locations of nominated funds. A careful LIA or lawyer should conduct a very strong risk assessment and management in the whole application life cycle, such as effectively identify and assess before engagement, help clients manage and respond to risks, and design appropriate compensatory measures to ultimately obtain visas.


[1] This was ruled unlawful in a Judicial Review by High Court. Afghan Nationals v The Minister of Immigration [2021] NZHC 3154, at [80]. It is in favor for the resident applications made before the border restrictions and those made after the Judicial Review as the Court expressed a strong view that the resident decisions should be made based on the Ops Manual in place when the application is made. However, its implementation in that way will generate de facto injustice for those resident applications made between the above two points in time. It appears that more refined and balanced policy formulation is imperative.


Before migrating to New Zealand, Jessica had worked in the head office of Agricultural Bank of China for 14 years, dealing with non-performing loans. She has a lawyer qualification in China and she is also an Arbitrator of Xiamen Arbitration Commission currently. IMME Limited has been established by Jessica, focusing on New Zealand Investor Category visas. Serving clients include the founder families of companies listed in Major Global Stock Markets, such as Nasdaq in the United States, A-share market in Mainland China and ASX share market in Australia. Contact Jessica via email: imme@imme.co.nz