IMF targets Scottish tax haven firms behind child abuse websites
BY DAVID LEASK AND RICHARD SMITH
THE International Monetary Fund has warned of the risk posed by Scotland’s “limited partnerships” to the fight against global money-laundering and organised crime. The IMF singled out the Scottish firms – which are widely used as tax avoidance and secrecy vehicles by Eastern European organised crime gangs – as it flagged up wider reforms it wants to see in the UK.
The Sunday Herald has exposed how Scottish limited partnerships or SLPs have acted as fronts for websites peddling child abuse images, and revealed they have been part of major corrup- tion cases in Ukraine, Uzbekistan and Latvia, including in the arms industry.
IMF officials said SLPs – which can be used to open bank accounts for anonymous owners – should be subject to anti-money-laundering measures, such as rules which force other UK companies to name their owners.
The IMF remarks, in a new report on Britain’s progress against money-laundering and terrorism financing, echo concerns raised by the Home Office.
In its controversial risk assessment on money-laundering, the Home Office found that even police felt SLPs were hard to hold accountable. It said: “The relative freedom from filing obligations enjoyed by partnerships reduces the ability of law enforcement to easily make initial inquiries. This means that law enforcement agencies have a reduced ability to identify whether this type of structure is being used for legitimate or illicit activity.”
There are currently more than 400 SLPs being registered every month, almost all with opaque partners in traditional tax havens such as Panama and Belize. Such Scottish firms are specifically marketed as “Scottish zero-tax offshore companies” with no requirements for regular financial filings – but come with a prestigious UK address.
Most notoriously, SLPs were allegedly used to funnel the proceeds of the $1 billion looting of the banks in the tiny former Soviet republic of Moldova. This week another SLP emerged in the news in Ukraine, amid calls for police investigation into the “grab” of an agricultural business by unknown investors.
The Scottish Government has called on its UK counterparts to act on SLPs – which are a reserved matter – amid concerns for the country’s reputation. Opposition Labour, Green and Liberal Democrats have also raised concerns. This month SNP MP Roger Mullin lodged an amendment to the finance bill calling for a review of SLPs. His proposal was outvoted by the Tories.
Mullin said: “Following the latest revelations and the UK Government’s opposition to my amendment to the Finance Bill, I am writing to Chancellor Philip Hammond to seek a meeting.
“Amongst other actions, I will be asking for clear action to be announced no later than the Autumn statement.”
SLPs are a particularly popular form of corporate entity but very much part of a UK-wide “brass plate” market for shell companies sold off the shelf, usually with other shell companies from tax havens as their partners or shareholders.