Shell firms used to launder cash in former Soviet Union
Warning as agencies in Latvia, Ukraine and Russia sell SLPs
NEW warnings have been sounded that off-the-shelf Scottish firms are being used for money-laundering and tax evasion in the former Soviet Union.
Concerns have been growing for more than a year over controversial limited partnerships – a unique Scottish corporate structure used in the elaborate looting of $1 billion from Moldovan banks in 2014.
Now it has emerged that such shell firms, which are advertised as “Scottish zero-tax offshore companies”, are being marketed across the European Union complete with official UK Government documentation that enables their owners to open bank accounts.
At least a dozen agencies in Latvia, Ukraine and Russia are selling Scottish limited partnerships (SLPs) along with Certificates of Good Standing, essentially references from Britain’s Companies House confirming the SLPs are bona fide.
Such papers are used to secure bank accounts in perhaps Riga, Latvia, or Nicosia, Cyprus. Russian-language adverts show such certificates being offered for €350 – on top of one-off payments of €1,700 for an off-the-shelf SLP, typically registered in a virtual office or private flat somewhere in Scotland.
Green MSP Andy Wightman has campaigned for reform of SLPs.
He said: “These revelations are further proof that Scottish Limited Partnerships are now the vehicle of choice for a growing number of criminal enterprises.
“The ease with which they can be registered and exploited for nefarious purposes such as money-laundering emphasises how urgently the Scottish and UK governments should be dealing with this issue.” Crucially, the use of an SLP and a bank account in an EU country allows former Soviet “investors” to bypass so-called blacklisted tax havens. Several former USSR states have banned direct contact with offshore zones.
However, an SLP enables them to deal indirectly with jurisdictions such as Belize and Panama, because SLPs, while registered in Scotland, are often owned by “members”, or partners, in the Caribbean.
So the SLP is used to provide a financial bridge between the former Soviet Union and tax havens by, nominally, having provided a corporate based in the respectable European Union jurisdiction. That SLP then opens doors to a bank account in another EU jurisdiction.
However, the SLP does not need to publish financial accounts if it does not do business in Scotland, meaning it effectively enjoys secrecy and tax advantages of its offshore parent companies.
News of certificates of good standing being sold in the ex-USSR came shortly after MPs warned Britain’s property market is used to launder billions of pounds.
The Home Affairs Committee said the UK “laid out the welcome mat” to launderers with lax controls over property ownership.
Mr Wightman said: “The UK Parliament Home Affairs Committee has revealed at least £100bn is being laundered through the UK every year. I have written to the Justice Secretary, Michael Matheson to ask him for an assurance that he is doing all in his power to tackle this issue.”