Crackdown on foreign money laundering loopholes in Scotland

Anew crack down is being launched to close loop holes around Scottish Limited Partnerships ( SLPS) which have been abused to launder dirty foreign money.

The UK government said thousands of British businesses use limited partnerships and SLPS legitimately, but research has found they have also been exploited in complex money laundering schemes, including one which used 100 SLPS to move up to $ 80 billion out of Russia.

They have also been linked to international criminal networks in Eastern Europe and have allegedly been used in arms deals.

Under new proposals, users will need to have a real connection to the UK and do business or maintain an address in Scotland to operate an SLP. They will also need to register through an agent who will carry out anti- laundering checks.

Business Minister Andrew Gr if fiths said :“The UK has taken a leading role in the fight against money laundering and is known internationally as a great place to work, invest and do business.

“But what we are seeing, especially with Scottish Limited Partnerships, is that they are being abused to carr y out all manner of crimes abroad - from foreign money laundering to arms dealing.

“This simply cannot continue to go unchecked and these reforms will improve their transparency and subject them to more stringent checks to ensure they can continue to be used as a legitimate way for investors and pension funds to invest in the UK.”

Limited partnerships are formed by at least two partners, one of which must be a general partn er liable for any debts incurred, and one limited partner who has limited liability but can not play a role in how the partnership is run. SLPS differ to those elsewhere in the UK as they have“legal personality ”, which allows them to enter into contracts, take on debts or own property.

Figures published f or a UK government consultation show just five frontmen were responsible for more than half of 6,800 SLPS registered between January 2016 and mid- May 2017. By June 2017, 17,000 SLPS were registered at just ten addresses.

“SLPS are being abused to carry out all manner of crimes abroad - from foreign money laundering to arms dealing”

ANDREW GRIFFITHS

Business minister