UK to crack down on Scottish shell firms
● Government responds to pressure over SLPS used to launder criminal funds
The UK government is to crack down on shell companies based in Scotland that have been implicated in the laundering of tens of millions of pounds by oligarchs and criminal networks in the former Soviet Union.
Ministers will announce a package of anti-corruption measures to address the abuse of Scottish Limited Partnerships (SLPS) following calls for action from transparency campaigners, opposition parties and the Scottish Government.
One SLP registered in Glasgow was used to transfer £160m out of Russia last year. A network of 21 SLPS was involved in a billion-dollar fraud that siphoned money worth more than a tenth of Moldova’s GDP from the former Soviet republic’s banks using addresses in Edinburgh.
While SLPS and most of their users are legal, they have been linked to drug trafficking, child pornography and mercenary organisations operating in the Ukraine.
In the wake of the Salisbury poison attack blamed on Moscow agents, the SNP’S Westminster leader Ian Blackford warned Theresa May that the shell firms were being exploited to hide money overseas by corrupt interests in Russia.
SLPS were first created in 1907 for farm holdings, but ministers have agreed that their legal structure makes them attractive money laundering vehicles for international crime groups. Thousands have been set up using ordinary addresses in Scotland with little scrutiny or oversight.
The Department for Business, Energy and Industrial Strategy said new measures will bring greater transparency and more stringent checks to those registering a limited partnership.
Annual filing requirements will ensure Companies House has accurate information on all UK limited partnerships, the department said.
Key proposals include those registering limited partnerships must demonstrate they are registered with an official anti-money laundering supervised agent, such as an accountant or a lawyer, or an overseas equivalent.
The limited partnership must demonstrate an ongoing link to the UK, for example by keeping its principal place of business in the UK. Companies House will be given powers to strike off dissolved limited partnerships and limited partnerships which are not carrying on business.
Scotland Office minister Lord Duncan said: “The UK government continues to take the abuse of Scottish limited partnerships very seriously and will do everything necessary to crack down on crime lords exploiting them to launder dirty money.”
Business Minister Kelly Tolhurst said: “These proposals will increase transparency by ensuring these arrangements can still be used legitimately to invest by pension funds and investors while preventing abuse.
“The UK is taking strong action in the international fight against money laundering and today’s proposals will increase best practice amongst businesses.”