Scottish Limited Partnerships (previously)  notorious corporate entities whose true owners are easily disguised, making them perfect vehicles for money laundry.

Scottish Limited Partnerships are notorious financial secrecy tools that have been used to launder an estimated $100 billion on behalf of ex-Soviet gangster-oligarchs.

After revelations about SLPs being used to launder billions looted from the treasuries of former Soviet nations, the Scottish Police revealed that governments all over the world have asked Police Scotland for assistance in tracking down their own stolen billions.

An explosive set of court rulings, regulatory warnings, official warnings from other nations (America, Canada, France, Belgium, Italy, Israel and Cyprus), a Council of Europe investigation and a UN blacklisting finally led the UK Department for Business, Energy & Industrial Strategy to open an investigation, helmed by the now-disgraced, former Business Minister Andrew Griffiths – the Anthony Weiner of Scotland only worse, who, from the start, signaled that he did not take the allegations seriously.

But that should be expected from someone who likes to launder their own reputation. Finally, the  Tory Minister was forced to step down as, Senior government sources described his behaviour as “depraved” and said the contents of the messages were “sadomasochistic” in nature. It is understood that he bombarded the two women, barmaids in their twenties, with messages describing his sexual fantasies despite never having met either of them.

 

The highest number of enquiries came from Polish law enforcement, with nine over the four-year period, followed by Ukraine with seven, Lithuania and Latvia each with six and the Czech Republic and Russia with four.

The UK government said it  unveiled plans to crack down on a business scheme which it says has been used to launder dirty foreign money.

It follows a review of Scottish limited partnerships (SLPs) by the Department for Business, Energy and Industrial Strategy (BEIS).

BEIS said SLPs had been used to move $80bn from Russia in just four years.

It also said just five individuals were behind thousands of SLPs registered between January 2016 and mid-May 2017.

The department is due to launch a consultation on proposals to close loopholes in the law regarding the scheme, which said  proposals would apply to all limited partnerships in the UK.

The department also said the scheme had been linked to international criminal networks in Eastern Europe and had allegedly been used in arms deals.

What are Scottish limited partnerships?

• SLPs are a business entity provided for in UK law
• Limited partnerships are formed by at least two partners, one of which must be a general partner – who is liable for any debts incurred – and one limited partner – who has limited liability but cannot play a role in how the partnership is run.
• SLPs differ to limited partnerships elsewhere in the UK as they have “legal personality”, which allows them to enter into contracts, take on debts or own property. In a limited partnership in England and Wales or Northern Ireland, this is done by the partners.

Source: BEIS

Concerns about criminal activity surrounding SLPs have been highlighted by the Herald newspaper which has been campaigning on the issue.

In 2016, it reported that shell firms advertised as “Scottish zero-tax offshore companies”were being marketed across the European Union.

A Scottish government spokesman said: “For some time we have called on the UK government to tighten the regulatory framework around Scottish Limited Partnerships. ”

“We remain fully committed to ensuring that SLPs engaged in criminal activity and those individuals and organisations who help facilitate that activity are held accountable for their actions.”

Yet, that “commitment” remains to be seen.

 

Under the new proposals, SLP 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, yet  Scottish limited partnerships, are being abused to carry out all manner of crimes abroad – from foreign money laundering to arms dealing.

Figures published in tandem with the launch of the consultation on SLP reforms will show just five individuals 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 10 addresses.

According to the BEIS, laws introduced last year requiring SLPs to report their beneficial owner and make their ownership structure more transparent led to an 80% reduction in the number registered.

The hope is the latest reforms will apply to all limited partnerships in the UK and will also include new annual reporting requirements for limited partnerships in England and Wales and Northern Ireland.

Or so they said , but in Dec of 2018, the department has published its proposed reforms, which will do virtually nothing to kerb money-laundering through SLPs.

As Richard Smith explains, the investigation consisted entirely of responses to a “call for evidence,” but did not take into account the vast amount of official documentation of money-laundering already in the record.

The call for evidence drew 29 responses from people “the vast majority of which said that they could not offer evidence which definitively links LPs, in particular in their Scottish form, to criminal activity” (or, as Smith puts it, “the views of twenty-odd unnamed respondents, all of whom say they know absolutely nothing about the question they are answering”).

Smith has rounded up a set of links to the voluminous reporting on SLP money-laundering, none of which were considered by the Department in preparing its report.

So despite, proposals, commitments, and burning desire little has changed.