Transparency International welcomes new UK money laundering rules

24^th June 2017, London – The UK’s failure to reveal the true owners of Scottish Limited Partnerships (SLPs), has so far left the UK open to corrupt money launderers. By seeking to reveal who the real owners of SLPs are, the UK is making a positive step towards ending its role as a safe haven for corrupt money, as well as meeting a key EU deadline.

The Government had been expected to miss the June 26th deadline, but has instead bypassed parliamentary rules that requires a 21 day period of parliamentary consideration, to push through the necessary legislation.

Scottish Limited Partnerships have unique features which mean they can be used as shell companies to help launder money and provide what appears to be a ‘respectable’ UK front to illicit activity. They have been at the centre of numerous global corruption scandals including over 100 used in the Global Laundromat, in which up to $80bn may have been laundered out of Russia.

Research from Transparency International and Bellingcat has found that in 2016, as other options for money launderers have narrowed, 5,215 SLP’s were registered, despite 1,000 fewer being set up in the entire preceding 100 years. In fact 71% of those registered last year were controlled by companies based in secrecy jurisdictions, such as Belize and Seychelles – a corporate structure favoured by money launderers.

Duncan Hames, Director Transparency International UK, said:

“We have seen how Scottish Limited Partnerships are being used as the UK’s home-grown corporate secrecy vehicle. They allow corrupt individuals to hide their real identity when laundering vast sums of money out of the country they have stolen from, by assuming the respectability of a UK incorporated legal entity. The abuse of these partnerships is a global problem that can have devastating effects on populations who have had their natural resources or state budgets emptied.””

“Whilst other avenues for corrupt individuals to launder the proceeds of corruption have been tightened, Scottish Limited Partnerships have emerged as a key weakness in the UK’s defences against money laundering. Criminals are adapting their behaviour to keep their activity hidden, so it is vital that the UK Government is alert to their methods and disrupt them .”

“We have campaigned on this as part of our broader efforts to end the UK’s role as a safe haven for corrupt individuals from around the world. Earlier this year we submitted evidence to a Government consultation on Scottish Limited Partnerships, and we are glad that the Government has now begun to make the necessary changes.”

Key Stats:

• 23, 625 (430%) increase in number of SLP’s set up in past 10 years
• In 2016 more SLPs were registered (5,215) than in the century after they were introduced in 1907 (4,458).
• 74% of SLP’s set up in past 10 years registered to just 10 Scottish addresses
• 71% of SLPs registered during 2016 were controlled by corporate partners based in secrecy jurisdictions like the Seychelles, Belize and Dominica.
• Dozens of SLPs were identified as key parts of the Global Laundromat, that helped launder up to $80 billion out of Russia between 2010 and 2014
• 20 SLPs were used to help steal over $1 billion from Moldovan banks in 2014, which cost the country an eight of its annual GDP

Key Recommendations:

• Extend beneficial ownership transparency requirements to SLPs to show who's really controlling them
• Companies House should then verify all beneficial ownership information it receives from SLPs so there is confidence in the accuracy of the information provided
• Prohibit SLPs from having corporate partners in most circumstances to stop them being used as fronts for money laundering

***ENDS***

Transparency International is the civil society organisation leading the fight against corruption

Contact:

Dominic Kavakeb

+44(0)20 3096 7695

+44 (0)79 6456 0340

Dominic.kavakeb@transparency.org.uk