THE number of new “secrecy firms” boomed in England after an attempted crackdown on their Scottish equivalents, The Herald can reveal.
British ministers are under increasing pressure to stop Russian and other dirty money being funnelled through a variety of UK shell firms.
No 10 earlier this year denied it was “turning a blind eye” to the issue after MPs urged it to close a series of laundering loopholes as a “major foreign policy priority”.
However, new research for The Herald suggests previous attempts to force notorious Scottish limited partnerships or SLPs to reveal their owners have merely prompted some of those needing a secrecy vehicle to look elsewhere in the UK.
The Conservatives in emergency legislation last summer said all SLPs would have to name a “person of significant control” or PSC if they had one.
They did not extend the same rules to similar but far from identical firms in England and Northern Ireland. The result was a 79 per cent reduction in registrations of Scottish limited partnerships but respective 142 per cent and 22 per cent rises in English and Northern Irish ones.
Labour MP Anneliese Dodds called on the UK Government to look at what was behind the changes.
She said: “I’ve been very concerned to hear about a significant increase in the number of registrations of English and Northern Irish limited partnerships.
“The rise has coincided with a clampdown on secrecy for Scottish limited partnerships.
“The UK Government needs to urgently consider whether this increase in registrations represents genuine business activity or - as many campaigners on SLPs would expect - merely shows a shifting of vehicle for those who want to hide where their money has come from and is going to.”
Scotland, re-imagined as a tax haven tropical island
#Analysis for The Herald found there were 2014 anonymously owned SLPs registered between January 1 and July 21, 2017, around the time new PSC rules kicked in.
There were just 422 such entities created between July 24 and December 1, 2017. Comparable figures for anonymous English limited partnerships saw a rise from just 238 from January to late July but then 577 in the rest of the year. Numbers were lower in Northern Ireland, rising from 138 to 168.
Some anonymous English partnerships have been used - improperly - as the persons of significant control of SLPs, concealing ultimate ownership.
UK firms were at the heart of the so-called Russian Laundromat, one of the biggest and most elaborate schemes ever uncovered to clean dirty money. They included more than 100 SLPs. But the most commonly used British vehicle in the laundromat was not SLPs, but limited liability partnerships or LLPs, a kind of firm found in all parts of the UK.
The Herald can reveal that just one Northern Irish LLP, based in Belfast’s upmarket Botanic Avenue, but with entirely opaque ownership, processed nearly $700m in payments from the Laundromat.
This figure, from data provided by the Organized Crime and Corruption Reporting Project, represents gross payments processed but underlines the sheer scale of funds even going through the accounts of Northern Ireland entities. The Belfast LLP, called Drayscott Overseas, was owned by opaque partners in Belize before it was wound up in 2015.
SNP MP Alison Thewliss has long warned that shell firm abuse affects the whole of the United Kingdom and challenged what she calls the government’s “empty rhetoric” on the issue.
Alison Thewliss
Ms Thewliss said statistics showing a boom in English limited partnerships should serve as a warning that ministers “cannot simply tinker around the edges when it comes to reform of these financial instruments, otherwise, dirty money will just move to another part of the UK”.
She added: “This latest evidence adds yet more weight to the argument that we need a coordinated, comprehensive strategy for dealing with the abuse of limited partnerships, and we need it quickly.
“The more time that passes without action, the plainer it becomes that the UK Government would rather take Russia’s money than mend its own tarnished reputation.”
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