Russians are using Scotland’s ‘ghost’ firms to import supplies that could aid Putin’s war machine, a major new probe has revealed.

For nearly two decades criminals, money-launderers and tax frauds, especially in the former Soviet Union, have exploited notoriously opaque Scottish limited partnerships or SLPs to conceal their identities.

Now Bellingcat, the news site which pioneered open-source online investigations, has discovered they are also being used to bypass sanctions on the Kremlin.

Researchers found that UK limited partnerships - mostly SLPs - were named as intermediaries in more than 17,000 Russian import transactions between Putin’s full-scale invasion on February 2022 and the end of this March. 

Crucially, Bellingcat identified that more than 600 of these shipments featured supplies were what the European Union and its partners flag as “‘High Priority’ battlefield components, potentially dual-use and sanctioned items”.

The group said another “3,211 exports into Russia contained items included in the ‘universe of critical components’, a term the pro-Ukrainian International Working Group on Russian Sanctions uses to define components found on the battlefield”.

The UK Government has just secured royal assent for a new financial crime bill that includes a long-awaited crackdown on the abuse of SLPs and other opaque British corporate entities. 

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Anti-corruption campaigners and experts have welcomed the reforms - though complain the measures have come too late and do not go far enough. New rules have yet to be implemented.

It is not new for SLPs to be used to bust sanctions. As The Herald reported, Scottish ghost firms were used to own ships used to break the embargo of Russian-occupied Crimea after Putin’s first invasion, in 2014. One of those boats ended up abandoned in Istanbul harbour. Investigators were only able to trace its ownership to an Inverness council flat used as a mail drop, against the wishes of its tenant. 

There are further documented and reported examples of SLPs and sometimes other British entities being used to provide cover for the illegal import of coal from occupied Donbas.

However, Bellingcat investigators, using vast and publicly available customs records, have exposed the scale of the use of SLPs and other British limited partnerships in imports in the first year of full-scale wars. Painstaking checks identified shipments of parts of vehicles and other goods subject to UK bans.

A spokesperson for the UK Government declined to comment on specifics. Speaking to Bellingcat, they said: “We have introduced the largest and most severe economic sanctions ever imposed on a major economy, significantly reducing UK goods being exported to Russia. 

“Whilst we cannot comment on individual cases, we are clear that any UK company that is found to be selling or exporting sanctioned goods to Russia, directly or indirectly, could be in breach of sanctions law and could face a heavy fine or imprisonment.”

The SNP MP Alison Thewliss has been campaigning for action against SLPs and other abused entities for years. Last night she told The Herald: “This forensic investigation by Bellingcat highlights yet again the deficiencies and loopholes in the UK corporate regime. Given their history, it comes as little surprise that Scottish Limited Partnerships have been used to evade sanctions and support the Russian war machine. 

"I am grateful for the work of investigative journalists, but we should not have to rely on them to ensure that these shady practices are brought to light and enablers are held to account.

"The UK Government must implement all aspects of the Economic Crime and Corporate Transparency Bill without delay, and rigorously enforce the rules we currently have place.”

Since 2017 SLPs have had to name a person of significant control or PSC. Bellingcat stressed that all of those they have identified had an official controller not resident in the UK. The group said most identified owners - and there are no checks such filings - were beyond the reach of British law enforcement, mostly in Russia or other parts of eastern Europe.

Bellingcat said one Edinburgh-registered SLP had been used to import static converters to Russia, a key piece of equipment considered to be highly sensitive. Its PSC was Russian and its controlling partner was registered in the Seyechelles.

The group said 45 LPs in Scotland, England and Northern Ireland have acted as shippers in the export of 17,425 shipments in the period of just over a year it investigated.

SLPs and other LPs, including those not involved in criminality, rarely making any revealing financial or other filings. 

Scotland's best-known shell firms are not subject to taxation in the UK if their “partners” - usually shell firms in secrecy jurisdictions like the Seychelles or Belize - are outside Britain. This has made the entities - long advertised off the shelf in the former Soviet Union as “Scottish zero-tax companies” -  extremely attractive to international criminals.

The Scottish entities were at the heart of some of the biggest money-laundering schemes in world history. They first came under major public scrutiny when they were used in an elaborate scheme to rob $1 billion from three Moldovan banks. 

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They were then named as key components of the huge “Russian laundromat” in which between $20 billion and $80 billion of dirty money was flushed through international financial systems.

But SLPs have also been used as everything from financial fronts for all sorts of online criminality, from student essay mills to websites enabling the exchange of child sexual abuse images.

“Since the beginning of the new millennium, UK limited partnerships have been targeted by global elites to help obtain and move corrupt funds through the financial system,” Graham Barrow, a money laundering expert, told Bellingcat. “Whether it is setting up bogus companies to win government contracts in former Soviet states, to own significant assets as a way of masking ownership or for setting up bank accounts to move huge swathes of dirty money around the world, UK Limited Partnerships have been the ‘go-to’ entity.”

Ironically, as The Herald has reported, the Putin regime has cracked down on SLPs and other British entities which are used to own strategic assets inside Russia. An Edinburgh firm, for example, has lost its stake in the port of Kaliningrad on the Baltic after its home jurisdiction was described as a “hostile state”.