By Alison Thewliss, SNP MP, Glasgow Central

LIMITED Partnerships, and those who abuse them for financial gain, are back under the spotlight this month with the UK Government recently closing its three-month consultation on how best to shore up the regulatory regime that surrounds them.

These vehicles – and in particular Scottish Limited Partnerships (SLPs), often labelled the UK’s home-grown secrecy vehicle – have been the subject of more exacting scrutiny in the past years and months, mainly due to their propensity to be exploited for nefarious purposes. What sets them apart is that they have “legal personality”, meaning the vehicle enters into contracts as opposed to the individual, affording them a unique anonymity.

The UK Government announced in April that it would take steps to reform SLPs, and subsequently launched a consultation on how best to approach the task. It has acknowledged that whilst often used for legitimate purposes, SLPs are also being abused to carry out crimes abroad. This recognition is welcome, but some – myself included – fear action may not go far enough.

READ MORE: How Britain enables routine, everyday corruption and fraud in the ex-USSR

The Government have form here. Take the “People with Significant Control”, or PSC rules for example. The PSC framework mandated that all companies must identify those who own or control a company, in an attempt to improve transparency. PSC registers would then be audited, and action taken to enforce compliance – all of which is very easy to get on board with in principle. SLPs however have been subject to PSC rules for almost nine months, and no fines have been brought against companies which continue to flout the rules. Moreover, Global Witness only last month released data detailing that 35 per cent of SLPs have not made an effort to identify a PSC at all, leaving the Government’s proclamations looking like “all mouth and no trousers”.

READ MORE: How Britain enables routine, everyday corruption and fraud in the ex-USSR

Enforcement, or lack thereof, is an enduring issue. However, there are other steps that the Government could take to improve compliance and reduce disreputable behaviour – some of which the SNP group at Westminster has submitted as part of our consultation response on Limited Partnerships. For example, by obligating Limited Partnerships to open a UK bank account within three months of their registration, the Government can create a legitimate connection to the UK, and subject company owners and directors to existing due diligence measures such as Know Your Customer guidelines and anti-money laundering checks.

In addition, the Government introduced earlier this year a new regulator known as The Office for Professional Body Anti-Money Laundering Supervision (OBPAS), with the aim of strengthening supervision and reducing unlawful activity. Given the chronic – and well publicised – resourcing issues at Companies House, it would make a great deal of sense to require Limited Partnerships, or those acting on their behalf, to present filings that clearly demonstrate that they are supervised by one of the recognised OBPAS regulators. After all, more scrutiny and transparency will almost certainly beget increased compliance.

HeraldScotland: Alison Thewliss

Alison Thewliss

It would be easy to be pessimistic about the likelihood of meaningful action by the Government with respect to Limited Partnerships, particularly given the sometimes baffling opposition to many of the sensible amendments to the Sanctions and Anti-Money Laundering Bill, presented in the previous Parliamentary session. However, evidence of the flagrant abuse of Limited Partnerships continues to emerge and there is a perception that the tide may be turning. The Government must do the right thing and deliver material change – I and others will continue to push them every step of the way.

HeraldScotland: