30th April, 2018
The UK government has proposed reforms to clamp down on money laundering after evidence revealed that international criminal gangs are using Britain to launder billions of dollars.
According to Business Minister Andrew Griffiths, the proposed measures will aim to crack down on the abuse of a specialised financial arrangement to launder dirty foreign money through Britain.
Thousands of legitimate British businesses, particularly the private equity and pensions industry, use businesses known as limited partnerships (LPs, or SLPs in Scotland) in which they legally invest more than 41 billion U.S. dollars a year.
Evidence to be published Tuesday, says the Department for Business, Energy and Industrial Strategy (BEIS) shows growing evidence some partnerships have been exploited in complex money laundering schemes.
The department said it includes one which involved using over 100 SLPs to move up to 80 billion U.S. dollars out of Russia.
The department also said partnerships have also been linked to international criminal networks in Eastern Europe and around the world, and have allegedly been used in arms deals.
Figures published for the launch of a government consultation due on Monday, show just five frontmen were responsible for over half of 6,800 SLPs registered between January 2016 and mid-May 2017.
By June 2017, 17,000 SLPs, representing over half of all of the partnerships, were registered at just 10 addresses.
Griffiths said: “Scottish Limited Partnerships are being abused to carry out all manner of crimes abroad, from foreign money laundering to arms dealing.”
Griffiths said new measures will improve the transparency of the partnerships and subject them to more stringent checks to ensure they can continue to be used as a legitimate way for investors and pension funds to invest in Britain.
Proposed measures will force SLPs to maintain a business or service address in Scotland.
The partnerships will have to register their agents meaning frontmen will be subjected to anti-money laundering checks.