Abuse controls on Scottish limited partnerships proposed by UK ministers

Reforms to prevent Scottish limited partnerships being exploited for money laundering and other criminal activities have been put out to consultation by the UK Government.

Although such partnerships (SLPs) are regularly used for legitimate business purposes, there is evidence that they are increasingly being exploited by foreign money laundering schemes, one of which moved billions of pounds out of Russia.

Limited partnerships can also be created elsewhere in the UK, but SLPs differ in having separate legal personality, which makes it easier for their true controllers to conceal their identity.

Figures published to coincide with the launch of the consultation show that 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, over half of all SLPs, were registered at just 10 addresses.

The proposals would make it clearer who runs limited partnerships. They include:

• requiring a real connection to the UK, including ensuring SLPs do business or maintain a service address in Scotland;
• registering new SLPs through a company formation agent, meaning frontmen will be subjected to anti-money laundering checks;
• new powers for Companies House to remove limited partnerships from the company register if they are dissolved or are no longer operating.

They will apply to all limited partnerships in the UK, and will also include new annual reporting requirements for limited partnerships in England & Wales and Northern Ireland.

Click here to access the consultation. The deadline for responses is 23 July 2018.