Dailly calls for controls on representing limited partnerships
Professional rules should prevent solicitors and others from acting for Scottish limited partnerships that fail to comply with transparency regulation, solicitor Mike Dailly claims today.
Writing in the Herald, the principal solicitor at Govan Law Centre argues for stronger measures to control the activities of such partnerships, which have been linked with foreign money laundering and other criminal activities. They are unique in being legal entities but without separate tax treatment – the partners are taxed as individuals – or any requirement to file accounts.
Regulations introduced last year require disclosure of the identities of people with significant interest or control of limited partnerships, along with other companies, but Mr Dailly says many partners "routinely flout" the rules.
He goes on to argue that while regulation of companies and partnerships is reserved to Westminster, the regulation of the professions is not. "Why should Scottish solicitors, accountants and others act for SLPs which flout the law?" he asks. "Simply explaining that the responsibility for compliance with transparency in regulations rests with the SLP isn't good enough. This should be a matter of professional conduct and ethics."
There is "a very real risk", he continues, that continuing to act for Scottish limited partnerships "with something to hide" will damage the public interest and reputation of the Scottish legal profession, and the Law Society of Scotland – and other porofessional regulatory bodies – should introduce a professional conduct rule to prohibit a solicitor from acting for one that "fails to demonstrate compliance with the transparency regulations".
Failing that, he concludes, the Scottish Parliament should legislate.
A spokesperson for the Law Society of Scotland said that disciplinary action could be taken against any solicitor who through complicity or negligence enabled the use of any business structure for criminal activity, and the Society would "continue to engage with lawmakers to influence effective reform".