Secrecy still shrouds many Scottish firms but new rules see SLP numbers plummet

After the UK first set up its register of the real owners behind companies (The Register of Persons of Significant Control) in 2016 and SLPs came under its rules a year later, a major new analysis shows 35 per cent of the firms – which are marketed overseas as secrecy vehicles – have still failed to carry out checks on who are their ultimate owners.

Working with a group of data scientists at DataKind UK, Global Witness, an international anti-corruption NGO, combed through data consisting of over four million companies – to uncover likely mistakes, loopholes and suspicious signs for money laundering and financial crime.

For years Scottish Limited Partnerships (SLPs) were a little known legal vehicle set up primarily for farmers in Scotland.

More recently, SLPs gained notoriety for their association with corruption, organised crime and tax evasion – including as part of the Russian and Azerbaijani Laundromats.

One of the reasons SLPs appeared to be so attractive to international criminals was their secretive nature.

It was also possible to set one up without having to declare who really controlled or and benefited from it.

And then once set up, those behind it could use it to to open a bank account or purchase property, without any connection to their name.

The vehicles also provide the semblance of legitimacy through a UK connection.

From 2011 the rates of incorporation for SLPs started mushrooming, culminating in an almost doubling between 2015-2016.

This changed in June 2017 when, in a move that appears to have surprised a number of the real owners behind SLPs, they were brought within the scope of the UK’s beneficial ownership transparency rules - so that the real owners had to be disclosed in the register.

Global Witness now says the change in the rules has resulted in their rates of SLPs incorporation plummeting to the lowest in 7 years, 80 per cent lower in the last quarter of 2017 than at its peak at the end of 2015.

However, the group also said SLPs remain by far the least compliant type of corporate entity in the UK.

Outwith SLPs, the proportion of Scottish firms that have not completed moves to identify a so-called Person of Significant Control (PSC) is just 0.2 per cent.

Of SLPs that named an individual as a PSC, more than two out of five said this was someone in the former Soviet Union.

Global Witness also identified nearly 8,000 British companies, including SLPs, that were linked to moneylaundering suspects.