UK Government Goes After Scottish Limited Partnerships to Curb Fraud

The UK government is taking a more hardline approach on Scottish limited partnerships, part of an ongoing bid to shore up transparency surrounding accords while also serving as a natural check against fraud.

The UK will push new laws that obligate Scottish limited partnerships (SLPs) to disclose ownership and control information.

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The laws will affect upwards of 30,000 firms that are presently registered as SLPs – these entities have been seen as controversial and potentially used as fronts for organized crime and Money Laundering Money Laundering Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laund Money laundering is a blanket term to describe the process by which criminals disguise the original ownership and proceeds of criminal conduct by making such proceeds appear to be derived from a legitimate source.Money laundering is an issue that traverses countless industries and sectors, which includes the financial services space. Though criminal money may be successfully laundered without the assistance of the financial sector, billions of dollars’ worth of criminally derived money are laund Read this Term, a tone echoed recently by Scottish National Party (SNB) leader Angus Robertson.

No more regulatory ‘blind spot’

Previously, Robertson had pressed for a joint plan with the PM Theresa May to tackle the misuse of SLPs given growing cross-party concern in Scotland. Indeed, skepticism surrounding SLPs has also been shared historically by the International Monetary Fund (IMF), among others, which noted a propensity for Eastern European crime and child abuse websites. The new laws are a culmination of this focus and will come into force today.

In particular, the newly introduced laws will force SLPs to disclose ownership and control information, helping better police these potential tax havens. 30,000 groups registered as SLPs will have 28 days to comply with the new regulations or face daily fines of up to £500 ($637).

The effort to finally crack down on SLPs is long overdue, given a virtual laundry list of allegations and warnings from several watchdog authorities and others. Historically, SLPs have been flagged as fronts for websites peddling a number of nefarious uses – this has included financial fraud, money laundering operations, child abuse images, and others.

Trending in wrong direction

This trend was exacerbated by an uptick in the registration of SLPs, which has swelled by 236 percent between March 2011 and 2016, ultimately forcing the UK to take action. Rather than relying on brute force Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term, the new laws will simply place SLPs on a level playing field with other UK firms, which all require the disclosure of the identity of their beneficial owners within 28 days.

Scottish Secretary David Mundell commented on the regulatory edict: “These new laws are a sign of the UK government’s commitment to transparency around Scottish limited partnerships. Campaign groups and media activity have highlighted growing concerns that SLPs had the potential to be used for criminal activity, and by introducing stronger deterrents the UK government is encouraging transparency.”