"I would go further and say that AML checks should be rolled out across the financial sector and made more stringent in areas that should already be doing comprehensive checks."
The National Crime Agency recently identified a disproportionately high volume of suspected criminal activity involving Scottish limited partnerships.
Government figures estimate that up to half of all SLPs are being used to launder dirty money and one money laundering scheme reportedly used more than 100 SLPs to move $80 billion out of Russia.
Transparency International’s report ‘Offshore in the UK’ found that just five ‘frontmen’ were responsible for more than half of the 6,800 SLPs registered between January 2016 May 2017, and that half of all SLPs are registered at just 10 addresses.
SmartSearch noted that unlike most investment vehicles, Scottish Limited Partnerships have their own legal 'personalities' which means they can hold assets, borrow money from banks and enter into contracts in their own right, and welcomes the tougher rules.
John Dobson, CEO of SmartSearch, commented: “The real owners of SLPs are able to hide their activity by not listing themselves and using foreign bank accounts. SLPs, therefore, offer anonymous ownership and control while giving the impression of a respectable UK business – a perfect veil for criminal activity. So perfect, in fact, that it is estimated that as many as half of all SLPs are being used to launder dirty cash.
“It is clear that something needed to be done, and the proposed reforms include that all those seeking to register a limited partnership have to register with an anti-money laundering supervisory body and to provide evidence of this.
“This is a very sensible move but I would go further and say that AML checks should be rolled out across the financial sector and made more stringent in areas that should already be doing comprehensive checks. For example, luxury goods retailers such as high-end cars, jewellery, antiques - any business, where large financial transactions take place, is open to abuse by money launderers.
“Carrying out money laundering checks used to be a slow, cumbersome process, with documents being checked by hand, which is why only sectors most at risk to money laundering have been subject to checks.
“But, thanks to advances in technology, electronic anti-money laundering platforms can complete AML checks and automatic sanction and PEP screening in a matter of seconds. So there is no reason why the Government shouldn’t legislate that any area that is in any way at risk to fraudulent financial activity is subject to proper AML checks.”
