The plans follow a review of Scottish limited partnerships (SLPs) by the UK Department for Business, Energy and Industrial Strategy (BEIS).
According to BEIS, just five individuals were behind thousands of SLPs registered between January 2016 and mid-May 2017.
In one scheme, cited by BEIS, hundreds of SLPs were used to move $80bn (£58bn €66bn) from Russia.
BEIS said thousands of British businesses used SLPs and limited partnerships legitimately.
However, business minister Andrew Griffiths said: “Scottish Limited Partnerships are being abused to carry out all manner of crimes abroad – from foreign money laundering to arms dealing.
“This simply cannot continue to go unchecked and these reforms will improve their transparency and subject them to more stringent checks to ensure they can continue to be used as a legitimate way for investors and pension funds to invest in the UK.”
Glasgow-based The Herald newspaper has been campaigning for reform on SLPs, which are interesting to crooks because they have a legal personality enabling them to take on debts and enter into contracts.
Under the new proposals:
- to use an SLP you need to demonstrate a real connection to the UK, including ensuring SLPs do business or maintain a service address in Scotland;
- to set up a new SLP you need to register through a company formation agent, meaning frontmen will be subjected to anti-money laundering checks;
- and Companies House will receive extra powers to remove limited partnerships from the company register if they are dissolved or are no longer operating.
Triple the Russian flows into UK tax havens vs. The City
Russian money in the UK is dwarfed by the amount held in the British Overseas Territories (BOTs), according to research published by campaign group Global Witness.
The report, Missing the Bigger Picture, uses figures from the IMF and the Russian Central Bank that shows nearly five times as much Russian money is invested in the BOTs than is held in the UK.
The BOTs hold an estimated £34bn – making them the third most popular place to store money, after Cyprus and the Netherlands.
Over the last ten years, more than seven times more money has flowed from Russia to the BOTs than has gone to the UK.
