A Scottish limited partnership (SLP) is a form of limited partnership registered under Scots law. SLPs have features that give them advantages as

investment vehicle An investment fund is a way of investing money alongside other investors in order to benefit from the inherent advantages of working as part of a group such as reducing the risks of the investment by a significant percentage. These advantages inc ...

s and have been criticized for having inadequate anti-money laundering rules. Unlike other UK limited partnerships, SLPs have

legal personality Legal capacity is a quality denoting either the legal aptitude of a person to have rights and liabilities (in this sense also called transaction capacity), or altogether the personhood itself in regard to an entity other than a natural person ...

, which allows them to hold assets and enter into contracts in their own right.

History

SLPs are governed by the

Partnership Act 1890 The Partnership Act 1890 (c. 39) is an Act of the Parliament of the United Kingdom which governs the rights and duties of people or corporate entities conducting business in partnership. A partnership is defined in the act as 'the relation which ...

and the

Limited Partnerships Act 1907 A limited partnership (LP) is a form of partnership similar to a general partnership except that while a general partnership must have at least two general partners (GPs), a limited partnership must have at least one GP and at least one limited p ...

. Prior to 2017, the ownership of SLPs was not disclosed in company filings. On 26 June 2017 regulatory changes required that SLPs disclose persons with significant control to

Companies House Companies House is the executive agency of the company registrars of the United Kingdom, falling under the remit of the Department for Business, Energy and Industrial Strategy. All forms of companies (as permitted by the Companies Act) are in ...

. Changes to the regulations were followed by a significant drop in the number of newly registered SLPs.

Illicit use

SLPs have been used to launder proceeds from criminal activities worldwide, including the proceeds of a $1 billion heist of major Moldovan banks. According to Transparency International, “these superficial companies have enabled theft, bribery and organised crime to thrive around the world under the veneer of a legitimate UK enterprise”. The investigative website

Bellingcat Bellingcat (stylised as bellngcat) is a Netherlands-based investigative journalism group that specialises in fact-checking and open-source intelligence (OSINT). It was founded by British journalist and former blogger Eliot Higgins in July 20 ...

"found SLPs trading in high-risk money laundering areas, operating unregulated trading and gambling websites, a large proportion of identifiable SLPs in business as trade intermediaries... SLPs appearing in the Ukrainian criminal courts, generic websites with no clear details of their trading activities... SLPs for sale online as shelf companies, SLPs involved in political lobbying, and others more directly involved in large scale criminal activity".

Popularity

Scottish Limited Partnerships new registrations chart

SLPs sharply increased in popularity between 2016 and 2017, with a 430% increase in registrations in that time. They are reportedly popular vehicles for money laundering for criminals from the former Soviet bloc. Due to possessing distinct legal personalities, SLPs have been used as investment vehicles in

Lloyd's of London Lloyd's of London, generally known simply as Lloyd's, is an insurance and reinsurance market located in London, England. Unlike most of its competitors in the industry, it is not an insurance company; rather, Lloyd's is a corporate body gove ...

since 1997. The requirement to file persons-with-significant-control documents from 2017 led to a large drop in the number of new registrations. This requirement did not apply to partnerships in England resulted in an about a doubling of new partnership registrations there.

Criticism

Transparency International Transparency International e.V. (TI) is a German registered association founded in 1993 by former employees of the World Bank. Based in Berlin, its nonprofit and non-governmental purpose is to take action to combat global corruption with civil ...

UK policy director Duncan Hames has criticized SLPs, stating that "money launderers have been attracted to them because of the secrecy and the veneer of legitimacy they offer". MP

Alison Thewliss Alison Emily Thewliss (born 13 September 1982) is a Scottish National Party (SNP) politician. She has been the Member of Parliament (MP) for Glasgow Central since the May 2015 general election. Before being elected to Westminster, Thewliss wa ...

described their reported abuse as "an issue of significant concern for the UK Government and the authorities".

References

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History

Illicit use

Popularity

Criticism

References

Further reading