Nearly half of the U.K. corporate structures that are tied to money laundering don’t meet the ownership regulation, but haven’t faced any punishment since the rules aren’t enforced, reported the Financial Times.
According to the report that cites the paper’s own analysis, since 2017, Scottish limited partnerships (SLPs) have had to record details about their shareholders with the Companies House, the U.K.’s corporate registry. But as of the start of 2019, only 47 percent of the 32,500 SLPs have registered shareholders with 25 percent or more stake in the company.
The requirement was put on the books after an investigation found that the SLPs were at the center of money laundering scandals that involved former Soviet countries. The National Crime Agency in the U.K. has said in the past that the SLPs are the preferred way to illegally move money across the globe.
As the paper noted, the Department for Business, Energy and Industrial Strategy, the registrar’s parent agency, contends that the number of Scottish limited partnerships that complied stood at 87 percent as of December, but that excludes 7,000 registered SLPs that had informed Companies House they had been dissolved. It also doesn’t include the number of SLPs that couldn’t be contacted. Those that fail to disclose the identities of shareholders with more than a 25 percent stake within 28 days face fines of as much as £500 per day, and could face up to two years of jail time.
Steve Goodrich, research manager at Transparency International, a non-governmental, anti-corruption organization, told Financial Times that although the rules are on the books, they aren’t enforced. “It is not a satisfying position if all you have to do to dodge rules is to not respond to a letter — that is exactly the kind of approach you would expect from someone who is involved in criminality,” Goodrich said in the report. “Companies House will accept information, unless there is something obviously wrong with it, without scrutiny or challenge.”
While it has been relatively easy for SLPs to appear as if they are complying with the regulation, it appears ministers are planning to tighten the regulations on the partnerships, including requiring more checks at registration and giving Companies House more authority to dissolve corporates, noted the report.