More than 21,000 partnerships, 14% of the total set up over the past 20 years incorporated in Britain, “bear the hallmarks” of shell companies used for financial crimes, a report from Transparency International UK (TI-UK) disclosed. They share almost identical characteristics with those known to have been used in corruption and money laundering schemes. Corporate partners from 21 high-risk jurisdictions with a high money laundering risk would control a vast network of LLPs.
The TI-UK analysis of 146,948 LLPs incorporated between April 2001 and September 2021 reveals that 21,002 (14%) showed three or more money laundering red flags.
The corporate secrecy in high-risk jurisdictions such as BVI, Belize, or the Seychelles would provide a layer behind which oligarchs and kleptocrats have hidden. 15 of these high-risk jurisdictions are either British Overseas Territories or members of Commonwealth nations. The patterns would be so clear and prevalent that it is undoubtedly no coincidence. Only a few key people would control this vast network on their clients’ behalf.
The report is the first to expose the scale of abuse of this type of company, with a conservative estimate putting the economic damage caused in the hundreds of billions of pounds, much of this flowing out of Russia.
The findings were released before a debate by MPs this week on the Economic Crime and Corporate Transparency Bill, which includes reforms designed to tackle the use of companies as a front for crime and corruption.
