UK Govt mulls next steps with regard to Scottish Limited Partnerships, often fronting for binary options firms

Maria Nikolova

The UK Government has no current plans to require Scottish Limited Partnerships to hold a bank account registered in the UK but is considering its next steps.

The UK Government is considering further measures with regard to the regulation of Scottish Limited Partnerships (SLPs), which are often used as fronts for the activities of fraudulent binary options companies.

Following the introduction of new requirements for SLPs in the summer of 2017, such entities are now obliged to disclose details about their beneficial owners. The measures were set to increase transparency and to help tackle the illicit activities performed by companies abusing the status of SLPs. Several months after the entry-into-force of the new rules, however, it became clear that SLPs that do not comply with the new requirements can avoid fines. “No Scottish Limited Partnerships (SLPs) have been fined since the People with Significant Control (PSC) register came into force”, Conservative MP Margot James said in November.

The questions around SLPs continue to mount. The most recent ones come from Labour MP Frank Field who has asked whether the Secretary of State for Business, Energy and Industrial Strategy will make an assessment of the potential benefits of bringing Scottish Limited Partnerships within the scope of the Persons of Significant Control register. On Wednesday, December 6th, Margot James replied that in June, a modified version of the Register of People with Significant Control (PSC) legislation was applied to eligible Scottish Partnerships, including limited partnerships registered in Scotland, under the Scottish Partnerships (Register of People with Significant Control) Regulations 2017. The Department will review the operation of the PSC register and report to Parliament in 2019, she said.

Margot James added that this Government has no current plans to require corporate entities, including Scottish Limited Partnerships, to hold a bank account registered in the United Kingdom. She was, however, less straightforward when it came to other requirements for SLPs.

Frank Field asked whether the Secretary of State for Business, Energy and Industrial Strategy has plans to require partners of Scottish Limited Partnerships to provide a correspondence address.

Margot James replied that:

“The Department undertook a call for evidence on Limited Partnerships into the working of the framework. The Government is actively considering options for reform and will announce next steps shortly”.

SLPs often front for binary options firms thanks to the special status of such partnerships. Before the coming into force of the new regulations, SLPs had been allowed not to disclose the identity of their owners and to file no accounts. A report by the Scottish Herald from earlier this year has estimated that 43 Scottish shell companies act as corporate fronts for binary options sites. Of these, 41 are Scottish limited partnerships.

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