Banned Russian oligarchs exploited UK secrecy loophole

    6

    Arkady and Boris Rotenberg – judo partners of the Russian president – used a type of company that was not required to identify its real owners.

    Ministers have acknowledged concerns that these companies, known as English Limited Partnerships (ELPs), have also been abused by criminals.

    A joint investigation by the BBC and Finance Uncovered has discovered evidence linking a number of ELPs to fraud, terrorism and money laundering.

    In 2016 and 2017, the government introduced measures that forced almost all UK companies to identify their real owners. ELPs were not covered by these new transparency laws.

    Since then, more than 4,500 of them have been set up.

    The BBC has worked with Finance Uncovered to analyse leaked documents and thousands of company records that show how ELPs have become a route to dodge anti-money laundering laws requiring the real owners, or persons of significant control, of UK companies to be disclosed.

    ELPs are legitimately used in real estate, investment and pension funds – they have tax advantages, for example, and the amount investors risk is limited.

    Unlike most companies, ELPs do not have a separate legal identity. The government says that means they cannot own assets, do not have a beneficial owner, and cannot legally open bank accounts in their own right.

    But our investigation has found documents identifying beneficial owners of ELPs, and evidence of their use to open bank accounts and to facilitate financial crime. According to Graham Barrow, an expert in financial crime, they are also “vulnerable to misuse” because of how little information about their activity they are required to make public.

    Our data shows the number of new ELPs being set up has gone up by 53% since 2017.

    “I wish I could be shocked about the scale of this, but I’m absolutely not. I’m just depressed and frustrated,” says Helena Wood, head of the UK Economic Crime Programme at the Royal United Services Institute.

    The investigation also reveals:

    Leaked documents show ELPs were marketed as an “alternative solution” to avoid transparency laws
    Just five companies, known as formation agencies, have been responsible for 1,500 ELPs, with hundreds listed at registered addresses including one above a burrito bar in central London
    A 71-year-old Swiss ceramic artist used in official paperwork to hide the real owners of UK companies was a signatory for more than 160 ELPs
    FBI agents investigating the Boston marathon bombing probed an ELP registered at an address currently home to a barber shop in Bristol.

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