HOTLINE MONEY LAUNDERING REPORTS

Smash & Grab

Pin it

The UK’s Money Laundering Machine
A bell¿ngcat Investigation

Introduction

In June 2017, Bellingcat and Transparency International UK released their joint-report “Offshore in the UK” . This report analysed the use of Scottish Limited Partnerships (“SLPs”) as mech­a­nisms for cor­rup­tion and mon­ey laun­der­ing.

Our research showed that more SLPs were reg­is­tered in 2016 than in the entire cen­tu­ry (1907 — 2007) after they were intro­duced and that 71% of all SLPs reg­is­tered in 2016 were con­trolled by com­pa­nies based in secre­cy juris­dic­tions. As wide­ly report­ed from a vari­ety of sources in the media, SLPs have been used as a mech­a­nism in large scale mon­ey laun­der­ing oper­a­tions, includ­ing the Moldovan bank fraud scan­dal in 2014 and the Azerbaijani Laundromat in 2017 . This had led to ques­tions in Parliament and assur­ances from the Government that action will be tak­en.

The EU’s Fourth Anti-Money Laundering Directive (“4AMLD”) oblig­es the UK Government to hold a reg­is­ter of Persons of Significant Control (“PSCs”) for SLPs. This rule came into force in July 2017 and result­ed in an almost imme­di­ate reduc­tion in new SLP reg­is­tra­tions. From 1 July 2017 to the end of June 2019, 1782 new SLPs have been formed, few­er than were formed in the four months pre­ced­ing the intro­duc­tion of the PSC rules. The require­ment to file Person of Significant Control doc­u­ments came into force in 2017, this was fol­lowed by a sig­nif­i­cant drop in SLP reg­is­tra­tions. Additionally, between April and July 2018 the Government ran a con­sul­ta­tion on Limited Partnership reform5 , the con­clu­sions of which were pub­lished in 2018. They pro­posed a series of mea­sures which would lim­it the poten­tial for mis­use of Limited Partnerships, whilst pro­tect­ing the inter­ests of Limited Partnerships which trad­ed with­in the law.

But the pro­pos­als have yet to come into effect. In the mean­time, the most pro­lif­ic enablers of SLPs involved in ille­gal and high risk behav­iour have moved on, demon­strat­ing that those who wish to use the UK’s com­pa­ny sys­tem for illic­it pur­pos­es are fre­quent­ly two steps ahead of the author­i­ties.

Key Findings

This arti­cle details some of the key pre­sen­ters of secre­tive SLPs, the uses of SLPs as con­duits for illic­it activ­i­ty, and the oppor­tu­ni­ties missed by the UK author­i­ties to com­bat mon­ey laun­der­ing in the UK and abroad.

To do this, Bellingcat has exam­ined the fil­ing his­to­ries of the 14,658 SLPs reg­is­tered between January 2015 and July 2019 (“the Period”). Where pos­si­ble, we have iden­ti­fied the part­ners and PSCs of these part­ner­ships, and the pre­sen­ters who reg­is­tered their for­ma­tion doc­u­ments. We have worked with jour­nal­ist and researcher Graham Stack to iden­ti­fy the types of busi­ness­es being run by SLPs. In doing so, we see famil­iar pat­terns – large num­bers of SLPs with con­trol­ling part­ners in secre­cy juris­dic­tions, a dis­pro­por­tion­ate num­ber of PSCs from Ukraine and Russia, mail­box address­es and vir­tu­al offices used as the reg­is­tered address­es of thou­sands of SLPs. But we also see hun­dreds of SLPs oper­at­ing in high risk mon­ey laun­der­ing sec­tors. We have found SLPs oper­at­ing unreg­u­lat­ed gam­bling sites, SLPs wide­ly used as front end com­pa­nies for cryp­tocur­ren­cies, unli­censed Forex trad­ing and bina­ry options trad­ing firms obtain­ing warn­ings from the FCA and their for­eign equiv­a­lents. We have found hun­dreds of SLPs with gener­ic, anony­mous­ly owned web­sites of dubi­ous authen­tic­i­ty. We have also found a large num­ber of SLPs used as trade inter­me­di­aries for firms oper­at­ing in the for­mer Soviet Union, attract­ing the atten­tion of the Ukrainian courts, as well as SLPs involved in polit­i­cal lob­by­ing.

The gov­ern­ment, in its con­sul­ta­tion on Limited Partnerships, is right to point out the gen­uine busi­ness needs that SLPs ful­fil. But their use as a con­duit for crim­i­nal activ­i­ty can­not be ignored. Our report shows that off­shore part­ners, often with a track record of con­trol­ling SLPs involved in mon­ey laun­der­ing, are also cur­rent­ly active as part­ners of thou­sands of Limited Liability Partnerships (“LLPs”).

Companies House does not cur­rent­ly con­duct due dili­gence on any cor­po­rate vehi­cles on reg­is­tra­tion, and pre­sen­ters of LPs are not cur­rent­ly required to reg­is­ter with an anti-mon­ey laun­der­ing super­vi­so­ry body (or indeed, to state who they are). During the boom peri­od in SLPs, this allowed unreg­u­lat­ed and anony­mous­ly run SLPs to oper­ate in areas such as those described in this report. In the course of our research, we have found that —

● Numerous SLPs are, or have been, involved in sec­tors which car­ry a high mon­ey laun­der­ing risk. These include trade inter­me­di­aries, high-yield invest­ment pro­grammes, Forex and bina­ry options trad­ing, unreg­u­lat­ed gam­bling sites and cryp­to cur­ren­cies. A large num­ber of SLPs are named on web­sites which claim to pro­vide gener­ic ser­vices, but which do not pro­vide any sub­stan­tive con­tact or own­er­ship details.

● Just 23 pre­sen­ters were respon­si­ble for bulk-reg­is­ter­ing two thirds of SLPs reg­is­tered dur­ing the Period. Bellingcat has iden­ti­fied four groups of pre­sen­ters who col­lec­tive­ly reg­is­tered 5,945 SLPs dur­ing the Period. All four groups have reg­is­tered SLPs involved in illic­it activ­i­ty, almost exclu­sive­ly use off­shore secre­cy vehi­cles as gen­er­al (con­trol­ling) part­ners and have reg­is­tered large num­bers of SLPs with PSCs in Ukraine, Russia and Eastern Europe.

● Thousands of SLPs, almost always with opaque own­er­ship struc­tures, are housed at mail­box address­es or vir­tu­al offices, with no means to con­tact their true ben­e­fi­cial own­er. Just 28 address­es house 91% of all SLPs reg­is­tered dur­ing the Period.

● The Government’s pro­posed plans to reform Partnership law do not address the fun­da­men­tal prob­lems asso­ci­at­ed with SLPs. Two of the four main pro­pos­als are already wide­ly adhered to by active SLPs, includ­ing those involved in high risk sec­tors. None of the pro­pos­als have yet to be put into action and, in any event, these changes will be imple­ment­ed long after the pop­u­lar­i­ty of SLPs has waned.

SLPs and their Presenters

Of the 14,658 SLPs reg­is­tered dur­ing the Period, 9,142 (62.4%) of the reg­is­tra­tion doc­u­ments were pre­sent­ed by 23 indi­vid­u­als or com­pa­nies. Bellingcat has looked at the fil­ings made by these pre­sen­ters, hav­ing par­tic­u­lar inter­est in those who meet the fol­low­ing cri­te­ria —

● Bulk reg­is­tered SLPs dur­ing the Period

● Have reg­is­tered mul­ti­ple SLPs involved in illic­it activ­i­ty, or areas where there is a high mon­ey laun­der­ing risk

● Have reg­is­tered a large pro­por­tion of SLPs nam­ing off­shore com­pa­nies in secre­cy juris­dic­tions as General Partners

● Have reg­is­tered large num­bers of SLPs with PSCs out­side of the EU.

From our research, it is clear that dur­ing the rise in SLP reg­is­tra­tions in recent years, a small group of pre­sen­ters were respon­si­ble for bulk reg­is­ter­ing thou­sands of part­ner­ships. The part­ner­ships they set up com­mon­ly use off­shore cor­po­rate vehi­cles in secre­cy juris­dic­tions as con­trol­ling part­ners, and an analy­sis of the PSC fil­ings show a dis­pro­por­tion­ate num­ber of PSCs based in Ukraine, Russia, and Eastern Europe.

Bellingcat has iden­ti­fied four net­works of pre­sen­ters who were respon­si­ble for reg­is­ter­ing at least 5,945 SLPs dur­ing the Period which fit the above cri­te­ria. In the past, the pur­pose of large vol­umes of SLP reg­is­tra­tions has been sub­ject to con­jec­ture. In 2015, Caroline Lucas MP wrote to Anna Soubry MP, the then Secretary of State for Business Innovation and Skills, seek­ing an expla­na­tion for the boom in SLP num­bers. The expla­na­tion giv­en for this increase was the pop­u­lar­i­ty of Limited Partnerships as a pri­vate equi­ty and ven­ture cap­i­tal funds vehi­cle. Most of the respon­dents to the Governments con­sul­ta­tion on Limited Partnerships stat­ed that they could not link SLPs to crim­i­nal activ­i­ty.

To bring some clar­i­ty to this sit­u­a­tion, we have paid spe­cial atten­tion to the busi­ness activ­i­ties of SLPs reg­is­tered by the four net­works. These are —

● LAS International, based in England and respon­si­ble for pre­sent­ing the incor­po­ra­tion doc­u­ments for 1,632 SLPs dur­ing the Period. Company Advice Ltd, run by for­mer staff of LAS International, pre­sent­ed the forms for a fur­ther 296.

● The direc­tors of Comform Solutions Ltd, a firm based in London, signed the LP5 (reg­is­tra­tion) forms for 1,733 SLPs dur­ing the Period on behalf of a num­ber of off­shore com­pa­nies.

● A group of asso­ciates of Marios Papantionou, a for­mer tax inspec­tor from Cyprus, who cre­at­ed firms which laun­dered mil­lions of pounds from the for­mer Soviet Union, pre­sent­ed the reg­is­tra­tion forms for 1,231 SLPs dur­ing the Period.

● A group of Dominican nation­als, whose names can often be seen togeth­er on LP5 forms, set up 1,050 SLPs dur­ing the Period.

This list is not exhaus­tive. When ana­lyz­ing the SLPs set up between 2015 and 2019, Bellingcat con­cen­trat­ed on pre­sen­ters who had cre­at­ed more than 100 SLPs. Furthermore, 3,068 SLPs did not pro­vide any details regard­ing pre­sen­ter infor­ma­tion. What makes the above groups stand out, are the pro­por­tion of busi­ness­es they have cre­at­ed involved in high risk mon­ey laun­der­ing activ­i­ties.

SLPs and their Business

Activities In late 2018, Bellingcat was con­tact­ed by researcher and jour­nal­ist Graham Stack. He had used a web scraper to search for the names of SLPs, pro­vid­ing infor­ma­tion on the types of busi­ness­es SLPs were involved in. We pro­vid­ed him with details of SLP fil­ings from 2015 and 2016, and man­u­al­ly searched the inter­net for the busi­ness activ­i­ties of all SLPs reg­is­tered between 2015 and 2019.

The activ­i­ties of the major­i­ty of SLPs reg­is­tered between 2015 and 2019 could not be ascer­tained. This means that most did not main­tain any web pres­ence at all, aside from entries on cor­po­rate reg­istries.

However, it became clear in the course of our research that peo­ple run­ning cer­tain types of busi­ness­es grav­i­tat­ed towards select groups of ser­vice providers. For instance, well known and well estab­lished firms of accoun­tants using UK based part­ners were found to be pre­sent­ing the reg­is­tra­tion forms for legit­i­mate busi­ness­es. In these cas­es the con­tact details for pre­sen­ters were clear­ly stat­ed on the LP5 forms. Partners and PSCs based in the UK were com­mon­ly found.

Other pre­sen­ters were found to be attract­ing clients with more nefar­i­ous busi­ness plans. General Partners (who effec­tive­ly con­trol SLPs) were fre­quent­ly found to be based in off­shore secre­cy juris­dic­tions. PSCs were either nev­er filed, undis­closed, or based in Ukraine or Russia. Two of the four net­works we have iden­ti­fied did not pro­vide con­tact details in the pre­sen­ter infor­ma­tion field on the LP5 forms.

The pre­sen­ter infor­ma­tion giv­en on LP5 forms does not require an address or con­tact details to be pro­vid­ed.

In either case, it is not against the law to bulk reg­is­ter hun­dreds of part­ner­ships with opaque own­er­ship, even if sev­er­al of those firms are lat­er found to be, them­selves, involved in illic­it activ­i­ty. We there­fore do not sug­gest that any ser­vice providers are break­ing the law.

In total, the activ­i­ties of 1,112 SLPs reg­is­tered by the four groups between 2015 and 2019 could be iden­ti­fied. These can be cat­e­go­rized as fol­lows —

1. Legitimate finan­cial struc­tures

These include a range of busi­ness pur­pos­es. For exam­ple, SLPs are com­mon­ly used in the ven­ture cap­i­tal and pri­vate equi­ty sec­tors. Graham Stack’s research found that in 2015 and 2016, 659 SLPs with a vis­i­ble web pres­ence could be iden­ti­fied as legit­i­mate finance struc­tures, the major­i­ty (72.8%) of these being formed by solic­i­tors Burness Paull LLP, the sec­ond most pro­lif­ic pre­sen­ter of SLP doc­u­ments dur­ing the Period, and a pre­sen­ter who do not meet the cri­te­ria of any of the enablers we have exam­ined in depth. There may, how­ev­er, be a dis­tinc­tion between pre­sen­ters who set up this kind of vehi­cle and those who cre­ate SLPs fit­ting into the oth­er cat­e­gories. Of all of the SLPs cre­at­ed by the four pre­sen­ters researched by Bellingcat — whose busi­ness activ­i­ties could be iden­ti­fied, that is — just three were clear­ly iden­ti­fi­able as legit­i­mate finan­cial struc­tures.

2. Trade inter­me­di­aries

From the iden­ti­fi­able busi­ness activ­i­ties of SLPs cre­at­ed in 2015 and 2016, the largest pro­por­tion were in use as trade inter­me­di­aries. The names of these SLPs can be found on the data for trade records, typ­i­cal­ly found on sites such as importgenius.com. The use of anony­mous­ly owned SLPs as trade inter­me­di­aries runs a high risk of trade mis­in­voic­ing. This involves the fal­si­fi­ca­tion of the val­ue of a com­mer­cial trans­ac­tion sub­mit­ted to cus­toms offi­cials. Predominantly, the names giv­en as trade inter­me­di­aries were found in cus­tom data­bas­es in Russia and Ukraine. In 2015–2016, the names of 793 SLPs were being used as trade inter­me­di­aries. 342 were cre­at­ed by the five groups iden­ti­fied by Bellingcat as the most pro­lif­ic pre­sen­ters of SLPs dur­ing the Period.

3. Online busi­ness­es with a high fraud risk

240 busi­ness­es which run a high fraud risk were iden­ti­fied in 2015/16 — these includ­ed cryp­to cur­ren­cies, HYIP and Forex trad­ing, bina­ry options trad­ing, alleged pyra­mid schemes, and unreg­u­lat­ed online gam­bling. 138 were linked to the four groups. Several have been the sub­ject of FCA warn­ings, or their for­eign equiv­a­lents.

4. Generic web­sites

The names of 230 SLPs cre­at­ed in 2015 and 2016 were found on web­sites which claimed to be trad­ing busi­ness­es, but gave fal­si­fied con­tact details, were vague on the details of their exact trad­ing activ­i­ties and who were almost always sit­u­at­ed at the vir­tu­al office or mail­box address they were reg­is­tered at. 179 were set up dur­ing the Period by the four groups exam­ined by Bellingcat. Outside of these web­sites, no trace of their busi­ness activ­i­ties could be found. One can spec­u­late as to why, but one pos­si­ble rea­son is that such web­sites are set up to pass mon­ey laun­der­ing checks, and may be a com­po­nent of mis­in­voic­ing as described above.

5. Eastern European firms or firms with for­eign reg­is­tra­tion

212 SLPs cre­at­ed in 2016 were found to be sit­u­at­ed, or have for­eign reg­is­tra­tion in Eastern sit­u­at­ed at the vir­tu­al office or mail­box address they were reg­is­tered at. 179 were set up dur­ing the Period by the four groups exam­ined by Bellingcat.

6. Online busi­ness­es

256 SLPS reg­is­tered in 2015 and 2016 were found to be engaged in busi­ness activ­i­ties that are con­duct­ed online, 198 of these were set up by the four groups described by Bellingcat dur­ing the Period. This cov­ers a large range of busi­ness­es, although SLPs appear to be par­tic­u­lar­ly pop­u­lar amongst app devel­op­ers. A large pro­por­tion of these busi­ness­es appear to be based in Russia and Ukraine.

7. For sale as shelf com­pa­nies

140 SLPs in 2015 and 2016 (69 set up by the five groups dur­ing the Period) were found for sale as shelf com­pa­nies, often on Russian Language web­sites, togeth­er with a vari­ety of dif­fer­ent cor­po­rate vehi­cles. SLPs list­ed for sale online on Latvian web­site.

8. Shipping firms

39 SLPs set up in 2015 and 2016 had links to ship­ping, par­tic­u­lar­ly in Eastern Europe. 20 were set up by the four groups dur­ing the Period.

9. Political lob­by­ing

32 SLPs set up in 2015 and 2016 were involved as inter­me­di­aries for polit­i­cal lob­by­ists or have con­nec­tions with polit­i­cal­ly exposed per­sons. For exam­ple, Mother Jones alleged in March 2018 that Biniatta Trade LP, an SLP cre­at­ed by LAS International paid Republican lob­by­ist Nick Muzin to lob­by on behalf of the Democratic Party of Albania. Eight such SLPs were reg­is­tered dur­ing the Period by the five groups.

10. Did not fit into anoth­er cat­e­go­ry

74 SLPS reg­is­tered by the four groups did not eas­i­ly fit into one of the above cat­e­gories list­ed. These large­ly con­sist­ed of web­sites which were defunct.

11. Crime & Corruption

13 SLPs set up by the four groups dur­ing the peri­od have been accused in the media of larg­er scale crim­i­nal activ­i­ty or activ­i­ty which had links to cor­rup­tion. These do not include the two SLPs named in the Guardian as com­po­nents of the Azeri Laundromat, both of which were set up in 2013, and do not include Fortuna United LP, which was involved in the Moldovan band raid, but was set up in 2014 by Royston Business Consultancy. Some of these SLPS are dis­cussed below.

The Four Groups

1) LAS International

With 1,632 SLPs reg­is­tered dur­ing the Period, LAS International (“LAS”) were the sin­gle most pro­lif­ic pre­sen­ter of SLPs between 2015 and 2017. At least 85.9% of the SLPs they cre­at­ed are con­trolled by com­pa­nies in secre­cy juris­dic­tions. 545 of these SLPs are still active.

The 638 indi­vid­u­als named as Persons of Significant Control for these part­ner­ships cov­er 34 dif­fer­ent nation­al­i­ties. A total of two PSCs are British, 286 are Ukrainian, and 171 are Russian. 566 in total are nation­als of for­mer Soviet Union coun­tries.

The major­i­ty (1,029) of SLPs cre­at­ed by LAS have nev­er revealed who their PSC is. 777 nev­er filed a PSC state­ment at all. 84 of these are still active, whilst most of the rest have dis­solved. Two have filed for dis­so­lu­tion, but then start­ed fil­ing again. This is pos­si­ble because Companies House can­not strike SLPs off the reg­is­ter once they are dis­solved.

The remain­der have filed state­ments to say they have not iden­ti­fied the reg­is­tra­ble per­son, or that there is no reg­is­tra­ble per­son. This leaves us with few­er than 80 per­sons of sig­nif­i­cant con­trol who the UK author­i­ties can rea­son­ably expect to con­tact in the event that their SLP is involved in any illic­it activ­i­ty.

The com­pa­ny, cur­rent­ly named LAS IH Ltd and based in Poole, has changed its name five times since its incor­po­ra­tion in 2005.

The com­pa­ny is sit­u­at­ed at the same address as UK Postbox Limited, a mail­box ser­vice and vir­tu­al office provider. The cur­rent direc­tor, and PSC, for LAS is Elena Yael Dovzhik, a British nation­al.

In 2016, Company Advice Ltd was incor­po­rat­ed by Latvian nation­als Ineta Utinane and Alisa Iurchenko. During the Period the com­pa­ny pre­sent­ed the reg­is­tra­tion forms for a fur­ther 296 SLPs, 113 of which have Russian or Ukrainian PSCs. Utinane has shared two direc­tor­ships with Dovzhik and is a for­mer share­hold­er and sec­re­tary of LAS IH Ltd.

SLPs reg­is­tered by LAS and Company Advice Ltd have been involved in a num­ber in high-risk mon­ey laun­der­ing sec­tors:

● 10 of the 103 trade inter­me­di­aries reg­is­tered by both com­pa­nies have appeared in Ukrainian crim­i­nal court doc­u­ments as con­duits for ille­gal ship­ments to Russian-con­trolled Eastern Ukraine, or as com­po­nents of trade mis­in­voic­ing.

● In February 2018, the Scottish Herald report­ed that Sea Force Group, a Ukrainian mer­ce­nary group, was using a LAS-cre­at­ed SLP as a front.

● The Belarusian Partisan report­ed in 2017 that Ukrainian cus­toms inter­cept­ed one mil­lion packs of smug­gled cig­a­rettes sent from Belarus from LAS SLP Damoni LP.

● In 2017 the cyber secu­ri­ty blog Confiant revealed how the Zirconium group set up 2017’s largest malver­tis­ing oper­a­tion by cre­at­ing 28 fake adver­tis­ing agen­cies and pur­chas­ing one bil­lion ad views. The legal enti­ty fronting Zirconium was Cape Diamond LP, an SLP cre­at­ed by LAS.

● Seven SLPs reg­is­tered by LAS, retail­ing at $1,200 each, were found on a Russian lan­guage Google Doc spread­sheet of unknown ori­gin. Another was found along­side com­pa­nies from Ireland and sev­er­al secre­cy juris­dic­tions for sale on a Russian lan­guage web­site.

● 62 Generic web­sites (as described above) were found, reg­is­tered in the UK by LAS and Company Advice Limited.

● 61 online busi­ness­es with a high fraud risk were found, most­ly Forex trad­ing web­sites and gam­bling web­sites, 17 of which were the sub­ject of accu­sa­tions of fraud from users and review­ers. M&A Mergers and Acquisitions Consultancy LP, set up by LAS, is named as the com­pa­ny behind Broker XP, sub­ject to an FCA warn­ing in 2018.

The FCA warn­ing for Broker XP

736 of the SLPs set up by LAS and Company Advice Ltd name a com­pa­ny called Damitra Group Ltd, based in the Seychelles as their General Partner. No oth­er details were pro­vid­ed oth­er than a sig­na­ture. Partners of SLPs are not oblig­ed to pro­vide any detailed con­tact infor­ma­tion

However, Damitra Group Ltd is also named in the doc­u­ments for a num­ber of Limited Liability Partnership appoint­ments on the Companies House web­site. From these we can see that a Designated Member named “S.Valuta” is sign­ing off the accounts for Damitra LLPs.

This is an indi­vid­ual called Sergiu Valuta, a pro­lif­ic sig­na­to­ry for numer­ous shell com­pa­nies oper­at­ing with­in the UK com­pa­nies reg­istry. On 9 August 2019, the Securities and Exchange Commission of Zambia named Valuta as an asso­ciate of World Way Capital LP (based in Canada), a fraud­u­lent invest­ment scheme.

The Securities and Exchange Commission of Zambia’s warn­ing against World Way Capital LP. The sig­na­ture of their asso­ciate Sergiu Valuta can be found on hun­dreds of com­pa­ny records in the UK.

Damitra Group have, at last count, 54 oth­er com­pa­ny appoint­ments in the UK, and con­trol hun­dreds of SLPs. Allegations that Valuta is run­ning Ponzi schemes are easy to come across with a sim­ple Google search. Damitra Group were addi­tion­al­ly a part­ner of Cape Diamond LP, the legal enti­ty behind malver­tis­ing scam­mers Zirconium.

Another com­mon­ly used General Partner by LAS SLPs is Poramto Group inc (Belize), anoth­er enti­ty who use Valuta as their Designated mem­ber and who con­trolled 322 SLPs set up by LAS dur­ing the Period. Their name has been cit­ed in the Ukrainian press, which alleged that UK LLPs con­nect­ed to for­mer Ukrainian pres­i­dent Petro Poroshenko’s con­fec­tionary busi­ness Roshen were used to dodge tax­es.

In sto­ries con­cern­ing local cor­rup­tion the names of UK LLPs and SLPs can often be found in the Ukrainian and Russian Press.

Both Poramto Group and Damitra Group were formed at address­es con­nect­ed to Alpha Consulting, a glob­al ser­vice provider that, by their own website’s descrip­tion, “focus[es] on reg­is­ter­ing com­pa­nies in coun­tries that use pref­er­en­tial tax­a­tion poli­cies”.

Another promi­nent con­trol­ling part­ner in LAS-cre­at­ed SLPs is Meezarte Holding Inc, who act­ed as General Partner for 251 of the SLPS reg­is­tered by LAS dur­ing the Period. Their des­ig­nat­ed mem­ber is Seychellois nation­al Sandra Gina Esparon (or Gina Sandra Esparon, as she has oth­er­wise been list­ed) who is in her own right a pro­lif­ic General part­ner for SLPs in the UK and has 92 cur­rent and pre­vi­ous com­pa­ny offi­cer appoint­ments in the UK.

Esparon was a part­ner in Always Efficient LLP, a UK based Partnership which oper­at­ed BTC‑e, a cryp­tocur­ren­cy trad­ing plat­form closed by the U.S. Justice Department in 2017. In 2014, £4.5 bil­lion worth of bit­coins were stolen from Tokyo based bit­coin exchange Mt Gox. Half of these coins were alleged­ly laun­dered through BTC‑e. Alexander Vinnik, the Russian nation­al behind BTC‑e, is cur­rent­ly in prison in Greece but both Russia and France are seek­ing his extra­di­tion.

There are two reg­is­tered offices that house 96.5% of all of the SLPs reg­is­tered by LAS dur­ing the peri­od. These are 5 St. Vincent Street, Edinburgh, an address vis­it­ed by iNews in 201716 due to the vol­ume of SLPs reg­is­tered there, and 4 Queen Street, Edinburgh, which also hous­es all but two of SLPs cre­at­ed by Company Advice Ltd. Both house thou­sands of cor­po­rate enti­ties.

2) ComForm Solutions

ComForm Solutions are a com­pa­ny for­ma­tion ser­vice based in Great Russell Street, London. Their direc­tors are James Dickins, Daniel O’Donoghue and Kiril Pestuns, a Latvian nation­al who is named at Companies House as the Person of Significant Control. ComForm’s name can be seen on the web­site for International Expo’s and con­fer­ences, mar­ket­ing their ser­vices to clients in Russian and Eastern Europe.

ConForm mar­ket their ser­vices across Eastern Europe and Russia

Dickins and Donoghue signed the LP5 doc­u­ments for 1,733 SLPs on behalf of three off­shore com­pa­nies –

● Nowi Setlus Corp, based in Saint Kitts & Nevis

● Viala Trade Ltd, based in Belize

● Brennan Development inc. also based in Belize

James Dickens signs on behalf of Nowi Setlus Corp. This is tak­en from the reg­is­tra­tion doc­u­ments for Hellax Corp LP, sub­ject of a FCA warn­ing in November 2018.

Collectively, they hold or have held over 600 appoint­ments as com­pa­ny offi­cers in the UK accord­ing to the Companies House web­site.

NOWI Setlus Corp was named in an arti­cle on Medium.com, pub­lished on 11 April 2019, in their capac­i­ty as the con­trol­ling part­ner of Interarmco LP, which is alleged to be an arms deal­er owned by Vasyl Lutchak. Lutchak is a busi­ness asso­ciate of Ukrainian oli­garch Ihor Kolomoisky, cur­rent­ly under inves­ti­ga­tion by the FBI for finan­cial crimes, includ­ing mon­ey laun­der­ing.

Our research into the three off­shores addi­tion­al­ly shows that –

● 63 of the SLPs set up by the three off­shores dur­ing the Period were trade inter­me­di­aries. Three have been cit­ed in Ukrainian crim­i­nal court records due to their links to trade mis­in­voic­ing.

● The nephew of the deposed President of Kyrgyzstan Kurmanbek Bakiyev is the PSC for two SLPs, which in turn con­trol 22.5% of the Belarusian National Biotechnology Corporation. Allegations of mon­ey laun­der­ing and cor­rup­tion have con­sis­tent­ly sur­round­ed Bakiyev and his fam­i­ly. Bakiyev’s son has been con­vict­ed in absen­tia in Kyrgyzstan for embez­zle­ment, ille­gal pri­vati­sa­tion of pub­lic land, and sell­ing off state assets.

● 41 SLPs were found for sale online. Most of these were found on the web­site for Finpay Consulting a com­pa­ny based in the Czech Republic, and were offered togeth­er with offices in Latvia.

● 27 SLPs were found with a high mon­ey laun­der­ing risk. These includ­ed Animax United LP, named on the Swiss Financial Market Supervisory Authority’s warn­ing list; Hellax Corp LP, sub­ject to a scam warn­ing from the FCA; New Assets Union LP was used to run a Belarusian-owned pyra­mid scheme which duped 900 peo­ple out of their sav­ings; Blackrock Alliance LP is a clone of an FCA autho­rized firm, sub­ject to anoth­er warn­ing from the FCA. The Swedish Financial Supervisory Authority, Finansinspektionen warned con­sumers in May 2017 that Explatinum LP had been offer­ing finan­cial ser­vices in Sweden despite not being autho­rized to do so.

Saliyev is the PSC for two SLPs con­trol­ling 22.5% of the Belarusian National Biotechnology Corporation. He is the nephew of for­mer pres­i­dent Kurmanbek Bakiyev.

Finansinspektionen have pub­lished a warn­ing about Explatinum LP, an unau­tho­rized finan­cial ser­vices firm. No British nation­als were named as PSCs for any of the SLPs reg­is­tered by Viala Trade, Nowi Setlus Corp, or Brennan Development. 408 indi­vid­u­als were names as PSCS, the largest pro­por­tion being Ukrainian (131) or Russian (92) nation­als. 1,674 of the 1733 SLPs cre­at­ed by the three are sit­u­at­ed at five address­es. All five are mail­box address­es.

Mail Boxes etc. in Bell Street, St. Andrews, used to house 395 SLPs con­trolled by the three off­shores.

3) Axiano

Axiano Limited (pre­vi­ous­ly known as Axiano Accounting Ltd and Axiano Accounting and Business Services Ltd) were an accoun­tan­cy firm based in Edinburgh. Their direc­tor Marios Papantoniou was a for­mer tax inspec­tor from Cyprus. In 2014, the Organized Crime and Corruption Reporting Project (OCCRP) report­ed that $20.8 bil­lion was laun­dered from 19 Russian banks in a scheme named the Russian Laundromat. The Scottish Herald report­ed that four UK Limited Companies trans­ferred $6.98 bil­lion from Russia which was then siphoned into numer­ous shell com­pa­nies as part of the Laundromat. All four were report­ed­ly cre­at­ed and con­trolled by their direc­tor, Marios Papantoniou.

Papantoniou was a part­ner in anoth­er Scottish firm, Lawsons & Co. LLP28, which was dis­solved in 2013. Despite their dis­so­lu­tion, a com­pa­ny named Lawsons & Co., sit­u­at­ed at the same address, pre­sent­ed the reg­is­tra­tion forms for 248 SLPs dur­ing the Period.

Papantoniou’s for­mer employ­ee at this firm, Viktoria Zirnelyte, set up Royston Business Consultancy in the same year, togeth­er with fel­low Lithuanian nation­al Remigijus Mikalauskas. The firm gained con­sid­er­able media atten­tion and was the sub­ject of a BBC inves­ti­ga­tion in 201530, when it was revealed that an SLP named Fortuna United LP, cre­at­ed by Royston and based in a for­mer coun­cil flat in Pilton, Edinburgh, was found to have the rights to $1billion that was stolen from three Moldovan banks in 2014, the equiv­a­lent of 12% of Moldova’s GDP.

The part­ners of Fortuna United LP, owed the pro­ceed­ings of the Moldovan bank raid

Professional enablers enjoy such impuni­ty in the UK that, when inter­viewed by the BBC for their inves­ti­ga­tion, Zirnelyte felt com­fort­able enough to state that not only did Royston cre­ate Fortuna United LP, but that Mikalauskas and Zirnelyte were the “nom­i­nee” direc­tors of the off­shore com­pa­nies con­trol­ling Fortuna. 31 Royston Business Consultancy are still active. During the Period they reg­is­tered 826 SLPs.

A fur­ther Axiano-relat­ed firm set up in 2015 by their for­mer direc­tor and Mario Papantonoius son Alexandros cre­at­ed 157 SLPs dur­ing the Period. In total, busi­ness­es run by indi­vid­u­als asso­ci­at­ed with Axiano reg­is­tered 1,231 SLPs dur­ing the Period.

Our research shows that Axiano-relat­ed firms have all cre­at­ed SLPs involved in illic­it or high risk mon­ey laun­der­ing activ­i­ty. As the SLPs involved in the Moldovan bank scan­dal were reg­is­tered before the Period they are not includ­ed (but are nonethe­less sig­nif­i­cant). Those reg­is­tered dur­ing the Period include:

● 74 Trade Intermediaries, most­ly in Russia in Ukraine, but also from as far afield as Iran and Ecuador. Communique Trade LP, an SLP cre­at­ed by Remigijus Mikalauskas was one of 10 SLPs named in the Ukrainian Courts in 2017 in a huge orga­nized crim­i­nal mis­in­voic­ing, tax eva­sion and mon­ey laun­der­ing scheme.

Communique Trade LP were one of a num­ber of SLPS named in the Ukrainian crim­i­nal courts in 2018.

● 28 SLPs were found to be oper­at­ing in areas with a high scam risk. These were large­ly SLPs act­ing as the com­pa­nies behind var­i­ous cryp­to-cur­ren­cies and trad­ing plat­forms.

● 37 Generic web­sites as described above were found to be oper­at­ed by SLPs, giv­ing their con­tact details as the reg­is­tered address­es used by Axiano part­ner­ships.

The General (con­trol­ling) part­ner details for all of Axiano’s SLPs were searched on Companies House. 86.7% of their SLPs were found to be com­pa­nies in secre­cy juris­dic­tions and had fur­ther com­pa­ny offi­cer appoint­ments in the UK. Just nine off­shore based com­pa­nies con­trolled 1,025 of Axiano’s SLPs, and col­lec­tive­ly they have held 292 com­pa­ny offi­cer posts in the UK.

The largest pro­por­tion of PSC details filed by Axiano SLPs (aside from the 275 who nev­er filed PSC doc­u­ments, and the 237 who stat­ed they had not yet tak­en rea­son­able steps to iden­ti­fy the PSC) were them­selves SLPs. Dalston Management LP33, reg­is­tered by Royston Business Consultancy, were named as the sole per­son of sig­nif­i­cant con­trol for 77 SLPs. Dalston them­selves have no reg­is­tra­ble per­son act­ing as their PSC.

Unusually, 29 SLPs reg­is­tered by the Axiano group named a British PSC — but 23 of these were Alexandros Papantoniou him­self. In con­trast, 195 were found to be owned by PSCs in Russian and Ukraine. 45 nation­al­i­ties in total were rep­re­sent­ed in the PSC doc­u­ments for Axiano Companies.

4) The Dominican Group

A group of Dominican nation­als were found to have cre­at­ed 912 SLPs dur­ing the peri­od. They are con­sis­tent­ly found co-sign­ing the reg­is­tra­tion forms for LP5 forms, either in their capac­i­ty as pre­sen­ters or on behalf of the off­shore com­pa­nies part­ner­ing the SLPs they cre­ate. The U.S. Bureau of International Narcotics and Law Enforcement Affairs described Dominica as a major mon­ey laun­der­ing cen­tre in its 2019 International Narcotics Control Strategy Report.

The names of Dominican nation­als often appear togeth­er on SLP reg­is­tra­tion doc­u­ments. The Dominican nation­als are Sandra Caesar (pre­sent­ing the reg­is­tra­tion doc­u­ments for 303 SLPs dur­ing the Period), Kimora Renata Harris (134), Janette St Luce (also known as Janette Lucy St Luce, 144) Deborah Merina Grant (198) and Naomi Jno Pearl John (133). Caesar also has 14 cur­rent and for­mer entries as a Company Officer accord­ing to the Companies House web­site. Our research into the com­pa­nies they have cre­at­ed has found the fol­low­ing infor­ma­tion:

● 118 Trade inter­me­di­aries were found, large­ly oper­at­ing in Russia and Ukraine. Three were cit­ed in the Ukrainian crim­i­nal courts due to their involve­ment in tax eva­sion. Six SLPs were found on the Ukrainian Ministry of Economic Development and Trade web­site due to their inclu­sion in sanc­tions lists.

● In 2016, court doc­u­ments from the United States35 described how an unnamed American com­pa­ny was defraud­ed “through the use of false and fraud­u­lent rep­re­sen­ta­tion made through the use of the wires, prop­er­ty involved in inter­na­tion­al mon­ey laun­der­ing, and the fruits of transna­tion­al orga­nized crime”. The United States sought to recov­er $25 mil­lion, includ­ing more than $16 mil­lion fraud­u­lent­ly tak­en from the American com­pa­ny. On 22 July 2016, the U.S. filed a Complaint of Forfeiture against monies held by a num­ber of com­pa­nies includ­ing Corwald Transit LP, an SLP set up by Jannette St Luce, and con­trolled by Doorset Management Ltd, a com­pa­ny based in the Marshall Islands. The funds held by Corwald Transit totalled $3.8million.

From the Final Judgement of Forfeiture filed by the United States in 2017. Privaled Construction LP is an SLP reg­is­tered in 2012 by Georgiou Panagiotis.

● 11 SLPs are cur­rent­ly for sale online, includ­ing SLPs that have been dis­solved. These were most­ly found on the web­site offshoreworldwide.com36 togeth­er with nom­i­nee part­ner ser­vices.

● 48 SLPs were found with gener­ic web­sites, as described above.

● 11 SLPs were found involved in oth­er sec­tors with a high mon­ey laun­der­ing risk. One, Guide Universal LP (trad­ing as MegatradeFX) is sub­ject of an FCA warn­ing.

655 SLPs reg­is­tered by the Dominican Group have not named a PSC. Of the remain­der, just 3 British nation­als are named. The major­i­ty of PSCs are indi­vid­u­als sit­u­at­ed in the for­mer Soviet Union. 1004 of the SLPs reg­is­tered by the Dominican Group (95.7%) are con­trolled by off­shore com­pa­nies in secre­cy juris­dic­tions. 991 of these are com­pa­nies in the Marshall Islands. The Marshall Islands were placed on the EU Blacklist of tax havens in March 2019.

Eight off­shore part­ners con­trol 859 of the SLPs reg­is­tered by the Dominican Group. All are reg­is­tered at the Trust Company of the Marshall Islands, Inc. The same part­ners have had a com­bined total of 866 com­pa­ny appoint­ments in the UK, large­ly as part­ners of LLPs. Two of these com­pa­nies, Sangaro Solutions and Legacy Properties Ltd were the part­ners (togeth­er with Sandra Gina Esparon) of Always Efficient LLP, a part­ner­ship report­ed to be linked to the laun­der­ing of £4.5 bil­lion worth of bit­coins from bit­coin exchange Mt Gox as described above.

Sabine Vickers (nee Boze) act­ed as the des­ig­nat­ed mem­ber for all but 33 of these part­ners. Vickers is the cur­rent direc­tor of two com­pa­nies in the UK, The Island Service Provider Limited40 and B2B Company Secretary Limited.

The PSC for both of these com­pa­nies is Alex Zinghaus, an Israeli nation­al, whose name­can be found along­side Deborah Merina Grant and Janette St Luce in the fil­ing his­to­ry for Serra Company LP, an SLP cre­at­ed by Grant in 2015. Additionally, Vickers was the des­ig­nat­ed mem­ber for Corporate Solutions Ltd, a part­ner of Metastar Invest LLP, iden­ti­fied by the OCCRP as one of the key com­pa­nies involved in the $2.9 bil­lion Azeri Laundromat .

Sabine Vickers signs off the accounts for Metastar Invest LLP, one of the core com­pa­nies involved in the Azeri Laundromat.

Limited Liability Partnerships

In the course of our research, it has become appar­ent that the con­trol­ling part­ners of SLPs cre­at­ed by the four groups are also part­ners in large num­bers of Limited Liability Partnerships, indi­cat­ing that off­shore part­ners in secre­cy juris­dic­tions are embed­ded in the UK com­pa­ny sys­tem. 86 off­shore part­ners were found to have com­pa­ny offi­cer appoint­ments in the UK, most­ly as LLP appoint­ments but also as Company Directors. These totalled 4,637 appoint­ments.

The Government’s Response

In April 2018, in response to reports that Limited Partnerships were being mis­used, the gov­ern­ment launched a con­sul­ta­tion into the reform of Limited Partnerships.

Bellingcat par­tic­i­pat­ed in this con­sul­ta­tion, togeth­er with a vari­ety of stake­hold­ers. In December 2018, the Government pro­duced their response to the con­sul­ta­tion includ­ing their pro­pos­als for poten­tial reform. The Government’s key pro­pos­als were as fol­lows

● Presenters will be required to demon­strate that they are reg­is­tered with an AML super­vi­so­ry body.

● Limited Partnerships will be required to main­tain a prin­ci­pal place of busi­ness (PPoB) in the UK.

● Limited Partnerships will be required to file a con­fir­ma­tion state­ment every 12 months.

● The Registrar of Companies will have the pow­er to strike lim­it­ed part­ner­ships off the reg­is­ter if they are dis­solved or dor­mant.

As of September 2019, these changes have yet to be put into effect. As dis­cussed above, SLPs num­bers have dropped sig­nif­i­cant­ly since the intro­duc­tion of the PSC rules. SLPs are already required to file a con­fir­ma­tion state­ment every 12 months, and all but a hand­ful have a reg­is­tered address in Scotland. As dis­cussed above, a small num­ber of address­es house a large pro­por­tion of SLPs, many of which are mail­box or vir­tu­al office address. It is unknown whether the gov­ern­ment con­sid­ers these to be viable PPoB address­es.

In any event, dur­ing the boom years of SLP reg­is­tra­tion (between 2008 and 2017), no action was tak­en by the author­i­ties to stem the tide of anony­mous­ly owned enti­ties. Despite reports in the media at home and abroad con­cern­ing major laun­dro­mats and the link between SLPs and crim­i­nal­i­ty it has tak­en years for the gov­ern­ment to react. As indi­cat­ed in this report, off­shore com­pa­nies in secre­cy juris­dic­tions are named as the part­ners for thou­sands of Limited Liability Partnerships, but they are not includ­ed in the plans for Limited Partnership reform.

Whilst we wait for mean­ing­ful reform to mate­ri­al­ize, sto­ries con­cern­ing SLPs will con­tin­ue to appear in the media. In July 2019, the Sunday Times report­ed how SLPs were used to ship asbestos to the devel­op­ing world.45 In June, Open Democracy report­ed links to SLPs and cor­rup­tion in Uzbekistan46.

Whilst the Government waits to respond to the already-end­ed boom in SLP reg­is­tra­tions, it is inevitable that more sto­ries will emerge in the com­ing years.

Acknowledgments Report writ­ten by: Ross Higgins Research by: Ross Higgins Graham Stack Editor: Natalia Antonova

Download the full report here.

Log In or Create an account