Closing The Loop

Earlier this month, the BBC reported that MPs from Northern Ireland, (NI) were lobbying to close a loophole, alleged to facilitate money laundering. Companies called Northern Ireland Limited Partnerships (NILPs) can easily be set up and be used to conduct illicit activities and transactions. These companies can be set up from anywhere around the world, enabling those that use the NILP to obstruct business from any location[1].

This type of company is not unusual: Scotland for instance, used to have a similar set-up, however five years ago (2017) regulations were introduced so that the ownership and control of these entities had to be disclosed. The resulting impact of this, were that less Scottish entities were incorporated and, as a result, the number of NILPs increased. Although NILPs do have legitimate purposes, the opportunity for these types of entities to hide and transact illicit funds is significant. In setting up a NILP, neither directors, nor beneficial owners must be disclosed. Accounts are not required to be filed and accordingly no tax is incurred.

According to current regulations NILPs are not deemed as legal entities that need to declare beneficiaries, because in theory, they are vehicles used to enable efficient profit sharing, rather than owning assets. In the BBC NI Spotlight programme, one NILP called Jasterport, was named, (among others) which were reported to have initiated a huge theft of government funds in Moldova. Investigators hired by the Moldovan parliament examined how these entities helped steal approximately $1bn (£798m) in government funds.

Ownership of the NILPs often remains obscure and rooted through secret companies in offshore territories such as the British Virgin Islands (BVI). Currently, the only way that the beneficial ownership or purpose of an NILP has been identified, is through whistle-blowers or data leaks. The BBC report stated that ‘In one street in south Belfast there are more than 100 NILPs registered at one address’[2]. NI MPs are hopeful that in the near future, the UK government’s Economic Crime Bill[3] will take some steps to close this loophole, especially considering the increased scrutiny of the international community, in its fight against money laundering. Lauren Parmenter Senior Consultant [1][2][3]

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