The ripping wheeze which Labour handed to money-launderers

 The Fincen papers emphasise what a bad idea it was for Gordon Brown, at the behest of the Big Four financial services companies, to create Limited Liability Partnerships. They are like the cure which is worse than the disease - if there was a serious disease in the first place. They are overwhelmingly (in the words of a judgment on an earlier London financial scandal) holes in the world for money to go through.

The ICIJ reports:

Danske Bank Estonia was consumed in a $230 billion money laundering scandal.

Newly leaked Estonian police files, including internal paperwork taken from Danske Estonia, reveal the extraordinary steps a tiny division of the Tallinn bank took to serve a shadowy, and highly lucrative, clientele largely from Russia and from former Soviet republics and satellites in Eastern Europe and Central Asia. The documents show that many bank accounts were held in the name of U.K. vehicles, known as “limited liability partnerships,” or LLPs, and “limited partnerships,” LPs [the equivalent in Scotland], which had no purpose other than to hide the identity of who really owned the money.

An investigation by the International Consortium of Investigative Journalists found that thousands of LLPs and LPs that owned accounts at Danske Bank and elsewhere had been mass produced by only a handful of secretive agencies that registered them at government offices in Cardiff, Wales, and other U.K. locations.

Almost all these agencies, ICIJ found, were run by individuals with personal ties to the Baltic region, often with links to Baltic banks, including Danske Estonia; some agencies helped LLPs and LPs open Baltic bank accounts for their secret clients.

The Estonian police records, obtained by ICIJ’s Italian partner, L’Espresso, reveal that the Danske Estonia bankers — required by law to vet their customers to prevent money laundering — instead ran a secret company on the side that helped set up U.K. LLPs and LPs that were designed to conceal the identity of bank clients.

This particular ICIJ report concentrates on the Russia-Estonia-England axis, but there are numerous other examples of LLPs being used as a conduit for dirty money or to hide the true ownership of subsidiearies.

A beneficiary of the ripping wheeze which Blair and Brown dreamed up is - surprise, surprise - Tony Blair.

Money-laundering is not a victimless crime, as Professor Paul Barnes, an authority on financial crime and forensic accounting, confirms:

The individual(s) or the country (and inhabitants) from which the money is stolen are, by definition, the victims/losers, whilst the money is used in the recipient country to support the criminal’s lifestyle or other activities such as drug importation, child sexual exploitation, human trafficking and terrorism and so on, alternatively, invested in property until a profitable opportunity arises.

Much of that property is located in England and Wales, especially in London where apartment blocks scandalously lie half-empty in the midst of a housing shortage. The end-owners are unknown because English law allows them to remain anonymous. 

Opposition leaders need to commit to ending that anonymity and, if not abolishing, then thoroughly cleaning up the LLPs. This may be difficult for Keir Starmer, seeming to project himself as Tony Blair Mk 2, but at least he is not tied to Peter Mandelson (unapologetic about the filthy rich).

Companies House also needs to be given powers to enforce the law regarding registration and operation of England and Wales companies. In particular, the blatant failure to present true accounts highlighted by the ICIJ reports needs to be prosecuted.