LATVIA looks set to deliver a major blow to Scotland’s secret “tax haven” firms as it cracks down on money-laundering through its banks.
The Baltic state has said that it will ban its financial institutions from providing accounts to anonymously owned shell companies, such as increasingly notorious Scottish limited partnerships or SLPs
The move comes as the UK Government said it too will act on SLPs, which effectively allow their owners to remain secret, pay no taxes and file no accounts.
For some years criminals and tax-avoiders have used SLPs with accounts in Latvia or other Baltic nations to move vast sums of money out of the former Soviet Union.
BACKGROUND: A quick guide to Scottish limited partnerships and their abuse
Latvia stepped up action against its banks - and shell firm abuse - under renewed pressure from the United States.
The European Central Bank in February effectively ordered the closure of one Latvian bank, ABLV, which was linked to North Korean laundering and whose accounts were marketed alongside SLPs.
Scotland, re-imagined as a tropical tax haven island
Latvia’s finance minister Dana Reizniece-Ozola earlier this month said America believed Latvian banks were still being used to launder money despite a series of scandals.
After a meeting with a US counterpart, she said: “We are being told that banks are still used to transfer funds associated with persons, companies or countries on which sanctions have been imposed.”
Analysis: Watchdogs have grown teeth to crack down on money-laundering
But Latvia’s crackdown piles new pressure on UK authorities to shore up policing of its four million corporate entities.
The Financial and Capital Market Commission, Latvia’s financial regulator, said nearly a third of all shell companies with accounts at Latvian banks were British. It did not say how many were SLPs or other Scottish, English or Northern Irish shell firms.
Another 18 per cent were registered in the British Virgin Islands, which means, Latvian Public Broadcasting stressed, that more than half the shell company accounts in Latvian banks are the UK’s responsibility.
British shell firms, especially Scottish ones, are partly popular in the former Soviet Union because they do not fall under tax haven blacklists.
Shell firms from traditional secrecy jurisdictions, such as Panama, were far less popular than UK entities, the Latvian Commission said.
Another bank whose accounts were offered as a package alongside SLPs is Rietumu, which is one-third owned by Dermot Desmond, Celtic’s main shareholder.
Speaking before Latvia announced its crackdown, Rietumu said it was ditching shell firm and other risky clients.
Dermot Desmond
A Rietumu spokesman told Latvian media: “For several years, Rietumu Banka has been turning away high-risk clients and substantially reducing the amount of transactions, as the bank has shifted its focus on deposits, loans and technological development.”
The bank is currently appealing the biggest fine in French history for facilitating tax evasion. It has also been rapped by its own regulator for allowing itself to be used to launder money from North Korea after an FBI investigation.
There have been international concern for some time about Latvia’s “non-resident banking” where a largely Russian and Ukrainian clientele was able to open dollar accounts through shell firms.
The chairman of Latvia’s central bank was detained in February on corruption charges. He is suspected of taking bribes from an unnamed bank.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel