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Research has shown that hundreds of UK firms are blacklisted in the Ukraine for suspected involvement in money laundering.

Author: Nicola Sharp  22 May 2020

Nicola Sharp of business crime solicitors Rahman Ravelli believes the research highlights a problem that needs addressing.

An analysis of Ukrainian government public records has found that more than 700 Scottish, English, Welsh and Northern Irish firms are on a blacklist in Ukraine.

The research by political website openDemocracy discovered that the businesses are all listed on a searchable database of thousands of international corporate entities that are subject to special sanctions. Most are subject to the sanctions because of suspicious money transfers.

Transparency International has said the findings are a reminder of Britain’s role as a global hub for financial crime. The Scottish National Party said the use of Scottish limited partnerships (SLP’s) in Ukraine had left a legacy that was “toxic’’. The SNP has been calling for tighter corporate governance.

SLP’s and limited liability partnerships from across the UK (LLP’s) have been promoted as offshore companies in Ukraine and other states that used to be part of the Soviet Union. Their supposed prestige and low levels of transparency are believed to make them attractive to money launderers.

LLP’s and SLP’s were identified as being part of an intricate money-laundering scheme that is believed to have moved $1.5 billion out of Ukraine for associates of the ousted Ukrainian president Viktor Yanukovych. Ukraine’s anti-corruption task force, NABU has said that SLP’s were used as fake intermediaries to corruptly divert millions from at least two important state arms export deals.

This news from Ukraine is likely to come as a surprise to many in the UK who have witnessed the extent of efforts made to improve corporate transparency in recent years. Many now view the UK as one of the most regulated countries in the world, with robust systems in place.

But these disclosures highlight how weaknesses in the UK system – some of which may have been forgotten or overlooked - can be utilised for the benefit of financial crime abroad. It remains to be seen whether the UK’s Finance Bill 2020, which is currently in the House of Commons committee stage, will serve to address these vulnerabilities and help overcome any doubts that it is deliberate practice.

Nicola Sharp C 09983

Nicola Sharp

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Nicola is known for her fraud, civil recovery and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.

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