Revealed: More than 700 British firms blacklisted in Ukraine for suspicious activity
19 May 2020

They are as common as muck in Ukraine. And often as dirty.

Foreign shell firms – ‘offshores’ in the jargon – litter the country’s politics and economy.

They are used to conceal ownership, avoid tax, make illicit payments and launder dirty money. Their abuse, say anti-corruption campaigners, help keep Ukraine poor.

Many are British, especially Scottish. Now an analysis of Ukrainian government public records by openDemocracy gives another glimpse at just how often UK corporate entities are being red-flagged in the country.

We found that more than 700 Scottish, English, Welsh and Northern Irish firms are ‘blacklisted’ in Ukraine.

Transparency International said this was “a stark reminder of Britain’s role as a global hub for financial crime”. The Scottish National Party, which has been campaigning for tighter corporate governance, said Scottish limited partnerships – or SLPs, one of the most common ‘offshores’ used in Ukraine – had left a “toxic” legacy.

The businesses are all listed on a searchable database of thousands of international corporate entities subject to special sanctions, usually because of suspicious money transfers.

Officials decreed that such enterprises – many of which appear to be shell firms registered in traditional secrecy jurisdictions such as Panama or Belize – could trade in the country only if they obtained individual licences.

Perfect mix

For years British corporate entities – especially limited liability partnerships from across the UK (LLPs) and SLPs – have been openly advertised as ‘offshore companies’ in Ukraine and other parts of the former Soviet Union.

Scottish and other UK shell companies are widely seen as providing a perfect mix of high prestige but low transparency. And combined with a bank account, often in one of the Baltic nations, they formed what amounts to a money-laundering kit.

Such firms regularly crop up in financial crime scandals – big and small – across the region.

LLPs and SLPs formed a significant part of a complex money-laundering scheme reportedly used to funnel some $1.5 billion out of Ukraine on behalf of people close to the ousted Ukrainian president Viktor Yanukovych and his ‘clan’.

And Ukraine’s elite but controversial anti-corruption task force, NABU, said SLPs were used as fake intermediaries to skim millions from at least two important state arms exports.

By David Leask and Richard Smith, openDemocracy, 16 May 2020

Read more at openDemocracy

Photo: © Colin/Wikimedia Commons

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