Some sanctioned Russian oligarchs close to President Vladimir Putin are taking advantage of a British loophole by setting up companies that do not have to disclose their true owners, according to a joint investigation by the BBC and Finance Uncovered.
In 2016 and 2017, the British government introduced legislation that forced almost all companies operating in the country to disclose their true owners. However, companies registered as English Limited Partnerships (ELPs), were not covered by the new regulations. Since then, more than 4,500 ELPs have been established.
Unlike most companies, ELPs do not have a separate legal identity, which the government says means they cannot hold assets, have no real beneficiaries and cannot legally open bank accounts in their own names.
However, ministers are concerned that they could be used by criminals, and the BBC and Finance Uncovered investigation unearthed documents identifying the actual beneficiaries of ELPs and evidence of their use to open bank accounts and facilitate financial crimes.
The investigation found that among those using ELP are brothers Arkady and Boris Rotenberg, sanctioned oligarchs close to Putin. A 2020 US Senate investigation found that they created a global network of shell companies to evade US sanctions imposed after the 2014 annexation of Crimea.
The investigation found that one such company was Sinara, founded in 2017 as an ELP, which was registered near Oxford Circus in London until it was dissolved two years later. The company, which formally provided travel and ticketing services, sent 14 transfers during the year to an art advisor helping the Rotenbergs buy artwork.
Most ELP companies are set up by agencies that provide them with an address and administrative support.
The investigation discovered that a quarter of the roughly 4,500 ELPs formed since 2017 were set up by just five UK-based agencies. According to the documents, many of these companies were set up for clients from Eastern Europe and the former Soviet Union.
Some of these companies set up by these five agencies were linked to financial crimes, including money laundering. Corporate documents show that the most prolific of these agencies is LAS, run by Elena Dovzhyk, an English-Russian accountant, and her Latvian business partner Ineta Utinane. Since 2017, their agency has established more than 660 ELP companies.