English Limited Partnerships and Scottish Limited Partnerships have been a widely used structure in the Real Estate Fund Management industry dating back to their creation in 1907.

Amid concern that the structures were being misused, the UK Government sought and received evidence in 2017 of apparent abusive use of the structures to further criminal activity and in particular Money Laundering.

In December 2018, the Government published its response to industry consultation sought in April 2018. Accordingly, it has resolved to demand stronger controls at the point of registration, requirements for additional information whilst the LP is operating, as well as providing the Companies Registry with powers to strike off LPs’ from the register under certain circumstances.

In terms of Anti-Money Laundering, the Government has announced that it will bring forward legislation requiring to make it mandatory for presenters of new applications for registration of LPs’ to demonstrate that they are registered with an AML supervisory body, and to provide evidence of this on the application form. The Government has said that it will also seek to ensure that applications from overseas will be subject to equivalent standards and is considering options for achieving this. This could include limiting applications from overseas to those jurisdictions within the EEA. Any list of overseas jurisdictions with equivalent standards would be reviewed on an ongoing basis.

In practice, most applications for registration are made by lawyers, accountants and other professionals regulated for AML purposes by their respective UK professional bodies or the FCA. However, this proposal will spell the end of applications for direct registrations of LPs’ and registrations by off shore incorporation agents based in jurisdictions outside the EEA or in jurisdictions with less than equivalent AML controls.