THERESA May has been accused of going soft on tackling financial crime after launching a new "weakly regulated" funding scheme before a Whitehall probe into international tax evasion and money laundering has concluded.

Roger Mullin, the SNP MP and the party's Treasury spokesman, condemned the move insisting: "The criminal fraternity will be very grateful to the Government but those concerned to protect the integrity of the financial system will be rightly angry.”

The row flared in wake of a series of investigations by The Herald into so-called Scottish Limited Partnerships (SLPs), businesses which under an obscure reserved Scottish corporate law are allowed to have secret owners, pay no taxes and publish no accounts.

During the last two years, scores of SLPs have been identified as having been involved in criminal or unethical behaviour, including serious corruption in the former Soviet Union, fronting sites providing child pornography, bootlegged videos and money-laundering.

Ben Wallace, the UK Government’s Security Minister, described the revelations as “very concerning” and confirmed they tallied with information from law enforcement sources.

SLPs are advertised globally as "Scottish zero-tax offshore companies" which act as shell companies but are also popular with overseas investors and equity funds as legitimate tax-efficient vehicles.

The UK Government has now launched a new type of equity funding vehicle, Private Fund Limited Partnerships (PFLPs), which share some of the characteristics of SLPs.

Earlier this year, the Treasury unveiled its plans for PFLPs on the same day that the Department for Business, Energy and Industrial Strategy (BEIS), launched a consultation on SLPs given the concern that they were being used as fronts for criminal activity.

At the time, the BEIS Department noted the “sharp growth" in SLPs; their number has more than trebled since 2011, while south of the border there was a rise of less than 50 per cent.

It said its call for evidence would help “inform what further action, if any, is required to prevent limited partnerships being used as a front for unlawful activities such as money laundering and tax evasion, while also ensuring that the limited partnership business model continues to provide an efficient and flexible vehicle for legitimate business use".

In a report, the Commons Committee on Regulatory Reform described the coincidence of the Treasury unveiling its plans for PFLPs and the BEIS Department's starting its consultation as “not a good example of joined-up government”.

Its chairman, the Conservative MP Andrew Bridgen, described the Treasury PFLP proposal as “essential” to maintaining the UK’s competitive edge in financial services.

However, he also noted: “The Government’s timing has been unfortunate with the Treasury putting the plans forward on the same day that the BEIS Department launched its consultation. It would be sensible for ministers to only proceed once they have received convincing assurances from the consultation that there are no wider issues to address.”

The two-month BEIS Department consultation ended on March 17; a spokesman said it was now “analysing the feedback” but gave no indication when it would publish its findings and recommendations. The launch of the PFLPs took place on April 6; the start of the financial year.

Mr Mullin, who sits on the Commons committee, said: “This puts paid to the idea that the Government are fully committed to ensure criminality in the financial sector is to be rooted out and dealt with.

“The Regulatory Reform Committee recommended, at my suggestion, that a new Private Fund Limited Partnership should not be proceeded with until after the Government review into criminality associated with SLPs was complete and recommendations made.

“The ink on the committee's report was hardly dry when the Treasury chose to ignore its recommendation and launch this new weakly regulated form of limited partnership. Launching it during a parliamentary recess was clearly aimed at avoiding parliamentary scrutiny,” declared the Kirkcaldy and Cowdenbeath MP.

Mr Mullin added: “The criminal fraternity will be very grateful to the Government but those concerned to protect the integrity of the financial system will be rightly angry. I will not let this issue rest and will be raising it at the first opportunity when Parliament resumes."

A Treasury spokesman said: “The UK is home to the world’s leading financial services sector, which employs over one million people, including 150,000 people in Scotland.

“The changes we have made to the rules around Limited Partnership Act, to create a new Private Fund Limited Partnership structure for investment funds, are uncontroversial. First announced in 2013, they update legislation that is over 100 years old and ensures that the UK will continue to compete with our international competitors.”