controls at lessors
Having escaped scrutiny for 13 years, finance leasing companies
will now have their anti-money laundering controls monitored by the
Financial Services Authority under the Money Laundering Regulations
(MLR) 2007.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
The MLR2007 comes into effect on December 15 with a new
interpretation of the definition of businesses obliged to put
themselves on the record for FSA oversight. This includes companies
offering financial leasing services but excludes companies that
only offer operating leases or hire purchase services.
The FSA’s manager of the Financial Crime Policy Unit, James
London, explained the double standard was a matter of
interpretation of Annexe 1 of the Banking Consolidation Directive,
which defines institutions that are subject to anti-money
laundering rules.
Although the FSA preferred not to rule out completely the
inclusion of operating lessors or hire purchase operators in
future, it does think it highly unlikely.
“It’s always dangerous to say never but I think there’s no
intention at the moment and I don’t even see a glint in the eye
that there’s any intention to expand the scope any further,” London
told Leasing Life in an interview.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataNot monitored
While finance leasing companies have been subject to anti-money
laundering legislation since the first MLR Act was passed in 1993,
their compliance levels were not monitored by any industry
watchdog, hence there was no requirement to register with the FSA
before.
Officially, firms have been given six months to register with
the FSA before the June 15 2008 deadline. The regulator also made
it clear that dealings will be strictly limited to anti-money
laundering efforts.
Leasing companies are expected to have in place appropriate
procedures to run background checks on customers where necessary,
as well as proper documentation and adequate staff training to keep
anti-money laundering controls active. With the risk-based
approach, companies are expected to judge for themselves what are
the high-risk activities and to focus their resources there.
As leasing companies have been subject to the MLR from the
beginning, they should already achieve full compliance, thus the
MLR2007 should not cause leasing companies to incur additional
cost, aside from the £100 registration fee and estimated annual
fees of £200 to £400 thereafter.
Still, if a firm is yet to achieve full compliance they should
not worry that the FSA will come down hard on them immediately as
the FSA does not see itself as an “enforcement-based
regulator”.
Firms can nonetheless expect periodic visits by FSA officials
and for the regulator to act based on what they hear in the market
place. Enforcement tools at the FSA’s disposal are however,
unlimited.
“We appreciate that it’s going to be a learning process for
companies so we won’t be expecting perfection from day one,” said
London. “… If a firm is seen to be not fully compliant we’ll be in
discussions with them, if they ignore us only then will we start
talking about enforcement. But we won’t be going in guns
blazing.”
