Vehicle Lease Management Ltd in our role of broker does not receive or hold funds on behalf of clients. The process of gaining financial approval requires us to gather personal information to a) ensure the clients credit worthiness and b) to deter money laundering opportunities.
The information gathered from prospects/clients is:
1. In credit application processing, there should be standard acceptable proofs for verification of Identity and current permanent address in accordance with paragraphs 3 - 5 below. These apply in the case of:
- New customers; and
- Current and previous customers where the proposal details show a material discrepancy from the existing account details in the records of the lender; and
- Previous customers whose last transaction expired over 12 months ago.
2. A ‘material discrepancy’ would include any of the following:
- Missing/wrongly spelt names;
- Change of name;
- Incorrect address information extending to post code, current or previous address;
- Incorrect time at address; and
- Conflicting employment details, bank details, date or place of birth.
3. There is a mandatory production of a full driving licence or a photo card driving licence, or a provisional driving licence with photo card, in every case bearing the customer’s current address.
All photo cards must be accompanied by their relevant counterpart. Where the driving Licence does not bear the customer’s current address, then additional proof of current permanent residence should be required (for example, by Electoral Roll confirmation).
4. In the rare circumstances where an individual cannot produce a current driving licence, the lender should verify the identity. Vehicle Lease Management will then ask to see the individual’s passport.
5. The driving licence must be supported, wherever possible, by at least one of the following.
- Electronic confirmation of the customer’s current residence via the Electoral Roll;
- Electronic confirmation of current credit data at the current address on existing lending;
- Electronic confirmation of identity.
Further information may be required by the lenders in exceptional cases.
A client file is created and this information is available to the police and other government agencies that are so authorised.
Vehicle Lease Management recognise the following issues;
What are the money laundering risks in motor finance?
The features of all lending are generally that the initial monies advanced are paid into another bank account, in the case of motor finance in exchange for the use of a vehicle. Repayments are usually made from other bank or building society accounts by direct debit; in most, but not all, cases, repayments in cash are not, and should not be, encouraged.
Given that a loan results in the borrower not receiving funds from the lender, but the use of a vehicle, the initial transaction is not very susceptible to money laundering. The main money laundering risk arises through the acceleration of an agreed repayment schedule, either by means of lump sum repayments, or early termination. Early repayment can also be indicative of funds being used which have emanated from a criminal lifestyle.
Motor finance products therefore carry a low inherent money laundering risk. A motor finance company will normally only accept payment of instalments from the customer named on the agreement, and in the case of overpayment will only make repayment to the customer named on the agreement.
Should a motor finance company accept occasional payments from third parties, for example the settlement of the agreement by the dealer, and/or accept payment via payment books, it must be alert to the increased risk of receiving the proceeds of crime.
Assessment of the risk
The lender’s knowledge of the customer only extends to information gleaned at the identification stage, and to a single monthly payment on the agreement; their occupation details and monthly income/expenditure are generally unknown.
The nature of motor finance business, however, is that the type of agreement entered into with the customer carries a low risk of money laundering.
Procedures and controls used for identifying potential money laundering are therefore normally transactional-based, to identify unusual transactional movements, unusual deposits, unusual advance payments or unusual repayment patterns.