Asset Finance providers offer financial facilities that allow Businesses to use an asset over a fixed period, in return for regular payments. The Business Customer chooses the equipment it requires, and the Finance Company buys it on behalf of the Business. Examples of Asset Finance would be, a Finance Lease, Operating Lease and Hire Purchase.
The features of Asset Finance are generally that no monies are advanced to the Customer, but are paid into the Supplier’s Bank Account to fund the purchase of an asset which is made available under contract to the Customer.
The main risk of Money Laundering is that the finance is used for layering and that through acceleration of an agreed repayment schedule, either by lump sum repayment, or early termination. Early repayment may also be indicative of funds being used which have emanated from a criminal lifestyle.
There are three main markets for Asset Finance as described below.
Big Ticket Lenders – Unless the business is listed on AIM or LSE, Asset Finance Business should follow the standard method of verifying the customer for AML purposes, including the verification of the identity of the Beneficial Owners and where appropriate, verification of the identity of Directors in principal control.
Mid Market Asset Finance – As above, however in applying a risk based approach, mid market Asset Financiers may take appropriate account of the guidance on using source of funds as evidence of identity.
Small Ticket Lenders – May be able to rely on simplified due diligence. However, for fraud purposes lenders should still carry out identity verification.
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