Skip to content
BOL Conferences
Thread Options
#2104018 - 10/21/16 11:09 AM Customer Risk Rating for Equipment Lease Customers
jhoch Offline
Member
Joined: Nov 2014
Posts: 66
Looking for comments on what banks do in regards to AML risk ratings for customers who only have an equipment lease product. I've heard from one bank that those customers can't receive a high risk rating unless they get other products. I'd like to get comments from other banks to see what they do.

Return to Top
BSA/AML/CIP/OFAC Forum
#2104022 - 10/21/16 12:27 PM Re: Customer Risk Rating for Equipment Lease Customers jhoch
edAudit Offline
Power Poster
edAudit
Joined: Jul 2008
Posts: 4,796
You are here
I've heard from one bank that those customers can't receive a high risk rating unless they get other products
Why?
_________________________
Opinions can be considered as coming from anywhere but my employer.

CAMS


Return to Top
#2104023 - 10/21/16 12:45 PM Re: Customer Risk Rating for Equipment Lease Customers jhoch
osucpa Offline
Diamond Poster
Joined: May 2011
Posts: 1,406
You should be rating customers on your bank's risk profile not others. I agree with edAudit.

Return to Top
#2104024 - 10/21/16 12:52 PM Re: Customer Risk Rating for Equipment Lease Customers jhoch
Elwood P. Dowd Offline
10K Club
Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
Slide show for compliance issues in the equipment leasing industry. It starts with money laundering.

The other bank's automatic "pass" may reflect nothing more than a lack of comprehension.
_________________________
In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.

Return to Top
#2104051 - 10/21/16 02:50 PM Re: Customer Risk Rating for Equipment Lease Customers jhoch
jhoch Offline
Member
Joined: Nov 2014
Posts: 66
I think the general theory is that the equipment lease product is a low risk for money laundering. FinCen in granting an exemption to the new Beneficial Ownership rules to equipment finance companies states that the product is a low risk for being used as a vehicle for money laundering. The reason I'm seeking comment is that we're having discussions about setting the thresholds for cutoffs between Low, Moderate and High Risk. In the absence of other banking products would there necessarily be a larger percentage of high risk customers. There's no set standard of how many customers in each category you should have (i.e. 10% should be high, 50% moderate etc. etc.) based on the overall risk profile of your organization. I found it a bit odd that the org I talked to would make it impossible to have a high risk customer (if only lease product) but maybe its me that's odd so i wanted to get comments from others.

Return to Top
#2104084 - 10/21/16 04:33 PM Re: Customer Risk Rating for Equipment Lease Customers jhoch
edAudit Offline
Power Poster
edAudit
Joined: Jul 2008
Posts: 4,796
You are here
I think the general theory is that the equipment lease product is a low risk for money laundering

Even if the equipment is know to be used for the manufacture of some illegal/sanctioned materials?
_________________________
Opinions can be considered as coming from anywhere but my employer.

CAMS


Return to Top
#2104105 - 10/21/16 05:38 PM Re: Customer Risk Rating for Equipment Lease Customers edAudit
jhoch Offline
Member
Joined: Nov 2014
Posts: 66
I didn't mean no risk I meant low risk.

Return to Top
#2109798 - 12/06/16 04:08 PM Re: Customer Risk Rating for Equipment Lease Customers jhoch
loyo111 Offline
100 Club
Joined: Mar 2006
Posts: 102
Miami
We risk rate them based off of their NAICS codes....and then on a yearly basis we take those names and run them against negative news and that is our High Risk review process.

Return to Top

Moderator:  Andy_Z