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#2104018 - 10/21/16 11:09 AM Customer Risk Rating for Equipment Lease Customers
jhoch Offline
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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.

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#2104022 - 10/21/16 12:27 PM Re: Customer Risk Rating for Equipment Lease Customers jhoch
edAudit Offline
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I've heard from one bank that those customers can't receive a high risk rating unless they get other products
Why?
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#2104023 - 10/21/16 12:45 PM Re: Customer Risk Rating for Equipment Lease Customers jhoch
osucpa Offline
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You should be rating customers on your bank's risk profile not others. I agree with edAudit.

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#2104024 - 10/21/16 12:52 PM Re: Customer Risk Rating for Equipment Lease Customers jhoch
Elwood P. Dowd Offline
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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.
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#2104051 - 10/21/16 02:50 PM Re: Customer Risk Rating for Equipment Lease Customers jhoch
jhoch Offline
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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.

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#2104084 - 10/21/16 04:33 PM Re: Customer Risk Rating for Equipment Lease Customers jhoch
edAudit Offline
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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?
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#2104105 - 10/21/16 05:38 PM Re: Customer Risk Rating for Equipment Lease Customers edAudit
jhoch Offline
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Joined: Nov 2014
Posts: 66
I didn't mean no risk I meant low risk.

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#2109798 - 12/06/16 04:08 PM Re: Customer Risk Rating for Equipment Lease Customers jhoch
loyo111 Offline
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Joined: Mar 2006
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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.

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