News -

- September 2009

Compensation & Benefits: OFT takes anti-money laundering ("AML") role

Some loans made to employees require employers to be licensed under the Consumer Credit Act 1974 to avoid potential criminal liability and to be able to enforce the loan.  The OFT now requires such employers to register with it for AML purposes.

The Office of Fair Trading (“OFT”) has announced that persons offering consumer credit to register with it for AML purposes.  This may affect employers who make loans to employees in connection with, for example, incentive plans or in order to ease employee cash-flow in connection with adverse international assignment taxation.

Where the period of the loan is more than 12 months or if repayment is in five or more instalments the loan may be a regulated agreement.  (Please note there are various exemptions from the requirement to obtain a license but employers would be prudent to check these before entering into employee loan arrangements.  The previous cap of £25,000 on regulated agreements has now been removed (with effect from 6 April 2008).

Registration deadline

Those companies with existing consumer credit act licences will have to register by 31 January 2010 pay a fee on registration.  Companies seeking licences will be unable to make regulated loans until they have been registered (in which case they should apply for a consumer credit license and AML registration at the same time). 

Exceptions

Companies which are already supervised by the Financial Services Authority for the purposes of the Money Laundering Regulations 2007 or are “money service businesses” (such as bureaux de changes) are excepted from the requirement to register.

AML obligations

Quite what AML obligations those companies who have to register will need to fulfil is not clear as yet.

Resources

OFT AML registration form

OFT Guidance on registration

OFT AML Registration Policy

OFT AML Registration fees calculator

OFT policy on enforcement and penalties for failure to register

For further information or to discuss the issues raised, please contact Guy Abbiss (Turn on Javascript!) on +44 (0) 203 051 5711.

Disclaimer

Content is for general information purposes only.  The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice.  If you require assistance in relation to any issue, please seek specific advice relevant to your particular circumstances.