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

30 January 2012 |

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 fees calculator

OFT policy on enforcement and penalties for failure to register

For further information or to discuss the issues raised, please get in touch.

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.

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. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this article. For further legal information click here.

Circular 230 disclosure

To ensure compliance with requirements imposed by the IRS and other taxing authorities, we inform you that any tax advice contained in this article (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

The author


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