Response to consultation on proposed RTS in the context of the EBA’s response to the European Commission’s Call for advice on new AMLA mandates
Question 1: Do you agree with the proposals as set out in Section 1 of the draft RTS? If you do not agree, please explain your rationale and provide evidence of the impact this section would have, including the cost of compliance, if adopted as such?
The Bundesverband Deutscher Leasing-Unternehmen e.V. (BDL) generally welcomes the EBA's efforts to develop uniform and practice-oriented standards to combat money laundering and terrorist financing. Nevertheless, the BDL sees considerable challenges for the leasing industry in several provisions of the draft RTS, which are addressed in this statement.
I.
The excessive level of detail in the requirements makes practical and economically viable implementation difficult - especially for smaller institutions and specialised financiers such as leasing companies. The large number of individual, granular requirements runs counter to the basic idea of a risk-oriented organisation of due diligence obligations. However, the actual risk content of many business models is not adequately taken into account due to the formalised processing of verification steps.
In addition, the high level of regulation leads to an overload of operational processes without achieving any recognisable added value for the prevention of money laundering. In the BDL's view, a more principles-based framework that gives institutions a certain degree of discretion within clearly defined guidelines would be more efficient and target-orientated. It would take better account of the different business models in the financial sector - especially those with low structural risk.
In addition, the draft contains numerous new requirements that could not be implemented in practice or could only be implemented with considerable effort. This applies in particular to verification and documentation requirements, the introduction of which would involve a disproportionate amount of human and financial resources - without any significant benefit in terms of risk minimisation. For leasing companies in particular, these requirements are inappropriate to the inherent risk. The existing internal control systems are already geared towards the specific risks of the leasing business and have been assessed as effective in practice. In the BDL's view, the planned expansion of due diligence obligations will therefore not lead to an improvement in money laundering prevention, but rather to a misguided focus on formal fulfilment of obligations at the expense of targeted and risk-oriented management of preventive measures.
In the BDL's view, it would therefore be urgently necessary to review the draft RTS again with regard to its practical feasibility and proportionality. In addition, the BDL recommends providing concrete practical examples for newly introduced requirements in order to facilitate interpretation and implementation in practice and to foster harmonized implementation.
II.
In detail:
Article 1 point 2 RTS-E - Commercial name
The BDL suggests deleting the obligation to record the commercial name provided for in the draft. From the perspective of the leasing industry, there is no recognisable added value of this additional information with regard to the prevention of money laundering or terrorist financing. In addition, it is not sufficiently clear what is actually meant by commercial name. At the same time, the system-based recording and maintenance of the commercial name involves considerable additional effort - especially for existing customers or in cases where commercial names are not clearly documented or legally relevant. This requirement therefore does not appear proportionate and should be dropped in favour of targeted, risk-oriented regulation.
Article 3 RTS-E - Country of birth
The BDL is in favour of deleting the obligation to record the country of birth of natural persons provided for in the draft. This information is difficult to implement in practice, as the country of birth is not usually noted on standard identification documents (e.g. identity card, passport).
Reliable collection of this information would in many cases require an additional request to the customer or the submission of supplementary documents, which would make the collection process disproportionately complicated and significantly impair the efficiency of customer acceptance processes, especially for standardised products.
Furthermore, there is no recognisable concrete added value of this information in terms of money laundering law - especially not in relation to the associated operational costs.
Article 4 RTS-E - Other nationalities
The BDL asks for clarification that the collection of additional nationalities of a customer can only be carried out by asking the customer and does not entail any further investigation obligations. In practice, additional nationalities are not evident from official identification documents and can therefore only be recorded on a self-reporting basis. An independent check or enquiry would be neither proportionate nor legally possible.
The BDL also points out that information about multiple nationalities should not automatically lead to an increase in risk classification or more extensive monitoring and supervision obligations. The mere existence of an additional nationality does not allow a generalised statement to be made about the individual risk of a customer.
Article 5 RTS-E - Place of birth in equivalent documents
The BDL asks for a clear clarification in the RTS text that the term "place of birth" is to be understood exclusively as the place in the sense of the city and not additionally the country of birth, as currently defined in Article 3 RTS-E, as otherwise almost all common documents could no longer be accepted as suitable equivalent means of proof. The requirement would also be inappropriate because even identity cards and passports do not contain this information.
Article 10 point 1 RTS-E Understanding the ownership and control structure
From the BDL's perspective, the current wording of Article 10 RTS-D could be interpreted to mean that a systematic and comprehensive review of ownership and control rights is required at all levels of the shareholding structure - regardless of the specific risk or anomalies. In practice, this would mean that all shareholder agreements at every level of the shareholding chain would have to be reviewed for any deviating voting rights.
Such a far-reaching audit obligation would go beyond the current requirements and would not be proportionate, especially for smaller companies such as GmbHs or GmbH & Co. KGs. The BDL is therefore calling for a clear clarification in the RTS that such a comprehensive audit is not required in every case and only needs to be carried out on a risk-oriented basis and in the event of specific indications.
Article 10 point 2 RTS-E Assessment of the ownershi and control structure
The BDL suggests clarifying in the RTS text that no further documented assessment of the ownership and control structure with regard to its plausibility and economic rationale is required for customers with normal risk, provided that no particular anomalies or indications arise from the individual case. In many cases - particularly in the case of companies with a transparent shareholder structure - the ownership and control structure is clearly evident and can be easily understood in economic terms. In these cases, an additional written assessment would not provide any added value for the risk assessment, but would lead to considerable additional administrative work.
In the BDL's view, it is in line with the risk-based approach that in-depth analysis and documentation is only required in the event of justified abnormalities or increased risk. A general obligation to assess and document inconspicuous constellations in the normal risk area does not appear proportionate and should be expressly excluded.
Article 12 RTS-E Senior Managing Officials
The BDL also requests clarification that Senior Managing Officials refers solely to the legal representatives.
Question 2: Do you have any comments regarding Article 6 on the verification of the customer in a non face-to-face context? Do you think that the remote solutions, as described under Article 6 paragraphs 2-6 would provide the same level of protection against identity fraud as the electronic identification means described under Article 6 paragraph 1 (i.e. e-IDAS compliant solutions)? Do you think that the use of such remote solutions should be considered only temporary, until such time when e-IDAS-compliant solutions are made available? Please explain your reasoning.
Article 6 point 2 RTS-E - Video identification
The restriction formulated in the draft, according to which alternative identification procedures such as the Video identification established in Germany should only be permitted if an eIDAS-compliant procedure is not available or "cannot reasonably be expected", should be viewed critically for several reasons. The wording is vague and leaves open the specific circumstances under which an eIDAS procedure "cannot reasonably be expected". This creates legal uncertainty for obliged entities that rely on functioning and recognised procedures such as VideoIdent in practice. The VideoIdent procedure has established itself in Germany - also under the supervision of BaFin - as a reliable and secure means of identification. A blanket restriction contdicts this proven practice and could jeopardise functioning structures without any recognisable added value. The restriction of alternative procedures should therefore be cancelled entirely.
Question 6: Do you agree with the proposals as set out in Section 4 of the draft RTS? If you do not agree, please explain your rationale and provide evidence of the impact this section would have, including the cost of compliance, if adopted as such?
Article 19 RTS-E Identification of the beneficial owner in the case of low risk
The BDL is expressly in favour of clarifying in the RTS that, in the case of low-risk clients, inspection of the central register is sufficient to determine the beneficial owner - without the need for additional verification measures, provided there are no concrete indications of discrepancies.
The central register was created with the aim of providing centralised information on the ownership and control structure in a transparent, officially verified and easily accessible manner. If further examination or verification of the information were required even in the case of low-classified risks, this would undermine the practical benefits and regulatory objectives of the register. As a consequence, the central register would in fact be completely devalued.
From the BDL's point of view, it is therefore essential that, in the absence of anomalies and low risk, inspection of the central register is considered sufficient and does not have to be supplemented by additional measures.
Question 7: What are the specific sectors or financial products or services which, because they are associated with lower ML/TF risks, should benefit from specific sectoral simplified due diligence measures to be explicitly spelled out under Section 4 of the daft RTS? Please explain your rationale and provide evidence.
Leasing transactions should generally be eligible for simplified due diligence measures due to their inherently low risk of money laundering and terrorist financing. Unlike other financial services, leasing typically involves long-term contractual relationships, identifiable assets, and traceable payment flows, which collectively reduce the risk of misuse for illicit purposes. Furthermore, the nature of leasing business—characterized by the physical presence of the leased asset and often domestic client bases—adds an additional layer of transparency. Therefore, from a risk-based perspective, applying simplified due diligence to standard leasing activities is both proportionate and justified.
Question 8: Do you agree with the proposals as set out in Section 5 of the draft RTS? If you do not agree, please explain your rationale and provide evidence of the impact this section would have, including the cost of compliance, if adopted as such?
Article 24 b) RTS-E Customer reputation
The BDL considers the obligation provided for in the draft RTS to take into account the "reputation" of the customer as part of the risk assessment to be inappropriate and unrealisable.
A valid and legally secure assessment of "reputation" is neither objectively measurable nor reliably documentable. It would force institutions to make speculative assessments that would have to be based on subjective sources or sources that are difficult to verify. This threatens considerable legal uncertainty, particularly in the event of subsequent supervisory or civil law reviews.
In the BDL's view, this requirement clearly goes beyond the scope of normal and proportionate due diligence obligations. In the absence of specific negative information (e.g. from sanctions lists or criminally relevant sources), institutions may not be required to provide their own assessment of the customer's public or business "reputation".
The BDL therefore recommends dropping this requirement or at least limiting it to clearly defined and verifiable criteria.
Article 24 c) RTS-E Past and present business activities of the client and the beneficial owner
The obligation to analyse previous business activities would go beyond the current standard of due diligence obligations under money laundering law and lead to an unreasonable expansion of documentation and verification obligations. The BDL therefore recommends deleting this requirement or limiting it to cases of increased risk and concrete suspicions.
Article 25 c) RTS-E Information on the customer‘s key customers, contracts and business partners or associates
The new requirement to obtain information on the customer's most important customers, contracts and business partners or affiliated companies is not appropriate, particularly in view of the short update intervals, even in the case of increased risk, and should therefore be deleted.
Article 26 RTS-E Information on the source of funds, and source of wealth of the customer
The BDL considers the requirement to submit evidence exclusively in the original or as a certified copy to be outdated and impractical.
This requirement contradicts the current state of digitalisation and leads to unnecessary interruptions and delays in business processes. Particularly in the leasing industry, which is increasingly focussing on digital processes and document management, such a requirement makes efficient and customer-friendly processing more difficult.
In addition, many documents, such as payslips, are regularly not signed and therefore a certified copy cannot be formally submitted.
Article 26 RTS-E Information on the source of funds, and source of wealth of the beneficial owner
Obtaining the evidence referred to in Article 25 of the draft RTS (e.g. tax returns or payslips) on the origin of the beneficial owner's assets and wealth is generally not feasible in practice, both in fact and in law, due to the lack of a direct business relationship between the obliged entity and the beneficial owner. The requirements of Article 26 RTS-E should therefore generally be limited to the customer.
Additional information on the beneficial owner should only have to be obtained if it can be proven that the beneficial owner is contributing assets to the business relationship with the obliged entity. In these cases, however, it should also be possible to verify the origin of the assets through publicly available sources or information already held by the client. An obligation to submit sensitive documents such as tax returns or salary statements is disproportionate in such constellations. Such a requirement would significantly exceed the provisions of Article 34(4)(c) of the AMLD, which provides for the collection of information on the origin of funds and assets, but does not standardise any obligation to use certain types of documents. In addition, the fundamental right to informational self-determination would be affected. The disclosure of particularly sensitive personal data such as income or tax information of a beneficial owner who is not directly involved in the business relationship to all of the customer's financiers would represent a significant intrusion that can only be justified under strict conditions.