Money laundering through vehicle sales is a simple process. Dealerships are subject to less regulatory oversight than financial firms, and dealers may not be as aware of AML requirements as other institutions.
The grey market is unregulated, and the source of the purchasers and methods of payments are difficult to track.īut perhaps the most significant factor contributing to the rise of money laundering schemes through luxury vehicle purchases lies with vehicle dealerships themselves. The grey market of export vehicles provides another entry point for money launderers. If dealers accept cash as payment for vehicles, the funds are deposited into the mainstream financial system, removing footprints of the transaction and complicating the ability to trace the source of wealth at purchase. The luxury vehicle industry also affords criminals the opportunity to legitimize significant amounts of money in a single transaction. Vehicles are either purchased with cash to conceal the origin of their wealth or rented to make seizures more difficult for law enforcement. According to a 2019 report on money laundering and the luxury vehicle industry, criminals are attracted to a lifestyle of consumptive wealth which make luxury vehicles a particularly appealing means of investing their profits. The automotive industry has been used as a conduit for money laundering for some time. Both the United Kingdom and Australia have adopted this categorization of vehicle dealers. High-value dealers include any business (or sole trader) that makes or accepts cash payments above a specific threshold.Non-financial businesses refer to a European categorization that states that individuals trading in goods belonging to so-called non-financial businesses must comply with European AML directives when they receive cash payments over €10,000.This categorization requires that these businesses must comply with AML requirements on par with banks. Non-bank financial institutions refer to a US categorization and encapsulate any business engaged with the sale of cars, planes or boats.The extent of their AML compliance may differ from entity to entity, which is why familiarising themselves with AML guidance is critical for all businesses within the automotive industry. All of these categories are obliged to follow AML requirements, which include customer due diligence, record-keeping and suspicious activity reporting.
These categories include high-value dealers, financial institutions, and non-financial businesses. Per AML guidelines, dealers and intermediaries may fall under various categories, depending on their size and location. AML Compliance and Classification of Vehicle Dealers
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