Anti-Money Laundering legislation and the effect on leasing companies Should leasing companies be exempt?

PwC Legal Agenda Global and EU regulation Practical issues – burden or standard? Due diligence Regulation outlook Slide 2 Leasing in CEE

PwC Legal Global and European Union AML regulation Origins of regulations International aspect Financial Action Task Force on Money Laundering recommendations European Union European specifics in regulation against laundering and terrorist financing Leasing companies are subject to regulation Regulation provides for substantial rules and obligations and sanctions Harmonization of EU law and Member states Slide 3 Leasing in CEE

PwC Legal Practical issues – burden or standard? AML regulation provides for processes companies comply with in their own interest Identification of the counter party Wrong or no identification will result in higher number of defaults, fraud and invalid contracts Limitation on cash payments Reduces cost for processing cash payments Reduces risk of fraud Reduces cost of checking possibly falsified banknotes Enables companies to reduce branch network Slide 4 Leasing in CEE

PwC Legal Due diligence AML regulation provides for processes companies comply with to protect their reputation and business Client and origin of his financial means Nominee structures Continuous supervision and relationship with client Does it help? Reduces risk of default Reduces cost of enforcement in case of default Increases customer satisfaction Reduces unwanted association with drugs, crime and prostitution Slide 5 Leasing in CEE

PwC Legal Due diligence AML regulation rarely leads to identification of suspicious transaction Our clients in the Czech Republic have not identified such transaction for a long time In leasing business money laundering has to be extremely complex and expensive Leasing is probably not a favorite transaction for money laundering What does it imply? Regulation requirements have to be fulfilled Required processes should be put to good use and have dual purpose Companies should look to AML procedures as reputation issue Slide 6 Leasing in CEE

PwC Legal Future regulatory outlook AML regulation will be probably stricter Leasing companies view the regulation as burdensome There is limited possibility to scale back the regulation as it agreed on global scale and applied EU wide Leasing associations monitor the development but rarely try to influence the process on national as well as European level How to do business in regulation affected areas? There is limited possibility leasing companies will be exempt Operational leasing may be discussed Leasing associations should communicate with local regulators to develop “best practice” Slide 7 Leasing in CEE

Consider future regulation as a way to improve internal processes This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers Legal s.r.o., advokátní kancelář, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © 2011 PricewaterhouseCoopers Legal s.r.o., advokátní kancelář. All rights reserved. “PwC” is the brand under which member firms of PricewaterhouseCoopers International Limited (PwCIL) operate and provide services. Together, these firms form the PwC network. Each firm in the network is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way.