Pepper has bought my mortgage now wants ID

[PMU]

Jim, my comment was based on PMU's statement. Is PMU correct?

I usually am. If you look at my posts on other topics they are factual, reference external sources, contain advice in areas I have either professional or personal experience. Here, the OP said a financial institution asked him to provide documentation to allow it to comply with its legal obligations under specified anti-money laundering and anti-terrorist financing legislation. In this forum he then received various anonymous advice which, if followed, could have the effect of hindering the financial institution in complying with its legal obligations. The legislation, while complex, is not particularly difficult to understand, and contains provisions for the identification and verification of customers. I think we would all agree that money laundering /terrorist financing are serious issues. The requirements placed on customers do not appear to be particularly onerous, so why would anyone advise the OP not to comply with them? The fact that the OP's identity was already confirmed with the Leeds Building Society is irrelevant. He's now dealing with Pepper, a different financial institution.

 

[llgon]

I never said you weren't correct, I was hoping to get clarification from Jim, who said that Pepper did not breach the legislation.

I disagree with your analysis though. I thought the documents requested by Danske/Pepper in 2015 were unnecessarily onerous and that was the main reason I didn't provide them. While money laundering and terrorist financing are important, I'm certain that Pepper requesting or receiving these documents will have zero effect.

Is there any factual negative consequence to me in not providing the documents?

 

[Gordon Gekko]

Are you 100% in compliance with all conditions of your mortgage contract?

e.g. valuation, loan-to-value, still living there, etc

Unless I was on rock-solid ground, I’d be wary of being too strident regarding AML documentation.

 

[llgon]

Hi Gordon,

Not sure if your question is directed at me or the OP. I know I've butted in on his thread so apologies for that.

In my case I'm happy I'm on solid ground. Additionally I made a successful complaint to the FSO about Danske prior to this so I was not worried about souring my relationship with them.

 

[Marion]

I’m in the ignored the request for documention group.

If they pursue it, I might comply.

If I’m likely to seek funds from them in the future, I will reconsider supplying the documentation.

Marion

 

[Bronte]

Are you 100% in compliance with all conditions of your mortgage contract?

e.g. valuation, loan-to-value, still living there, etc

Unless I was on rock-solid ground, I’d be wary of being too strident regarding AML documentation.

Told the bank I was emigrating, they didn't change the mortgage from home loan ever.

While abroad they gave me a mortgage on an investment propety and allowed me have the mortgage rate applicable to home loans rather than investment.

Later I later had a dispute with them via the ombudsman about a different mortgage that they gave me at home loan rates which they decided to change the title of 'home loan' rates.

I have never been asked whether value had gone up or down. And up and down they did go. Including negative equity after the Tiger bust.

What is your point?

 

[JohnSp]

I don't think it's that simple. Financial firms are required under anti-money laundering and ant-terrorist financing legislation to identify and verify customers and beneficial owners prior to establishing a business relationship with them.

Thanks PMU, that's very helpful.

Given the above and in particular the portion I have highlighted shouldn't Pepper have identified me and verified my ownership of the mortgage before they purchased it from Leeds? The process was ongoing for several months before Leeds informed me they had agreed to sell my mortgage to Pepper and between then and the actual transfer of ownership they had several more months to put the necessary checks in place.

Based on the above it seems Pepper didn't follow due process of anti-money laundering and ant-terrorist financing legislation prior to acquiring my mortgage and without identifying me as the beneficial owner of the mortgage they cannot treat me as a customer.

Is that correct?

If not and I am somehow already a customer of Peppers then what would be achieved by providing the requested info now? I can't become a customer twice can I?

 

[JohnSp]

Are you 100% in compliance with all conditions of your mortgage contract?

e.g. valuation, loan-to-value, still living there, etc

Unless I was on rock-solid ground, I’d be wary of being too strident regarding AML documentation.

I'm 100% in compliance with all the obligations I am in control of i.e. repayments, life assurance and insurance cover but who knows what the value of the property is until the property is actually sold? Value changes a little every day and has swung up and down considerably (and by extension so has the LTV) since the mortgage was taken out. It was probably under water in 2009 - 2013 and is probably above water now but it's not something I even think about and won't think about unless I decide to sell and there's no sign of that happening anytime soon as we are more than happy and the family isn't getting any bigger!!

It wouldn't be hard to get an estimate of value based on local comparables adjusting for variables like condition, size of garden, ability or inability to extend etc etc but is there any precedent for a financial institution terminating a mortgage and/or evicting people from their primary residence for theoretical breaches of LTV outside their control who were up to date on repayments and in compliance with life assurance and insurance etc?

 

[Gordon Gekko]

Told the bank I was emigrating, they didn't change the mortgage from home loan ever.

While abroad they gave me a mortgage on an investment propety and allowed me have the mortgage rate applicable to home loans rather than investment.

Later I later had a dispute with them via the ombudsman about a different mortgage that they gave me at home loan rates which they decided to change the title of 'home loan' rates.

I have never been asked whether value had gone up or down. And up and down they did go. Including negative equity after the Tiger bust.

What is your point?

My point is that it is naive to think that when a bank advances a home mortgage to someone, he or she has an automatic entitlement to unilaterally move the goalposts and convert the contract to an investment property mortgage.

 

[newtothis]

My point is that it is naive to think that when a bank advances a home mortgage to someone, he or she has an automatic entitlement to unilaterally move the goalposts and convert the contract to an investment property mortgage.

Surely what they are entitled to do is set out in the mortgage contract, which is normally signed after taking legal advice?

Speaking of legal advice, it would be interesting to hear how to square the right of a mortgage provider to assign the mortgage to someone else that's in most (all?) mortgage contracts and the obligation of companies to verify the identity of customers prior to establishing a financial relationship. I'm not a legal expert by any means; all I do know is that the obligation is defintely on the provider rather than the customer.

 

[JohnSp]

Speaking of legal advice, it would be interesting to hear how to square the right of a mortgage provider to assign the mortgage to someone else that's in most (all?) mortgage contracts and the obligation of companies to verify the identity of customers prior to establishing a financial relationship. I'm not a legal expert by any means; all I do know is that the obligation is defintely on the provider rather than the customer.

I'm most interested in this part also. I've no doubt Leeds were within their contractual rights to assign our mortgage to Pepper but I'm not aware of anything in the anti-money laundering and ant-terrorist financing legislation which excuses them from their AML requirement to identify and verify beneficial ownership of the mortgage counterparties BEFORE they take ownership of the mortgage.

Can anyone point to an exception permitting the establishment of a customer relationship by a financial institution without FIRST OF ALL having satisfied the AML requirement?

 

[newtothis]

I'm most interested in this part also. I've no doubt Leeds were within their contractual rights to assign our mortgage to Pepper but I'm not aware of anything in the anti-money laundering and ant-terrorist financing legislation which excuses them from their AML requirement to identify and verify beneficial ownership of the mortgage counterparties BEFORE they take ownership of the mortgage.

Can anyone point to an exception permitting the establishment of a customer relationship by a financial institution without FIRST OF ALL having satisfied the AML requirement?

I'm guessing here - and I stress that, as I say I've no particular expertise or knowledge - but I would suggest that there's a difference between a legal obligation to do something and the protocols and practices of how that obligation is exercised. For example, maybe the legal requirement is met by Leeds providing some form of affidavit to Pepper that all the customers have already been verified by them at the start of the relationship, but Pepper as a matter of course put out the request for id regardless, as that is what they do otherwise.

 

[JohnSp]

I'm guessing here - and I stress that, as I say I've no particular expertise or knowledge - but I would suggest that there's a difference between a legal obligation to do something and the protocols and practices of how that obligation is exercised. For example, maybe the legal requirement is met by Leeds providing some form of affidavit to Pepper that all the customers have already been verified by them at the start of the relationship, but Pepper as a matter of course put out the request for id regardless, as that is what they do otherwise.

Thanks newtothis, I guess if you are correct and the legal requirement is met by Leeds affirming to Pepper then why do Pepper need to repeat/duplicate the exercise and ask their customers to jump through these admin hoops? To be sure to be sure?

If Peppers AML requirement has been satisfied by an affidavit from Leeds I see no reason to waste my time duplicating the process.

However, if Peppers AML requirement has not been met before they took ownership of my mortgage they have not established a customer relationship with me as required by the AML legislation.

 

[PMU]

Thanks PMU, that's very helpful. Based on the above it seems Pepper didn't follow due process of anti-money laundering and ant-terrorist financing legislation prior to acquiring my mortgage and without identifying me as the beneficial owner of the mortgage they cannot treat me as a customer. Is that correct? If not and I am somehow already a customer of Peppers then what would be achieved by providing the requested info now? I can't become a customer twice can I?

The competent authority on this is the Central Bank. The CB clearly states that "A financial services firm is obliged by law to seek identification and verification information from a customer when opening an account." https://www.centralbank.ie/regulati...ing-and-countering-the-financing-of-terrorism. So do you have an account (within the meaning of the legislation) with Pepper or not? Clearly, Pepper thinks so, as they are asking for customer identification documentation. The CB goes on to state that "If a customer does not disclose relevant information required by law, a financial firm is obliged under the AML laws to cease providing services to that customer and may ultimately have to discontinue the business relationship." So that's the risk you run by not providing the requested information. I think there is a limit to what you can expect in advice from an open forum, and my main interest in this was 'advice' being provided that appeared to be at odds with the legislation. You can always ask the CB. There is a link to the CB's Anti Money Laundering Division on their web site.

 

[newtothis]

The competent authority on this is the Central Bank. The CB clearly states that "A financial services firm is obliged by law to seek identification and verification information from a customer when opening an account." https://www.centralbank.ie/regulati...ing-and-countering-the-financing-of-terrorism. So do you have an account (within the meaning of the legislation) with Pepper or not? Clearly, Pepper thinks so, as they are asking for customer identification documentation. The CB goes on to state that "If a customer does not disclose relevant information required by law, a financial firm is obliged under the AML laws to cease providing services to that customer and may ultimately have to discontinue the business relationship." So that's the risk you run by not providing the requested information. I think there is a limit to what you can expect in advice from an open forum, and my main interest in this was 'advice' being provided that appeared to be at odds with the legislation. You can always ask the CB. There is a link to the CB's Anti Money Laundering Division on their web site.

In what way is the advice at odds with the legislation, which as I've pointed out several times applies to the service provider not the customer? Just out of curiousity, do you have any particular expertise in this area?

We can all quote text from Web sites. You say: "A financial services firm is obliged by law to seek identification and verification information from a customer when opening an account." I would emphasise the "when opening an account" part: maybe the mortgage being transferred is not considered a "new account". The point is that it is all speculation.

The fact is customers are not obliged to supply any id, the very worst that can happen is the service being provided will terminate. How that would get resolved in the case of an outstanding loan or mortage is anyone's guess. I think it safe to say that before that actually happened you would be given the opportunity to recover the situation. My experience and that of many others is that whilst they may keep asking for id information, they will eventually give up. If anyone has faced any difficulty in taking this approach it would be interesting to hear. Anything else is just speculation. You are doing nothing wrong in not supplying id information; if you were it is not advice I would give.

 

[PMU]

Just out of curiousity, do you have any particular expertise in this area?

Let's say in the field of compliance with complex legislation.

We can all quote text from Web sites.

Not from any old website, but from the Central Bank, which is the competent authority in this area.

You say: "A financial services firm is obliged by law to seek identification and verification information from a customer when opening an account."

No , the CB said it.

I would emphasise the "when opening an account" part: maybe the mortgage being transferred is not considered a "new account". The point is that it is all speculation.

If you have a problem on definitions you could always ask the anti-money laundering section of the CB. (As could the OP.) But it's not speculation. Pepper clearly believes it is such an account, which is why they are asking for the identification information.

The fact is customers are not obliged to supply any id,

But by not providing this information they are frustrating a financial institution in complying with its legal obligations under anti-money laundering and anti-terrorist financing legislation. And indeed frustrating the will of the Oireachtas that passed the legislation that such information be requested. Why would any reasonable person want to do this?​

Why would any person advise not to provide the information? You are exposing the customer to risk, as the response of the financial institution is uncertain. A more appropriate advice would be that it would be prudent to supply the requested information, which is not a particularly onerous task, to allow the financial institution to comply with its legal obligations and with public policy on anti-money laundering and anti-terrorist financing activities.
​

 

[JohnSp]

If you have a problem on definitions you could always ask the anti-money laundering section of the CB. (As could the OP.)

My (and is seems most peoples) reading of the AML legislation is that a financial services firm is obliged by law to seek identification and verification information from a customer when opening an account." i.e. BEFORE they commence a customer relationship not afterwards.

I sought clarification on this from the CB and and (non) answer I got was ""The Central Bank of Ireland is responsible for the supervision of firms to ensure that they comply with the statutory obligations under Irish legislation. However, the Central Bank does not prescribe how firms actually carry out their customer due diligence obligations nor does it set down criteria to which it must be adhered."

From my perspective I've taken reasonable steps to clarify whether I'm obliged to supply the onerous information Pepper are now (after I've become their customer) asking for and the relevant authority have not confirmed that I am obliged to do so.

My position is Pepper should have satisfied the AML requirement as part of their due diligence BEFORE they acquired my mortgage from Leeds. IF the documentation Leeds had on file met the AML obligation it should have been transferred/assigned to Pepper and all would be fine but if during due diligence it became clear that Leeds did not have satisfactory AML info on file then Pepper could and should have made the acquisition of my mortgage contingent on Leeds securing the required AML info BEFORE it could be transferred to Pepper. As an existing customer of Leeds I'd have felt obliged to co-operate with them but as I wasn't consulted during the negotiations between Leeds and Pepper relating to my mortgage I feel Zero obligation to now help Pepper back fill the AML obligations they should have completed before they acquired my mortgage and if they start getting heavy handed with my I'll point to the assistance I requested from the CB as evidence that I was prepared to co-operate if obliged to but in their response the CB did not affirm I had such an obligation.