Regulatory Change Continues To Influence The Aviation Financing Landscape

Regulatory developments at both domestic and EU level are playing an increasingly important role in the aviation financing market. 

Upcoming changes in the EU anti-money laundering (AML) framework will impact the compliance frameworks for Irish in-scope vehicles, while the upcoming implementation of CRD VI is influencing how lenders approach cross-border activity, risk management and transaction structuring. 

Understanding the direction of travel is becoming critical for market participants operating across jurisdictions. 

Increasing focus on AML compliance and supervision 

In Ireland, AML requirements continue to apply to aviation-related entities engaged in lending and financial leasing activities. 

There is a growing focus on how these obligations are implemented in practice, with increased supervisory engagement and a more data-driven approach from the Central Bank of Ireland. Recent developments indicate that AML compliance will remain a key enforcement priority. 

At an EU level, the new AML reform package introduces a more centralised framework, including the establishment of the Anti-Money Laundering Authority (AMLA) and the move towards a single rulebook, harmonised through an EU AML Regulation. 

These changes are expected to drive greater consistency across Member States, alongside enhanced supervision at both EU and national levels. 

CRD VI and its impact on non-EU lenders 

At the same time, CRD VI introduces significant changes for non-EU lenders providing services into the EU. 

In particular, the new framework requires certain third country lenders to establish an authorised EU branch where they carry out in-scope banking activities. This represents a material shift from the existing position in a number of jurisdictions. 

The scope of these requirements, and the circumstances in which they will apply, is a key area of focus for market participants. Firms are also closely analysing the available exemptions, including reverse solicitation, intra-group transactions and interbank activity. 

Structuring and commercial implications 

There regulatory developments are already having a practical impact on how transactions are structured. 

Firms are increasingly assessing where lending activity is carried out, how they interact with EU counterparties and whether existing models remain viable under the new regime. In some cases, this is driving the use of alternative structures or a reassessment of existing arrangements. 

There is also a greater emphasis on documentation, governance and evidencing compliance, particularly where reliance is placed on exemptions. 

Looking ahead 

While some elements of the new framework are still developing, the overall direction is clear. 

There will be greater regulatory scrutiny, increased convergence across jurisdictions and a stronger focus on transparency and risk management. Market participants will need to remain agile and ensure that their structures and processes are in line with the new requirements. 

For an overview of the structural developments emerging in response to these changes, read our companion article on evolving aviation finance structures here.