Anti-Money-Laundering and Counter-Terrorist-Financing in Belgium: An Overview

This post is also available in:

Money laundering, terrorist financing and organised crime are seen as among the major problems that national authorities and international bodies seek to address in order to safeguard the soundness, integrity and stability of the financial system. Banks, recently in the spotlight following the FinCEN Files, are subject to heavy obligations. This article gives a practitioner’s overview of the Belgian framework.

The applicable rules: repressive and preventive

Belgian anti-money-laundering (AML) rules have two components. The repressive component rests on the Criminal Code (Art. 42 et seq. and 505) and the Code of Criminal Procedure; the Criminal Code does not use the term “money laundering” and treats the laundering of unlawful patrimonial advantages as a special form of handling stolen goods, giving rise to three laundering offences (holding or managing such advantages; converting or transferring them; concealing their nature, origin, location or ownership).

The preventive component rests on EU law, Directive (EU) 2015/849 as amended by Directive 2018/843, and the FATF’s 40 recommendations, and in Belgium on the AML Act of 18 September 2017, supplemented by the National Bank of Belgium (NBB) Regulation of 21 November 2017. Unlike the Criminal Code, the Act defines “money laundering” (conversion or transfer, concealment, acquisition or use of criminally derived assets, and participation in such acts) and “terrorist financing”.

Who is covered

The AML Act applies to obliged entities listed exhaustively in the Act: credit institutions, payment institutions, investment firms, notaries, lawyers, accounting professionals, gambling operators, and also professional football clubs and sports agents. It applies to activities carried out in Belgium by persons or undertakings established there. Assets are treated as of “unlawful origin” where they derive from one of the predicate offences listed in the legislation, such as organised crime, serious tax fraud, drug trafficking, market abuse or misuse of corporate assets.

The six core obligations of obliged entities

The Act breaks the basic duty to cooperate and detect laundering into six specific obligations.

• Overall risk assessment. The entity must assess the risks attached to its clientele, products, services, transactions, geographies and distribution channels, under the responsibility of a designated officer (AMLCO), in three phases: risk identification, gap analysis, and remediation, documented in writing for the supervisor.

• Client screening (identification and verification). The entity must identify and verify the identity of clients, agents and beneficial owners using reliable sources, to a degree proportionate to the risk. Screening is required before entering into a business relationship or, for occasional transactions, at set thresholds (EUR 10,000; EUR 1,000 for transfers of funds; any transaction involving anonymous cash or e-money). If screening is impossible, the entity may neither enter into the relationship nor carry out the transaction, and must terminate any existing relationship. Enhanced due diligence applies to higher-risk situations, notably politically exposed persons (PEPs), high-risk third countries, serious tax fraud and cross-border correspondent banking.

• Client acceptance policy. Entities must classify clients on a risk scale and reserve the decision to onboard higher-risk clients to staff of an appropriate seniority.

• Ongoing due diligence and organisational requirements. Entities must monitor for atypical transactions (through two lines of defence: front-line staff and an internal monitoring system) and keep client data up to date. They must adopt internal policies, procedures and controls, designate a member of effective management as ultimately responsible and one or more AMLCOs, train and vet staff, and operate an internal (whistleblowing) reporting channel.

• Cooperation with the CTIF-CFI. On suspicion, or reasonable grounds to suspect, laundering or terrorist financing, entities must report immediately to the Financial Intelligence Processing Unit (CTIF-CFI), in principle before executing the transaction, and are bound by a tipping-off prohibition. A good-faith report shields the reporter from civil, criminal or disciplinary liability.

• Record-keeping. Identification data, verification evidence, transaction records, atypical-transaction reports and currency-exchange slips must be kept for ten years.

Penalties

Breaches of the preventive rules do not, as a rule, lead to criminal prosecution (save, notably, where an entity obstructs supervisory inspections). Supervisors may impose administrative fines on the entity itself or on individuals (board members, management), together with periodic penalty payments, and may suspend or revoke the operating licence.

Selected special rules

Transfers of funds must carry prescribed originator information under Regulation (EU) 2015/847, to prevent misuse of EU payment systems. Currency dealers must draw up purchase or sale slips for cash exchanges. Cash payments and gifts are, in principle, capped at EUR 3,000 for linked transactions (the cap does not apply between consumers), and the price of real estate may be settled only by transfer or cheque.

This article is a translation. Only the French version is authoritative. It is provided for information purposes and does not constitute legal advice.