Financial Crime World

Belgium’s Financial Institutions Under Scrutiny: Compliance Audits a Must for AML/CTF Regulations

As part of efforts to combat money laundering and terrorism financing (ML/TF), Belgium’s financial intelligence processing unit, CTIF-CFI, and the Financial Services and Markets Authority (FSMA) are keeping a close eye on financial institutions’ adherence to anti-money laundering (AML) laws.

Compliance with AML Regulations

For regulated entities in Belgium, compliance with AML regulations is crucial. Audits play a vital role in ensuring that these obligations are met. To comply with AML/CTF regulations, obliged entities must implement internal control measures, policies, and procedures that cover:

  • Risk management
  • Customer due diligence
  • Suspicious activity reporting
  • Record-keeping
  • Internal control
  • Management of compliance with AML Law requirements

This includes:

  • Designating a person in charge of directing compliance
  • Establishing mechanisms for reporting violations anonymously
  • Conducting an overall risk assessment
  • Maintaining records of client and transaction due diligence

Customer Due Diligence

Obliged entities must also conduct customer due diligence, including:

  • Identifying and verifying the identity of customers
  • Locating and confirming the legitimacy of beneficial owners and customer agents
  • Evaluating the features of clients and the goal and planned nature of working relationships

Additionally, they must take extra precautions when dealing with:

  • Politically exposed individuals (PEPs)
  • Their family members
  • People who are near them

Reporting Suspicious Transactions

Reporting suspicious transactions is another critical aspect of AML/CTF regulations in Belgium. Obliged entities must notify CTIF-CFI if they know, suspect, or have good reason to suspect that a transaction is connected to ML/TF, regardless of whether it involves cash or electronic funds transfers. Entities must also report suspicious transactions that occur through representatives such as agents or distributors, even if the transactions are conducted in another EU Member State.

Prioritizing AML/CTF Compliance

In light of these regulations, financial institutions in Belgium must prioritize AML/CTF compliance and conduct regular audits to ensure that they are meeting their obligations. Failure to comply with these regulations can result in severe consequences, including fines and reputational damage.

By prioritizing AML/CTF compliance and conducting regular audits, financial institutions in Belgium can minimize the risk of non-compliance and maintain a strong reputation in the industry.