Financial Crime World

Belgian Banks Must Comply with Stringent Regulations on Outsourcing

Brussels, BELGIUM - A New Era in Banking Regulations

The Financial Services and Markets Authority (FSMA) has issued a comprehensive handbook outlining new guidelines for banks in Belgium regarding outsourcing. These regulations aim to ensure that banks maintain sufficient substance and do not become “empty shells” or “letterbox companies.” The guidelines come into effect on June 30, 2024.

Key Requirements

Banks must consider the proportionality principle when implementing outsourcing arrangements, taking into account the complexity of their activities and the risks involved. They must also distinguish between critical or important functions and other functions, with more stringent rules applying to the former.

The key requirements include:

  • Establishing an Outsourcing Register: Banks must maintain a register containing information on all outsourcing operations.
  • Arm’s-Length Remuneration: Third-party service providers must be remunerated at arm’s-length in intra-group contexts.
  • Review and Update: Banks must review their outsourcing policies and procedures against the new handbook.
  • Minimum Clauses in Agreements: Certain minimum clauses must be included in written agreements with third-party service providers.

Failure to Comply

Failure to comply with these regulations may result in regulatory action, including fines or even revocation of authorization. Banks must take immediate action to review and update their outsourcing arrangements to ensure compliance with the FSMA’s guidelines.

Implementation Timeline

Banks have until June 30, 2024, to implement these new regulations. The FSMA will be monitoring compliance closely and will provide guidance and support to banks throughout this process.

In summary, Belgian banks must take immediate action to comply with the FSMA’s new guidelines on outsourcing to avoid regulatory consequences. By understanding the key requirements and implementation timeline, banks can ensure a smooth transition to compliance.