Financial Crime World

Belgian Financial Regulator Cracks Down on Money Laundering and Terrorism Financing: What Businesses Need to Know

Belgium, known for its rich history and cultural influence, is taking a stand against financial crimes, including money laundering and terrorism financing. In 2021, the Belgian Financial Intelligence Unit (CTIF) recorded over 46,000 suspicious transactions, marking a 50% increase from the previous year [1]. To combat this growing threat, Belgium has fortified its regulatory framework and strengthened its financial oversight.

Adhering to EU AML/CFT Regulations

As a member of the European Union (EU), Belgium adheres to strict anti-money laundering (AML) and counter-financing of terrorism (CFT) regulations. Businesses looking to set up or expand into Belgium should familiarize themselves with the country’s AML framework:

Belgian AML Regulators: The Financial Services and Markets Authority (FSMA) and The CTIF

  1. The Financial Services and Markets Authority (FSMA): The FSMA is Belgium’s primary financial regulator, responsible for supervising financial products and services, enforcing financial conduct rules, and overseeing AML/CFT regulations. It collaborates with the National Bank of Belgium and the Federal Public Service Economy to conduct onsite inspections and demand documentation to verify AML/CFT compliance [2].
  2. The Financial Intelligence Unit (CTIF): In addition to the FSMA, Belgium also houses a Financial Intelligence Unit (CTIF), which collects and processes AML/CFT data, including Suspicious Transaction Reports (STRs), to aid in subsequent law enforcement investigations [3]. CTIF collaborates with international counterparts to streamline the investigation and prosecution of financial crimes.

Key AML Regulations in Belgium: The AML Law

Belgium’s primary AML legislation is the Law of 18 September 2017 on the Prevention of Money Laundering and Terrorist Financing, also known as the AML Law. This legislation sets out a risk-based regulatory framework for companies within Belgium’s jurisdiction and transposes the details of the EU’s Anti-Money Laundering Directives [4].

Complying with Belgium’s AML Law: Customer Risk Assessment and Monitoring

To ensure AML/CFT compliance, businesses in Belgium are required to conduct a risk assessment of individual customers [5]. This process involves establishing and verifying the identity of customers and building accurate risk profiles based on:

  • Customer due diligence measures: These procedures help establish and verify the identity of clients and assess individual risk levels.
  • UBO (Ultra-high net worth individual) verification: By ensuring transparency in corporate structures, we can prevent money launderers from hiding their identities behind shell companies or complex structures.
  • Sanctions and adverse media screening: Assessing the current and future risk posed by clients, including their designation on watchlists and sanctions lists, as well as their involvement in criminal activities or regulatory changes.

By implementing robust AML/CFT compliance measures and staying informed of regulatory changes, businesses can effectively mitigate financial crime risks in Belgium and other jurisdictions.

References

  1. Belgian Financial Intelligence Unit (CTIF), “Annual Report 2021.”
  2. Financial Services and Markets Authority (FSMA), “About FSMA.”
  3. Financial Intelligence Processing Unit (CTIF), “About CTIF.”
  4. Belgian Federal Public Service Finance, “Law of 18 September 2017 on the Prevention of Money Laundering and Terrorist Financing.”
  5. Financial Services and Markets Authority (FSMA), “Customer Due Diligence.”