Financial Crime World

Belgium’s Battle Against Financial Crimes: AML/CFT Regulations and Enforcement

Belgium, a prosperous nation in Europe’s economic landscape, is attractive to financial institutions and service providers from the EU and beyond. However, the financial sector’s prosperity brings potential risks, primarily money laundering and terrorism financing. In response, Belgium has implemented robust Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) Regulations to safeguard its financial system.

Money Laundering Outlawed

Belgium’s stance against money laundering is unequivocal. Money laundering is explicitly banned under the Law of January 11, 1993, with Article 505 of the Penal Code imposing a maximum penalty of five years’ imprisonment. The Belgian legislature expanded this law in 2004 to incorporate Council Directive 2001/97/EC’s provisions, extending potential money laundering predicate offenses beyond drug trafficking to include financing of terrorist acts or organizations. The law was updated again in 2010 to align with the European Union’s third anti-money laundering directive.

Regulatory Oversight

Financial institutions in Belgium face regulatory scrutiny from multiple quarters:

  1. The Belgian Banking and Finance Commission (CBFA) oversees banks, exchange houses, stock brokerages, and insurance firms regarding money laundering and terrorism financing.
  2. Casinos fall under the Belgian Gaming Commission’s jurisdiction.
  3. Unregulated professions come under CTIF-CFI’s oversight.
  4. However, the apex regulatory body is the Financial Services and Markets Authority (FSMA), tasked with safeguarding Belgium’s financial system and ensuring AML/CFT compliance.

Key Role of FSMA

Established in 2011, the FSMA took over from the Banking Finance and Insurance Commission (CBFA), overseeing Belgium’s financial markets as a public, autonomous organization reporting to the Belgian parliament. Its governing bodies serve six-year terms, and the FSMA’s primary mandate is upholding market fairness, order, and transparency through collaboration with the National Bank of Belgium. The FSMA achieves this objective via six key objectives:

  1. Monitoring financial markets
  2. Ensuring regulatory compliance
  3. Overseeing financial products
  4. Supervising financial service providers
  5. Monitoring supplementary pension plans
  6. Enhancing financial literacy in Belgium

Conduct Regulations and AML/CFT Measures

Financial institutions in Belgium must comply with the FSMA’s conduct guidelines and AML/CFT regulations:

  • The FSMA provides clear, consistent guidelines to maintain industry fairness.
  • AML/CFT regulations include reporting, record-keeping, and monitoring obligations.
  • Belgium adopted the Fifth Anti-Money Laundering Directive (5AMLD) in 2017, incorporating regulations regarding cryptocurrency service providers, prepaid cards, high-value commodities transactions, and enhanced beneficial ownership measures.
  • The Sixth Anti-Money Laundering Directive (6AMLD) came into force in late 2020, with a compliance deadline of June 2021.

Penalties for Noncompliance

Ignoring AML/CFT regulations carries severe consequences for individuals and businesses:

  • Money launderers risk up to five years of imprisonment and €800,000 fines.
  • Noncompliance with AML/CFT obligations exposes one to €5 million fines for individuals and €1.6 million for businesses.
  • Those who obstruct investigations face fines of €5 million and a year of imprisonment.

Belgium’s stringent penalties underscore its commitment to fighting financial crime and safeguarding the financial system’s integrity.