Financial Crime World

Belgian Financial Institutions: Fortifying Defenses Against Money Laundering and Terrorist Financing

Belgium, a prosperous European nation, is home to a variety of financial institutions and service providers from the EU and beyond. To protect this financial landscape from the threat of money laundering and terrorist financing, the Belgian government has instituted robust Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) regulations.

Prohibitions on Money Laundering

In Belgium, money laundering is a criminal offense, explicitly outlawed under the Law of January 11, 1993. Article 505 of the Penal Code states that this offense carries a maximum penalty of five years in prison.

In 2004, Belgian legislation adhering to Council Directive 2001/97/EC came into force, broadening the scope of money laundering predicate offenses beyond drug trafficking to include financing of terrorist acts or organizations. This was updated in 2010 with the European Union’s third anti-money laundering directive.

Regulatory Oversight

The oversight of Belgian financial institutions falls under three entities: the Belgian Banking and Finance Commission (CBFA), the Belgian Gaming Commission, and the Financial Services and Markets Authority (FSMA).

CBFA

The CBFA is responsible for money laundering and terrorism financing matters regarding financial institutions.

Belgian Gaming Commission

Casinos are subject to the Belgian Gaming Commission.

FSMA

The FSMA, established on April 1, 2011, is responsible for safeguarding the Belgian financial system and ensuring AML/CFT compliance. Its roles include:

  • Monitoring financial markets
  • Ensuring compliant institutional practices with regulations
  • Overseeing financial products
  • Monitoring financial service providers and their brokers
  • Focusing on financial education

Conduct Regulations and AML/CFT Regulations

Financial institutions operating in Belgium must adhere to the FSMA’s conduct guidelines, which uphold treatment equity, consistency, and stringent safety standards.

To tackle money laundering and terrorism financing concerns, Belgium implemented the Fifth Anti-Money Laundering Directive (5AMLD) in 2017. This expanded the scope of AML/CFT regulations to include:

  • Cryptocurrency service providers
  • Prepaid cards
  • High-value commodities transactions
  • Beneficial ownership measures

Penalties for Noncompliance

Penalties for noncompliance with Belgium’s AML/CFT regulations can result in both financial and criminal repercussions:

  • Individuals: A maximum penalty of five years in prison and fines of €800,000 for money laundering
  • Businesses: Fines of up to €1.6 million
  • Individuals violating AML compliance regulations: Fines of up to €5 million
  • Businesses violating AML compliance regulations: Up to 10% of their previous year’s earnings
  • Obstructing AML investigations: Penalties of €5 million along with a year of imprisonment

These stringent penalties reflect Belgium’s unwavering commitment to combatting financial crime and safeguarding its financial system.