Financial Crime World

Belgium Cracks Down on Money Laundering with Robust Regulatory Framework and Stringent AML Laws

The prosperous European country of Belgium, renowned for its rich culture and political influence, is simultaneously tackling an escalating threat of financial crimes, including money laundering and terrorism financing. In 2021 alone, the Belgium Financial Intelligence Unit (FIU) recorded an alarming 50% surge in suspicious transactions, reaching a total of 46,000. To safeguard its economy and contribute to global anti-money laundering (AML) and countering the financing of terrorism (CFT) initiatives, Belgium has put in place a comprehensive regulatory framework and established strong financial regulators to oversee compliance.

This article provides an overview of Belgium’s AML regulatory landscape, highlighting key regulators, regulations, and penalties. For businesses looking to enter or expand in Belgium, this information is crucial to understand the implications of the country’s vigorous AML regulations and take necessary steps to protect their organizations from financial risks.

Belgium Regulators and AML Enforcement

Belgium’s primary financial regulator is the Financial Services and Markets Authority (FSMA). Established in 2011 and replacing the Banking Finance and Insurance Commission (CBFA), the FSMA aims to consolidate regulatory oversight of Belgium’s financial markets, ensuring transparency, fairness, and orderly operations. Some of its primary responsibilities include:

  • Supervision of financial products and services
  • Compliance with financial conduct rules and AML/CFT regulations
  • Surveillance of financial markets and distributed financial information
  • Financial education

Working closely with the National Bank of Belgium (NBB) and the Federal Public Service Economy, the FSMA conducts onsite inspections and requests documents to verify AML/CFT compliance. Violations can result in warnings, business prohibitions, and significant financial penalties.

Another essential entity within Belgium’s AML framework is the Financial Intelligence Processing Unit (CTIF). This Financial Intelligence Unit collects, processes, and analyses suspicious transaction reports (STR) and other relevant information to provide intelligence for law enforcement investigations. Collaborating with international counterpart organizations, the CTIF aids in the investigation and prosecution of financial crimes.

Key Regulations and Penalties under Belgian AML Laws

Belgium’s primary AML legislation is the Law of 18 September 2017 on the Prevention of Money Laundering and Terrorist Financing, commonly known as the “AML Law”. Aligning with European AML Directives, this legislation mandates that businesses operating within Belgium adhere to risk-based AML/CFT regulations. Failure to comply can lead to severe financial penalties – up to €1,250,000 for non-financial companies and €5000 or 10% of annual turnover (whichever is greater) for financial institutions.

With the release of new AMLDs, the Belgian government updates the AML Law accordingly to ensure the most up-to-date regulatory requirements. For example, the Sixth Anti-Money Laundering Directive introduced a harmonized list of money laundering predicate offenses and expanded the definition of money laundering to include aiding and abetting.

How to Comply with Belgium’s AML Law

Belgium’s risk-based AML/CFT requirements mandate that businesses implement comprehensive measures to determine individual customer risk levels and establish proportionate compliance measures. Key AML/CFT controls for Belgian businesses include:

  1. Customer due diligence (CDD) measures, such as establishing and verifying customer identities, and building accurate risk profiles.
  2. Ultimate beneficial ownership (UBO) verification to uncover hidden ownership structures used by money launderers.
  3. Customer screening against relevant watchlists, including politically exposed persons (PEPs) and global sanctions lists, and adverse media sources.
  4. Ongoing PEP and sanctions list screening.

Adhering to Belgium’s AML regulations is crucial to maintaining business operations and reputation in a global financial landscape where regulatory requirements change frequently. Firms requiring AML compliance solutions should focus on platforms capable of real-time monitoring of global data sources, ensuring the ability to keep pace with regulatory changes and minimizing false-positive alerts.