Belgium Cracks Down on Financial Crimes: An In-depth Look at the FSMA, CTIF, and AML Law

Amidst Belgium’s standing as a prosperous and influential European power, the country confronts an escalating threat of financial crimes, such as money laundering and terrorism financing. In the year 2021 alone, the Belgian Financial Intelligence Unit (FIU) recorded a staggering 46,000 suspicious transactions, which represents a 50% surge compared to the previous year. To counterbalance this threat and contribute to international efforts to combat money laundering and terrorist financing, the Belgian government has fortified its regulatory framework. In this article, we provide an overview of crucial Belgian regulatory entities and legislation.

Belgian AML Regulators

The Financial Services and Markets Authority (FSMA)

The FSMA is the primary financial regulator in Belgium, having replaced the Banking Finance and Insurance Commission (CBFA) in 2011. Its responsibilities include:

• Supervising financial products and services: Including pension schemes.
• Enforcing financial conduct rules and AML/CFT regulations.
• Surveilling markets and distributing financial information: To ensure fair and transparent markets.
• Promoting financial education: To empower customers and investors.

The FSMA collaborates with the National Bank of Belgium (NBB) and the Federal Public Service Economy in its supervisory role. It possesses the power to conduct on-site inspections and request documents to ensure AML/CFT compliance. Non-compliance may result in warnings, business prohibitions, or significant financial penalties.

The Financial Intelligence Processing Unit (CTIF)

In accordance with the Financial Action Task Force (FATF) and EU directives, Belgium has also established a financial intelligence unit (FIU), known as the CTIF. The CTIF gathers and processes AML/CFT data, such as suspicious transaction reports (STR), to provide critical intelligence for subsequent law enforcement investigations. The CTIF also cooperates with counterpart FIUs abroad to facilitate the investigation and prosecution of financial crimes.

Belgian Key AML Regulations

The Belgian AML Law

Belgium’s main AML/CFT legislation, referred to as the “AML Law,” is the Law of 18 September 2017 on the Prevention of Money Laundering and Terrorist Financing. This law transposes the EU’s Anti-Money Laundering Directives (AMLDs) and outlines a risk-based AML/CFT framework for firms operating within Belgium’s jurisdiction. As new AMLDs are issued, the Belgian government updates the AML law to include the latest regulatory details.

Penalties for non-compliance with the AML Law may reach up to €1,250,000 for non-financial companies and €5,000 or 10% of annual turnover (whichever is greater) for financial companies.

How to Comply with Belgium’s AML Law

To comply with Belgium’s AML Law, firms must adhere to risk-based AML/CFT requirements:

1. Customer due diligence (CDD): Verifying the identities of customers and establishing risk profiles.
2. Ultimate beneficial ownership (UBO) verification: Confirming the true ownership of corporate structures.
3. Customer screening: Against relevant watchlists, including politically exposed persons (PEPs) and global sanctions lists, as well as adverse media sources.
4. Ongoing screening: To reflect changes in customer statuses.
5. Risk-based transaction monitoring: Identifying and flagging potentially suspicious transactions.

In conclusion, the Belgian regulatory landscape governing financial crimes is comprehensive and stringent. Firms must remain diligent and comply with Belgium’s AML/CFT regulations to protect their businesses and contribute to global financial security.