Belgium’s Financial Compliance Legislation: Obligation for Reporting Entities to Adhere to Financial Sanctions

Overview

Reporting entities in Belgium are required to establish effective control systems to comply with financial sanctions under the country’s anti-money laundering (AML) law. This article discusses the obligations and requirements for reporting entities, the affected financial sanctions, and the entities responsible for overseeing the observance of these obligations.

What are Financial Sanctions?

Reporting entities, including financial institutions and non-financial professions, in Belgium are subject to the following regulations under Article 8 of the Belgian Law of September 18th, 2017 on the prevention of money laundering and terrorist financing (AML Law):

1. Defining and implementing comprehensive policies, procedures, and internal control measures for adhering to binding provisions related to financial embargoes:

   • Creating risk management models
   • Practicing customer acceptance with due diligence
   • Monitoring transactions
   • Maintaining records
   • Implementing internal controls
   • Adhering to fit-and-proper personnel measures

2. Educating staff and business associates:

   • Ensuring awareness and training on the necessary compliance measures

Which Reporting Entities are Affected?

The following entities are subject to these regulations if they fall under the Belgian Financial Sector Law (LBC) or are listed in Article 5 of the AML law:

• Banks
• Insurers
• Stockbrokers
• Non-financial professions like notaries, lawyers, estate agents, diamond merchants, and accountants

Which Financial Sanctions Apply?

The AML law targets money laundering, terrorist financing, and the proliferation of weapons of mass destruction. The obligation to develop a monitoring system applies to financial sanctions imposed under regimes against terrorism (e.g., national lists, IS/Al Qaida sanctions) or against the proliferation of weapons of mass destruction (e.g., North Korea sanctions).

Who Oversees the Observance of the Obligation?

The Belgian supervisory authorities responsible for AML monitoring ensure compliance with the requirement to define and implement a monitoring system for financial sanctions. Additionally, the Treasury plays a role in detecting infringements against financial sanctions and reporting violations.

Enhanced Due Diligence Measures for High-Risk Countries

Reporting entities are also responsible for defining a monitoring system for financial sanctions and practicing enhanced due diligence measures for high-risk countries identified by the Financial Action Task Force (FATF) or the European Union as having strategic shortcomings in the fight against money laundering, terrorism financing, or the proliferation of weapons of mass destruction.

Additional Resources

• Belgian Law of September 18th, 2017, on the prevention of the use of the financial system for the purposes of money laundering and terrorist financing and limitations to the use of cash
• National Bank of Belgium website on the obligation to define a control system enabling them to comply with financial sanctions
• FPS Finance website on the obligation to apply a high level of vigilance in respect of high-risk countries

Contact Information

Contact the Treasury at quesfinvragen.tf@minfin.fed.be for any assistance or additional questions related to financial sanctions in Belgium.