Financial Crime World

Belgium Cracks Down on Financial Crimes: An Overview of AML Regulations and Enforcers in the Country

Amidst its reputation as a thriving European power, Belgium faces an escalating threat from financial crimes, including international money laundering and terrorism financing activities. In 2021, the country’s Financial Intelligence Unit (CTIF) reported an alarming increase of 50% in suspicious transactions compared to the previous year, totaling 46,000. To safeguard its economic system and contribute to the global anti-money laundering (AML) and counter-financing of terrorism (CFT) efforts, Belgium has established a robust regulatory framework and a dedicated financial regulator to ensure compliance. In this article, we will provide an overview of the key financial regulators, AML regulations, and compliance measures in Belgium to help you protect your business from potential risks.

Belgium’s Main Financial Regulators

The Financial Services and Markets Authority (FSMA) and the CTIF are the primary financial regulators in Belgium, playing pivotal roles in supervising AML/CFT regulations and combating financial crimes.

The Financial Services and Markets Authority (FSMA)

  • Established in 2011
  • Responsible for supervising financial products and services
  • Ensures fairness and transparency
  • Enforces AML/CFT regulations
  • Works with institutions such as the National Bank of Belgium (NBB) and the Federal Public Service Economy
  • Maintains a significant presence on the global financial stage through its membership in the European Securities and Markets Authority (ESMA) and other international financial organizations

The Financial Intelligence Unit (CTIF)

  • A part of Belgium’s efforts to adhere to the Financial Action Task Force (FATF) and EU directives
  • Serves as the Financial Intelligence Unit to collect, process, and analyze AML/CFT data
  • Provides law enforcement agencies with actionable intelligence
  • Coordinates with international counterpart FIUs to aid in cross-border financial crime investigations

Key AML Regulations in Belgium

The primary legislative framework governing AML and CFT measures in Belgium is the Law of 18 September 2017 on the Prevention of Money Laundering and Terrorist Financing, also known as the AML Law.

  • Transposes the details of EU Anti-Money Laundering Directives
  • Imposes risk-based AML/CFT requirements on firms operating within Belgium’s jurisdiction
  • Firms failure to comply with the AML Law can result in fines reaching up to €1,250,000 for non-financial companies and €5,000 or 10% of annual turnover for financial companies
  • Belgium is expected to implement the Markets in Crypto Assets (MiCA) regulation, which is scheduled to be introduced in 2024

Complying with Belgium’s AML Regulations

Firms operating in Belgium must conduct a risk assessment of individual customers to establish their level of risk and implement proportionate AML/CFT compliance measures.

Key compliance controls include:

  1. Customer due diligence: Verifying the identity of customers, building accurate risk profiles, and collecting necessary identifying documentation.
  2. Ultimate beneficial ownership: Ensuring transparency of corporate structures by verifying the true owners.
  3. Sanctions screening: Monitoring relevant watchlists, including politically exposed persons (PEP) lists, global sanctions lists, and adverse media sources for changes to customer status or involvement in risk factors.
  4. Adverse media screening: Scanning international data sources for risk indicators before confirmation by official sources, allowing firms to make decisions more quickly.

Conclusion

Belgium’s commitment to combating financial crimes is reflected in its strengthened regulatory framework, dedicated financial regulators, and risk-based compliance measures designed to safeguard its economy and contribute to global AML/CFT efforts. By adhering to the AML regulations discussed in this article, businesses can take appropriate measures to protect themselves and operate within a secure financial environment.