Financial Crime World

Title: Belgium Cracks Down on Money Laundering and Terrorist Financing: An Overview of Financial Crime Prevention Measures

Belgium, like many other countries, faces the global threat of money laundering and terrorist financing. The Belgian government has strengthened prevention measures through various legislations and international cooperation. This article provides an overview of money laundering and terrorist financing, how criminal organizations operate, the economic scale of these crimes, legal provisions for combating them, preventive measures for financial professionals, right and protections for reporting persons, confidentiality and data protection, the role of the Financial Intelligence Processing Unit (CTIF-CFI), sanctions for non-compliance, and restrictions on cash payments.

Money Laundering and Terrorist Financing: An Overview

Money laundering and terrorist financing are global threats to the financial system and national security.

  • Money laundering is the process of introducing criminal money into the formal financial system from illicit activities.
  • Terrorist financing involves collecting and transferring funds for terrorist activities, often disguised to avoid detection.

Criminal Organisations: Operation and Processes

Criminal organisations’ primary goals are:

  • Money laundering: Concealing the origin of tainted funds
  • Terrorist financing: Hiding the illegal destination of funds

The processes for both involve:

  • Placing: Introducing criminal funds into the formal financial system
  • Layering: Disguising the origin of tainted funds
  • Integration: Reintroducing the money into the economy as clean funds

For terrorist financing:

  • Placement: Collecting and disguising funds
  • Layering: Moving funds between accounts and jurisdictions

Economic Scale of Money Laundering and Terrorist Financing

Global proceeds of money laundering and terrorist financing range from €400 billion to €1 trillion yearly.

  • 2.5% to 5% of the world’s Gross Domestic Product
  • Significant challenge for financial systems and law enforcement agencies
  • Belgium joined the Financial Action Task Force (FATF) in 1989
  • EU adopted several directives, Belgium implemented the Act of 18 September 2017 on the Prevention of Money Laundering and Terrorist Financing and Restricting the Use of Cash (ML/TF Act)

Who is Subject to the ML/TF Act?

Applies to everyone involved in financial transactions and professionals in specific sectors like:

  • Financial leasing
  • Banking
  • Insurance
  • Real estate
  • Diamond trading
  • Art and antiques

Preventive Measures for Financial Professionals

  1. Conduct thorough customer due diligence
  2. Keep records
  3. Report suspicious transactions to the CTIF-CFI
  4. Take additional measures for high-risk transactions

Rights and Protections for Reporting Persons

  1. Protection against threats and acts of aggression
  2. Criminal immunity
  3. Civil immunity
  4. Disciplinary immunity
  5. Confidentiality when reporting to Public Prosecutor or foreign bodies

Confidentiality and Data Protection

Members of the CTIF-CFI and law enforcement agencies are bound by professional secrecy.

Role of the CTIF-CFI

  1. Process, analyze, and respond to reports of suspicious transactions
  2. Prevent suspicious transactions
  3. Request Public Prosecutor to take further action

Sanctions for Non-Compliance

  • Administrative fines: €250,000 to €1,250,000 for non-financial professions and up to 10% of the annual net turnover for financial professions
  • Criminal charges

Restrictions on Cash Payments

Belgium implemented restrictions on cash transactions to maintain financial transparency.

Monitoring Compliance and Penalties

Various Belgian authorities monitor compliance with the ML/TF Act and implement applicable penalties.

  • Violators face administrative fines, administrative and criminal charges, and public disclosure of non-compliance.

In conclusion, the Belgian authorities enacted significant measures against money laundering and terrorist financing, providing a secure financial environment for citizens and businesses.