Financial Crime Prevention Best Practices in Belgium
Understanding the Obligation to Monitor Financial Sanctions
In Belgium, financial institutions and certain non-financial professions are required to implement effective policies and procedures to prevent money laundering and terrorist financing. One of the key provisions of the law on the prevention of money laundering (LBC Law) is the obligation to define a control system enabling them to comply with financial sanctions.
Key Provisions of Article 8 of the LBC Law
According to Article 8 of the LBC Law, reporting entities must develop internal control policies, procedures, and measures to ensure compliance with binding provisions relating to financial embargoes. This includes:
- Risk Management Models: Developing models to identify and assess potential risks related to financial sanctions.
- Customer Acceptance: Implementing measures to ensure that customers are not involved in activities prohibited by financial sanctions.
- Due Diligence Measures: Conducting thorough due diligence on customers, including verifying their identity and checking for any adverse media reports.
- Suspicious Transaction Reporting: Reporting any suspicious transactions to the competent authorities.
- Record-Keeping: Maintaining accurate and detailed records of all transactions.
Obligation Applicable Entities
The obligation applies to entities subject to the LBC Law, primarily financial institutions such as:
- Banks
- Insurers
- Stockbrokers
- Notaries
- Lawyers
- Estate agents
- Diamond merchants
- Accountants
Enhanced Due Diligence Measures for High-Risk Countries
While both provisions aim to prevent money laundering and terrorist financing, they concern different obligations:
- The obligation to define a monitoring system enabling them to comply with financial sanctions targets individuals and entities involved in the financing of terrorism or the proliferation of weapons of mass destruction.
- Enhanced due diligence measures for high-risk countries aim to exercise greater vigilance in business relationships and transactions with natural persons, legal entities, and financial institutions established in countries identified as having strategic shortcomings in the fight against money laundering and terrorist financing.
Compliance Monitoring
Compliance with these obligations is monitored by supervisory authorities exercising AML monitoring on reporting entities. Additionally, the Treasury is responsible for enforcing compliance with financial sanctions and reporting any infractions.
Seeking Guidance
Reporting entities can seek guidance from the Treasury by contacting quesfinvragen.tf@minfin.fed.be or visiting the National Bank of Belgium’s website for information on the obligation to define a control system enabling them to comply with financial sanctions (Article 8 of the AML Law).