Financial Crime World

Belgium’s Robust Response to Financial Crimes: A Closer Look at Its AML/CFT Policies

Belgium, a financial hub in Europe, has enacted strict Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) regulations to safeguard its thriving financial sector from money laundering and terrorism financing.

Money Laundering Prohibitions

Under the January 11, 1993, Law, money laundering is explicitly outlawed in Belgium, with a maximum penalty of five years’ imprisonment for individuals (Article 505 of the Penal Code). The Belgian legislation broadened the scope of money laundering predicate offenses in 2004 to include financing terrorism acts or organizations, aligning with European Union’s Council Directive 2001/97/EC. The law was updated in 2010 to accommodate the EU’s third AML directive.

Regulatory Oversight

The Belgian Banking and Finance Commission (CBFA) is the primary regulatory body responsible for money laundering and terrorism financing matters in Belgium. Regulatory oversight extends to financial institutions such as banks, exchange houses, stock brokerages, insurance firms, casinos, and unregulated professions under the FCT (CTIF-CFI). The Belgian Financial Services and Markets Authority (FSMA) acts as the apex regulatory body, ensuring adherence to AML/CFT compliance.

Role and Mandate of the FSMA

Established in April 2011, the FSMA replaced the CBFA. This autonomous public organization reporting to the Belgian parliament and governed by Royal Decree focuses on maintaining the fair and orderly functioning and transparency of Belgium’s financial markets. Key objectives include:

  1. Monitoring financial markets
  2. Institutional compliance
  3. Product oversight
  4. Provider supervision
  5. Pension plans
  6. Financial education

The FSMA collaborates closely with the National Bank of Belgium in achieving these objectives.

Conduct Regulations and AML/CFT Regulations

The FSMA issues conduct guidelines for all financial institutions, maintaining consistency and adhering to stringent safety standards. In line with its mandate, these guidelines prevent inequitable treatment within the industry.

Belgium amended its legislation on September 18, 2017, to incorporate the Fifth Anti-Money Laundering Directive (5AMLD), expanding AML/CFT regulations to cover cryptocurrency service providers, prepaid cards, high-value commodities transactions, and beneficial ownership measures alongside existing reporting, record-keeping, and monitoring obligations. The Sixth Anti-Money Laundering Directive (6AMLD) was implemented in December 2020, with a compliance deadline of June 3, 2021.

Penalties for Noncompliance

Belgium imposes severe penalties for non-compliance with AML regulations. Individuals found guilty of money laundering face imprisonment for up to five years and fines of as much as €800,000. Businesses may incur fines reaching €1.6 million. Violations of AML compliance lead to fines of up to €5 million for individuals and penalties equivalent to 10% of the previous year’s earnings for businesses. Obstruction of AML investigations leads to fines of up to €5 million and a year of imprisonment, underscoring Belgium’s unwavering commitment to combating financial crime and maintaining the integrity of its financial system.