Financial Crime World

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Belgium Tightens Screws on Banking Regulations to Combat Financial Crime

In a bid to bolster the country’s financial system against money laundering and terrorist financing, Belgium has stepped up its banking regulations. The move is aimed at enhancing the integrity of the sector and protecting consumers from illicit activities.

The Challenges Ahead

With the EU’s Anti-Money Laundering (AML) Directives IV, V, and VI in place, as well as national implementing regulations, the European Central Bank’s integration of ML and TF-related risks into its Supervisory Review and Evaluation Process, and guidelines from the Basel Committee on Banking Supervision, banks in Belgium face an increasingly complex regulatory landscape.

Data Quality and Tools: A Key Concern

The detection of money laundering and terrorist financing relies heavily on data quality. With a vast amount of information coming from:

  • Customer identification and verification
  • Customer segmentation
  • Transactions
  • Third-party sources

banks must ensure that their IT systems and applications can effectively manage this data.

Operational Burden: A Growing Concern

Know Your Customer (KYC) obligations require significant resources to process client files, with periodic reviews adding to the burden. Client outreach requests place a heavy load on front-office staff, while compliance teams struggle to develop suitable policies and procedures, monitor high-risk customers and products, and fulfill reporting obligations.

Expertise and Skills: A Growing Shortage

Finding experienced staff in KYC teams can be challenging, leading to bottlenecks, delays, and backlogs when key personnel leave. High-risk products and industries, such as private banking and correspondent banking, require even stricter AML monitoring and reporting requirements.

Reputational Risk: A Direct Impact on Financial Institutions

Accusations of money laundering or terrorist financing can lead to significant fines and damage a bank’s reputation. Consumers are increasingly demanding streamlined onboarding processes, and inefficient KYC procedures can undermine relationships with loyal clients.

How PwC Can Help

PwC has extensive experience in enhancing KYC processes and building robust AML/CTF frameworks for financial institutions. Our services include:

  • Developing strong AML/CTF operating models that align with a bank’s business and client base
  • Drafting and optimizing operational policies and procedures
  • Providing KYC analysts and subject matter experts
  • Performing client outreach and quality assurance
  • Developing and implementing KYC tooling

By partnering with PwC, banks in Belgium can ensure they are well-equipped to navigate the complex regulatory landscape and protect their reputation against financial crime.