Financial Crime World

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Belgium’s Money Laundering Techniques Exposed: Virtual IBANs and Hawala System

In a recent shocking revelation, the Belgian Financial Information Processing Unit (CTIF) has identified two new money laundering techniques being used in the country. According to Chief Compliance Officer at LinkCy, Baptiste Forestier, these methods are particularly effective for internationally active companies looking to conceal large volumes of transactions.

Virtual IBANs: A New Money Laundering Technique

The first technique involves the use of virtual International Bank Account Numbers (IBANs), which are linked to real bank accounts. These virtual IBANs can be assigned to each customer, simplifying accounting and allowing companies to classify transactions based on currency, services, products, or geographical areas.

  • This system presents a significant risk of money laundering due to its international nature, ultra-fast issuance, and ability to mask the root account.
  • The anonymity and lack of administrative trace make it an attractive option for money launderers and terrorists.

The Hawala System: A Time-Tested Money Laundering Technique

The second technique is the hawala system, which has been around for centuries in India and China. This unregulated transfer system allows traders to send funds between countries with minimal administrative trace.

  • The main reasons for using hawala are:
    • Low bank charges
    • Speed of exchange
    • Difficulties opening a traditional bank account
    • Lack of confidence in the banking system
  • Hawala “bankers” often mix cash with legitimate business proceeds, making it difficult to detect.
  • Despite modern anti-money laundering (AML) tools, the hawala system is still thriving today, with annual volumes in the billions of dollars.

Conclusion: The Need for Increased Vigilance

These revelations highlight the need for increased vigilance in the AML, AFC, and Compliance sectors to combat money laundering techniques in Belgium. Forestier’s weekly insights into global money laundering techniques can be found on AML Intelligence, and he has also launched The Laundromat Podcast, available online.