NBB Warns Financial Institutions to Review Alert Thresholds Based on Business Relationship Elements
The National Bank of Belgium (NBB) has issued a warning to financial institutions to review and update their alert thresholds for detecting atypical transactions based on the elements of the business relationship.
Importance of Reviewing Alert Thresholds
According to Article 17 of the Anti-Money Laundering Regulation, financial institutions must not rely solely on the number of transactions or amount of transactions when setting their alert thresholds. Instead, they must take into account the nature, volume, and classification of customers, as well as their knowledge of the business relationship.
Consequences of Non-Compliance
The NBB emphasized that failure to comply with this requirement may lead to inefficient or ineffective detection systems, which could ultimately compromise the fight against money laundering and terrorist financing (ML/FT).
Monitoring Effectiveness
In addition, the NBB highlighted the importance of periodically monitoring the effectiveness of the system used by financial institutions for detecting atypical transactions. Financial institutions must address any deficiencies identified in this regard as soon as possible.
Procedure for Reporting Atypical Transactions to AMLCO
The NBB also reiterated the importance of having an efficient procedure for reporting atypical facts and transactions to the Anti-Money Laundering Compliance Officer (AMLCO).
- Reports must be sent as soon as possible.
- Include the reasons why the transaction is considered atypical.
- Be documented to allow for pre-analysis and analysis by the AMLCO.
Protection of Reporting Persons
The NBB emphasized the importance of protecting persons who internally report atypical facts and transactions from any threats or hostile action.
- According to Article 36 of the Anti-Money Laundering Law, financial institutions must take reasonable measures to ensure that their staff members, agents, and distributors are protected from being exposed to any threats or hostile action.
- The regulator recommended that financial institutions put in place measures to ensure that the identity of persons who have reported atypical facts and transactions is known only by those who need it for performing their duties in the field of AML/CFT.
Conclusion
In conclusion, the NBB emphasized the importance of reviewing alert thresholds based on business relationship elements, having an efficient procedure for reporting atypical transactions to the AMLCO, and protecting reporting persons from any threats or hostile action. Financial institutions must comply with these requirements to ensure effective detection and reporting of atypical transactions, and ultimately, to prevent ML/FT activities.