Belgium Steps Up Risk Assessment in Finance to Combat Money Laundering and Terrorism Financing
The National Bank of Belgium has highlighted the significance of a risk-based approach and overall risk assessment in combating money laundering and terrorist financing. This emphasis is crucial in complying with Article 7 of the Anti-Money Laundering Law, which requires financial institutions to adopt a risk-based approach to assess and mitigate risks associated with these threats.
Risk-Based Approach
Financial institutions must conduct an overall risk assessment, as required by Article 16-18 and Annexes I-III of the law. This involves:
- Identifying potential risks
- Assessing and mitigating those risks
- Monitoring and reporting suspicious transactions
The National Bank of Belgium has also implemented its own regulation, which requires financial institutions to conduct an overall risk assessment at both individual and group levels.
Supranational Risk Assessment
The European Commission has released a report assessing the risks of money laundering and terrorist financing affecting the internal market and relating to cross-border activities. The report emphasizes the importance of cooperation between:
- Financial institutions
- Supervisory authorities
- Law enforcement agencies
in combating these threats.
Sectoral Risk Assessment
A sectoral assessment of the risks of money laundering and terrorist financing has been conducted for Belgian financial institutions subject to the National Bank of Belgium’s supervision. This assessment identifies key risk factors, including:
- Customer due diligence
- Transaction monitoring
- Reporting suspicious transactions
Key Risk Factors to be Taken into Account
Several documents have been published by regulatory bodies and international organizations outlining key risk factors that should be taken into account when conducting a risk assessment. These include opinion papers, reports, and guidelines from:
- European Banking Authority (EBA)
- Financial Action Task Force (FATF)
- Other organizations
Reference Documents
Several reference documents have been published by regulatory bodies and international organizations providing guidance on risk-based approaches for various sectors, including:
- Securities
- Life insurance
- Payment institutions
These documents provide valuable insights into the risks associated with money laundering and terrorist financing and offer best practices for mitigating these threats.
Conclusion
The National Bank of Belgium’s emphasis on risk assessment in finance is a crucial step in combating money laundering and terrorist financing in Belgium. By adopting a comprehensive approach to risk assessment, financial institutions can better identify vulnerabilities and prevent these threats from materializing.