FSMA Belgium: The Impacts On Money Laundering

Money Laundering in Belgium

One of Europe’s wealthiest countries, Belgium has a highly developed financial landscape, hosting institutions and service providers from across the EU and the world. In order to manage the threat posed by financial crimes such as money laundering in Belgium and terrorism financing, the country implements a range of AML/CFT regulations. These impose record-keeping and reporting obligations on banks and other financial services providers that operate within its jurisdiction.

The Financial Services and Markets Authority (FSMA) is Belgium’s primary regulatory authority, tasked with protecting the country’s financial system and supervising AML/CFT compliance. With that in mind, financial institutions should understand the role of the FSMA in Belgium, and their responsibilities under Belgian AML/CFT law.

What is FSMA Belgium?

The FSMA was established on 1st April 2011 and replaced the Banking Finance and Insurance Commission (CBFA). An autonomous public institution, the FSMA in Belgium operates under the authority of the Belgian parliament, with members of its governance bodies serving in 6 year periods by Royal Decree. In creating the FSMA, Belgium’s government was seeking to ensure the ‘fair and orderly operation and the transparency’ of its financial markets: accordingly, the FSMA is responsible for supervising all financial service providers, products, and supplementary pensions in the country. The FSMA works with the National Bank of Belgium in its supervisory role in pursuit of the following six objectives: 

• The surveillance and supervision of Belgium’s financial markets and information distributed by financial institutions. 
• The supervision of institutional compliance with business rules and regulations.
• The supervision of financial products in Belgium. 
• The supervision of financial service providers and their intermediaries.
• The supervision of supplementary pension schemes.
• The improvement of Belgium’s financial education.

Conduct rules: In line with its supervisory objectives, the FSMA in Belgium issues conduct rules for all financial institutions operating in the country. The rules are intended to ensure fair and equitable treatment across the financial sector and guarantee that financial services and products meet certain safety standards.

What are the Belgium Money Laundering Regulations?

As a member of the European Union, Belgium is obliged to transpose the bloc’s Anti-Money Laundering Directives (AMLD) into its domestic legislation. Accordingly, Belgium implemented the Fifth Anti-Money Laundering Law (5AMLD) by amending its Law of 18 September 2017 on the prevention of money laundering and terrorist financing and on the restriction of the use of cash – and published the law in the Belgian Official Gazette. The law added to existing reporting, record-keeping, and monitoring requirements, but expanded the scope of AML/CFT laws to include cryptocurrency service providers, prepaid cards, and high value goods transactions, and introduced new beneficial ownership measures.  

The most recent directive, the Sixth Anti-Money Laundering Directive (6AMLD) came into effect in December 2020, with an implementation deadline of 3rd June 2021. 

Penalties: Noncompliance with Belgium money laundering regulations carries the risk of financial and criminal penalties. Individuals that are found guilty of the offence of money laundering face prison terms of up to 5 years and fines of up to €800,000 – while entities may be fined up to €1.6 million. 

Similarly, persons that are found guilty of AML compliance violations may be fined up to €5 million, while entities may be fined up to 10% of their previous year’s profits. Persons that impede AML investigations face fines of up to €5 million and 1-year imprisonment.

How Can Firms Comply with FSMA Belgium Regulations?

As a member of the Financial Action Task Force (FATF), Belgium requires its financial institutions to develop and implement risk-based AML/CFT compliance programs. This means that Belgian firms must conduct risk assessments of the money laundering threats that they face and deploy a compliance response proportionate to that risk. 

With that in mind, firms should implement an internal AML/CFT program to comply with FSMA Belgium that features the following measures:

• Customer due diligence: Firms in Belgium must be able to verify the identities of their customers in order to understand who they are and the nature of their business. Firms must also be able to establish beneficial ownership of customer entities. 
• Transaction monitoring: Firms should be able to detect financial behavior that could indicate customers are attempting to use their services to launder money. Unusually high volumes of transactions or unusual transaction patterns are all indicative of money laundering in Belgium. 
• Sanctions screening: Customers that are subject to economic sanctions present a higher AML/CFT risk. Accordingly, firms should screen customers against relevant international sanctions lists, including the EU’s consolidated list and the UNSC list. 
• PEP screening: Politicians and other elected officials pose a higher compliance risk since they may be able to use their status and influence to avoid AML controls. Firms should screen customers on an ongoing basis to establish their politically exposed person (PEP) status.