Belgium, one of Europe's most prosperous nations, boasts a robust financial landscape that accommodates institutions and service providers from across the European Union and around the world. To tackle the looming threat of financial crimes such as money laundering and terrorism financing, Belgium has instituted a set of Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) Regulations. These regulations lay down stringent record-keeping and reporting requirements, effectively guiding banks and other financial entities operating under its jurisdiction.
Money Laundering Prohibitions in Belgium
Money laundering is explicitly outlawed in Belgium by the Law of January 11, 1993. Article 505 of the Penal Code renders it a criminal offense, carrying a maximum penalty of five years' imprisonment. Belgium's domestic legislation, which incorporates Council Directive 2001/97/EC on preventive measures for the use of the financial system for money laundering, came into force in January 2004. This expansion encompassed a broader range of money laundering predicate offenses, extending beyond drug trafficking to include the financing of terrorist acts or organizations. Subsequently, the statute was updated in January 2010 to encompass the European Union's third anti-money laundering directive.
Regulatory Oversight
Belgian financial institutions are under the oversight of the Belgian Banking and Finance Commission (CBFA), which also extends its purview to exchange houses, stock brokerages, and insurance firms concerning money laundering and terrorism financing matters. Casinos, on the other hand, fall under the regulation of the Belgian Gaming Commission, while professions not regulated by the CBFA or other agencies are overseen by CTIF-CFI.
The apex regulatory body in Belgium is the Financial Services and Markets Authority (FSMA), entrusted with safeguarding the nation's financial system and ensuring AML/CFT compliance. Financial institutions operating in Belgium must be acutely aware of the FSMA's role and their obligations within the framework of Belgian anti-money laundering and counter-terrorist financing legislation.
The Role of the FSMA
Established on April 1, 2011, the FSMA was formed to replace the Banking Finance and Insurance Commission (CBFA). It operates as an autonomous public organization, reporting to the Belgian parliament, and is governed by Royal Decree. Members of its governance bodies serve six-year terms. The FSMA's primary mandate is to uphold the fair and orderly functioning and transparency of Belgium's financial markets. To achieve this, it collaborates closely with the National Bank of Belgium, working toward six key objectives:
- Monitoring and supervision of financial markets and information provided by financial institutions in Belgium.
- Ensuring institutional compliance with business norms and regulations.
- Oversight of financial products within Belgium.
- Supervision of financial service providers and their brokers.
- Monitoring supplemental pension plans.
- Advancement of financial education in Belgium.
Conduct Regulations
The FSMA issues conduct guidelines that apply to all financial institutions operating in Belgium, aligning with its regulatory objectives. These guidelines aim to ensure equitable and consistent treatment of financial services and products across the industry while also upholding stringent safety standards.
AML/CFT Regulations in Belgium
As a member of the European Union, Belgium is obligated to integrate the bloc's Anti-Money Laundering Directives (AMLD) into its national legislation. Consequently, Belgium amended its legislation on September 18, 2017, concerning the prevention of money laundering and terrorist funding, as well as cash usage restrictions, to incorporate the Fifth Anti-Money Laundering Directive (5AMLD). This amendment was published in the Belgian Official Gazette and broadened the scope of AML/CFT regulations to cover cryptocurrency service providers, prepaid cards, high-value commodities transactions, and additional beneficial ownership measures alongside the existing reporting, record-keeping, and monitoring obligations. The latest iteration, the Sixth Anti-Money Laundering Directive (6AMLD), came into force in December 2020, with a compliance deadline of June 3, 2021.
Penalties
Noncompliance with money laundering regulations in Belgium carries both financial and criminal repercussions. Individuals found guilty of money laundering face the risk of up to five years imprisonment and fines of up to €800,000, while businesses may encounter fines reaching up to €1.6 million.
Similarly, individuals found guilty of AML compliance violations may incur fines of up to €5 million, while businesses could face penalties amounting to 10% of their previous year's earnings. Those who obstruct AML investigations risk penalties of up to €5 million and a year of imprisonment. Belgium's stringent penalties underscore its commitment to combating financial crime and ensuring the integrity of its financial system.
