The Essentials of AML Compliance in Belgium

Anti-Money Laundering (AML) compliance is a critical obligation for financial institutions and businesses operating in Belgium. As a member of the European Union, Belgium adheres to EU directives on AML, incorporating them into its national legal framework. The country has a robust regulatory structure designed to combat financial crime, money laundering, and terrorist financing, requiring businesses to implement stringent measures to detect and prevent illicit financial activities.

This guide provides a complete overview of AML compliance in Belgium, covering key regulations, reporting requirements, enforcement measures, and best practices for businesses to remain compliant. Whether you’re a financial institution, a real estate agency, or a virtual asset service provider, understanding AML obligations is essential for mitigating risks and avoiding severe penalties.

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The Regulatory Landscape of AML in Belgium

Belgium’s Anti-Money Laundering (AML) framework is a combination of domestic legislation and European Union (EU) directives, designed to combat financial crime, money laundering, and terrorist financing. Belgian businesses, especially those in financial services and other high-risk sectors, must adhere to strict compliance obligations, including due diligence, transaction monitoring, and reporting suspicious activities.

The regulatory framework is enforced by multiple bodies, including Belgium’s Financial Intelligence Unit (CTIF-CFI) and the Financial Services and Markets Authority (FSMA). Compliance failures can result in severe penalties, including fines, licence revocations, and criminal prosecution.

Belgium's AML laws are continually evolving to align with EU directives, and the upcoming establishment of the EU Anti-Money Laundering Authority (AMLA) is expected to further standardise compliance requirements across EU member states.

The Anti-Money Laundering Act (AML Act)

The Belgian Anti-Money Laundering Act is the primary national law governing AML compliance. It transposes EU directives into Belgian law, providing the legal framework for preventing money laundering and terrorist financing. The most recent amendments align Belgium’s regulations with the 6th EU AML Directive (6AMLD), introducing:

• Stronger criminal penalties for individuals and businesses involved in money laundering.
• Extended liability, making not only individuals but also corporate entities criminally responsible for AML violations.
• Expanded predicate offences, covering a wider range of crimes that could be linked to money laundering activities.

Belgian businesses subject to AML regulations must establish robust internal policies, conduct customer due diligence (CDD), and implement enhanced due diligence (EDD) for high-risk clients. The law also mandates businesses to report suspicious transactions to CTIF-CFI without tipping off the customer.

Failure to comply with the AML Act can result in significant fines, reputational damage, and legal consequences.

The Financial Intelligence Processing Unit (CTIF-CFI)

The Cellule de Traitement des Informations Financières (CTIF-CFI) is Belgium’s Financial Intelligence Unit (FIU), responsible for:

• Receiving and analysing suspicious activity reports (SARs) submitted by banks, financial institutions, and other regulated entities.
• Investigating potential money laundering and terrorist financing cases before referring them to law enforcement.
• Collaborating with international organisations, such as Europol and FATF, to combat cross-border financial crimes.

Under Belgian law, businesses must file a Suspicious Transaction Report (STR) with CTIF-CFI if they detect potential money laundering activities. Examples of suspicious activities include:

• Unusual transaction patterns, such as multiple large cash deposits.
• Structuring transactions to avoid reporting thresholds.
• Transactions involving high-risk jurisdictions or politically exposed persons (PEPs).

Once CTIF-CFI identifies a high-risk transaction, it can freeze assets and refer cases to law enforcement authorities for further investigation. Non-compliance with reporting obligations can lead to significant fines, enforcement actions, and reputational damage.

EU Directives and Regulations

As an EU member state, Belgium follows European AML directives, which set minimum requirements for combating money laundering and terrorist financing across all member states. Belgium’s AML laws have been updated to align with:

4th AML Directive (2015/849)

• Introduced a risk-based approach to AML compliance, requiring businesses to assess and manage financial crime risks.
• Strengthened customer due diligence (CDD) procedures.
• Enhanced transparency on beneficial ownership through Ultimate Beneficial Owner (UBO) registers.

5th AML Directive (2018/843)

• Expanded AML rules to virtual assets, requiring cryptocurrency exchanges and wallet providers to comply with KYC and reporting requirements.
• Lowered the threshold for prepaid cards to reduce anonymity in financial transactions.
• Increased transparency for high-value transactions in sectors such as real estate and luxury goods.

6th AML Directive (2018/1673)

• Strengthened criminal penalties for money laundering, imposing a minimum four-year prison sentence for offenders.
• Extended corporate liability, holding legal entities accountable for money laundering offences.
• Harmonised AML laws across EU countries, ensuring that AML regulations are applied consistently.

The Future: EU’s AMLA (Anti-Money Laundering Authority)

The EU Anti-Money Laundering Authority (AMLA) is expected to launch in 2025, centralising AML enforcement across all EU member states. AMLA’s role will include:

• Direct supervision of high-risk financial institutions.
• Coordinating AML investigations across national FIUs.
• Ensuring uniform application of AML regulations across Europe.

Once AMLA is established, Belgian businesses may face additional compliance requirements, particularly those operating across multiple EU jurisdictions.

Who Needs to Comply with AML Regulations in Belgium?

Belgian AML laws apply to a wide range of businesses and professionals, including:

Financial Institutions

• Banks
• Credit institutions
• Payment service providers
• Insurance companies
• Investment firms

Designated Non-Financial Businesses and Professions (DNFBPs)

• Real estate agents
• Notaries and lawyers (when facilitating transactions)
• Accountants and auditors
• Casinos and gambling operators

Virtual Asset Service Providers (VASPs)

Cryptocurrency exchanges, wallet providers, and other VASPs must comply with AML regulations, including customer due diligence (CDD) and transaction monitoring.

High-Value Dealers

Businesses dealing in luxury goods, precious metals, art, or vehicles above a certain threshold must implement AML measures.

Failure to comply can result in severe penalties, including fines, license revocations, and even criminal prosecution.

Key AML Compliance Requirements in Belgium

Customer Due Diligence (CDD)

Belgian law mandates that businesses perform Know Your Customer (KYC) checks to verify customer identities and assess potential risks. This includes:

• Standard CDD: Required for most transactions and involves verifying identity and assessing risk.
• Enhanced Due Diligence (EDD): Applied to high-risk customers, such as politically exposed persons (PEPs) or individuals from high-risk jurisdictions.
• Simplified Due Diligence (SDD): Allowed for low-risk customers under specific conditions.

Businesses must also perform ongoing monitoring of customer transactions to detect unusual patterns.

Suspicious Activity Reporting (SAR)

If a business suspects money laundering or terrorist financing, it must file a Suspicious Transaction Report (STR) with the CTIF-CFI. Businesses must report suspicious transactions immediately and refrain from tipping off customers.

Record-Keeping Obligations

Companies must retain AML records for at least 10 years, including:

• Customer identification documents
• Transaction records
• Internal AML policies and risk assessments

Internal AML Policies and Training

Organisations must implement a risk-based AML programme, including:

• A designated AML compliance officer
• Internal policies for risk assessment and mitigation
• Employee training programmes on AML obligations

Beneficial Ownership Transparency

Belgium maintains a UBO (Ultimate Beneficial Owner) Register, where companies must disclose individuals who ultimately own or control them. This helps prevent shell companies from being used for illicit activities.

AML Enforcement and Penalties in Belgium

Regulatory Bodies

• FSMA (Financial Services and Markets Authority): Regulates financial institutions and enforces compliance.
• CTIF-CFI: Investigates and reports suspicious transactions to law enforcement.
• National Bank of Belgium (NBB): Supervises banks and other financial entities.

Penalties for Non-Compliance

Failure to comply with AML regulations can result in:

• Fines up to €5 million for financial institutions
• Administrative sanctions, including licence revocations
• Criminal prosecution, with penalties including imprisonment

Belgian authorities also cooperate with Europol and international organisations to combat cross-border money laundering.

Best Practices for AML Compliance

 Implement a Risk-Based Approach

A risk-based approach (RBA) is a fundamental principle in AML compliance, ensuring that resources are allocated efficiently to areas of highest risk. Instead of applying the same level of scrutiny to all customers and transactions, businesses should assess risks based on various factors, including customer profiles, transaction patterns, geographic locations, and business relationships.

Key Steps in a Risk-Based AML Framework:

• Customer Risk Assessment: Businesses should categorise customers based on risk levels—low, medium, or high. Factors such as the customer’s occupation, source of funds, and involvement in high-risk industries (e.g., gambling, cryptocurrency, or cash-intensive businesses) should be considered.
• Transaction Risk Monitoring: Companies should implement transaction monitoring systems that flag unusual activities, such as large cash deposits, frequent international transfers, or transactions inconsistent with a customer’s profile.
• Geographical Risk Evaluation: Transactions involving high-risk jurisdictions—such as those with weak AML regulations or high levels of corruption—require enhanced due diligence (EDD). Businesses should refer to lists published by organisations like the Financial Action Task Force (FATF) to assess jurisdictional risks.
• Ongoing Risk Reassessment: A customer’s risk profile can change over time. Companies must continuously monitor transactions and update risk assessments accordingly.

By implementing an RBA, businesses can prioritise their compliance efforts, focusing more on high-risk entities while streamlining processes for low-risk customers.

Leverage Technology for Compliance

Technology plays a crucial role in modern AML compliance, helping businesses streamline compliance procedures, reduce human error, and improve efficiency. With the growing sophistication of money laundering techniques, financial institutions and other regulated entities must utilise advanced technological solutions to detect suspicious activities and ensure regulatory adherence.

How Technology Enhances AML Compliance:

• Automated Transaction Monitoring: AI-powered systems can analyse vast amounts of transaction data in real time, flagging unusual patterns or suspicious activities for further investigation.
• Digital Identity Verification: Businesses can leverage biometric verification, facial recognition, and e-KYC (electronic Know Your Customer) solutions to ensure accurate customer identification and reduce onboarding fraud.
• AI and Machine Learning for Risk Analysis: These technologies help refine risk models by identifying evolving money laundering trends and adapting risk assessments accordingly.
• RegTech Solutions for Compliance Reporting: Automated compliance platforms generate real-time reports, helping businesses meet regulatory requirements efficiently and reduce manual workloads.

Adopting technology-driven AML solutions improves compliance effectiveness, enhances accuracy, and reduces costs associated with manual compliance processes.

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Conduct Regular AML Training

AML compliance is only as strong as the people responsible for implementing it. Regular and comprehensive AML training ensures that employees understand their obligations, recognise suspicious activities, and stay up to date with evolving regulations.

Best Practices for AML Training:

• Mandatory Training for All Employees: Every staff member involved in financial transactions, customer interactions, or compliance should receive baseline AML training. This should cover topics such as identifying red flags, reporting suspicious activity, and legal obligations.
• Specialised Training for High-Risk Roles: Employees in compliance, risk management, and customer due diligence (CDD) departments should receive advanced training on specific regulatory requirements, enhanced due diligence (EDD) procedures, and reporting mechanisms.
• Ongoing Training and Updates: Since AML regulations are frequently updated, businesses should conduct refresher courses at least annually and whenever there are significant regulatory changes.
• Case Study-Based Learning: Real-world examples of money laundering cases can enhance employees' understanding and help them recognise illicit activities in practical scenarios.

A well-trained workforce reduces the likelihood of compliance breaches, strengthens internal controls, and improves overall AML effectiveness.

Perform Independent Audits

Regular independent audits are essential for assessing the effectiveness of an organisation’s AML compliance framework. These audits provide an objective review of policies, procedures, and risk management strategies, ensuring that businesses remain compliant with Belgian and EU AML regulations.

Key Aspects of AML Audits:

• Review of AML Policies and Procedures: Auditors evaluate whether internal AML policies align with regulatory requirements and industry best practices.
• Assessment of Risk-Based Approach Implementation: Auditors examine whether the company’s risk assessment framework effectively identifies and mitigates money laundering risks.
• Evaluation of Transaction Monitoring and Reporting: The audit process ensures that suspicious transactions are identified, investigated, and reported to the Financial Intelligence Processing Unit (CTIF-CFI) as required.
• Testing of Internal Controls: Auditors check whether the business has adequate internal controls, such as dual-approval processes for high-value transactions and data security measures.
• Identification of Compliance Gaps: Any weaknesses or non-compliance issues discovered during the audit should be addressed immediately, with corrective actions implemented.

Independent audits should be conducted annually or whenever there are significant regulatory changes or major internal process modifications. Businesses should also engage external auditors for unbiased evaluations and recommendations.

Maintain Strong UBO Disclosure Practices

Transparency in corporate ownership is a critical component of AML compliance. Money launderers and financial criminals often use complex corporate structures and shell companies to conceal the real beneficiaries of illicit funds. To combat this, Belgian law requires businesses to maintain accurate and up-to-date Ultimate Beneficial Owner (UBO) information.

UBO Compliance Requirements in Belgium:

• Registration with the Belgian UBO Register: Companies, partnerships, and foundations must disclose their beneficial owners to the national UBO Register, managed by the Federal Public Service Finance.
• Definition of a UBO: A UBO is any individual who directly or indirectly owns or controls 25% or more of a company’s shares or voting rights.
• Ongoing UBO Monitoring: Businesses must regularly update UBO information, especially in cases of ownership changes, mergers, or restructuring.
• Enhanced Due Diligence for High-Risk Entities: If a company has complex ownership structures or is linked to jurisdictions with weak AML regulations, additional scrutiny is required.

Failure to comply with UBO transparency requirements can result in fines up to €50,000, legal consequences, and reputational damage. Maintaining accurate UBO records helps prevent fraud, tax evasion, and money laundering.

Final Thoughts

Mastering AML compliance in Belgium requires a thorough understanding of legal obligations, regulatory bodies, and enforcement mechanisms. Financial institutions, DNFBPs, and VASPs must implement robust AML policies, perform customer due diligence, report suspicious transactions, and maintain detailed records to comply with Belgian law.

With evolving regulations and increasing enforcement, businesses must adopt a proactive approach to AML compliance. Leveraging technology, training employees, and conducting regular audits will ensure compliance and protect organisations from financial crime risks.

By staying informed and implementing best practices, businesses in Belgium can navigate the complexities of AML regulations and maintain a secure and compliant financial environment.

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