Today, the new Belgian Anti-Money Laundering Act (the “AML Act”) was published in the Official Gazette. The act will enter into force on 16 October 2017.
Why is this new legislation enacted?
The new AML Act seeks to bring Belgian AML legislation in line with recent international and European developments. In particular, the act incorporates the EU Directive 2015/849 (“Fourth AML Directive”) into national law. The act also incorporates some of the recommendations made by the International Financial Task Force (“FATF”).
What will change?
The AML Act introduces a number of important innovations/changes for organizations like financial and credit institutions (“Obliged Entities”):
- a central register, so called Ultimate Beneficiary Register (“Belgian UBO-register”) will be established at the Ministry of Finance for the purpose of registering the ultimate beneficial owners (“UBOs”) of Belgian entities;
- a “risked-based approach” (“RBA”) requirement: Obliged Entities must adopt and implement adequate mitigating security measures based on their own assessment of their exposure to risks;
- the role, responsibilities and tasks of the Financial Intelligence Processing Unit (“CTIF” or “CFI”) are defined in greater detail;
- criminal sanctions are introduced regarding the obstruction of inspections or verifications, the refusal to provide requested information or the intentional provision of incomplete or erroneous information;
- certain information and documentation will have to been retained for ten years (instead of seven years now) as Belgium has chosen to extend the five year period stipulated in the Directive to the maximum extent possible.
The new UBO Register
The AML Act requires Obliged entities to investigate and verify their clients’ identity, including their UBOs.
The Fourth AML Directive requires member states to set up a central register containing up to date and accurate information regarding UBOs. This register is conceived as a tool to facilitate compliance with AML obligations.
Consequently, all companies established in Belgium (and certain other legal entities) will have to provide information regarding their UBO (name, date of birth, nationality, country of residence, nature and extent of the interest held, etc.). This information will then be collected into a national Register for Belgium.
The practical aspects (including organization and access) of the Belgian UBO Register will be determined in a future decree which is expected to be published in June 2018. The register should also be up and running by that time.
Such decree will inter alia determine how and to what extent other than competent authorities and financial institutions will have access to the Belgian UBO Register.
What will happen to the current AML legislation?
The new AML Act will repeal and replace the Act of 11 January 1993 regarding the use of the financial system for money laundering and the financing of terrorism.
Who will supervise the compliance with the new act?
The competent supervisory authority will depend on the type of obliging entity in question. For example, compliance by stockbroking companies and credit institutions will be supervised by the NBB whereas compliance by managing companies of collective investment companies will be supervised by the FSMA.
Please note that a recently adopted act (the Act of 31 July 2017 as published on 11 August 2017) grants protection to whistleblowers who notify potential violations to the FSMA. This protection extends to all violations of rules subject to FSMA control, including the AML Act.
When will the new act enter into force?
The act will enter into force on 16 October 2017.
This article was co-written by Sarah De Dijn in her capacity as an associate at Stibbe.