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 Which provisions about financial sanctions are stipulated in the law on the prevention of money laundering? 

Article 8 of the law of September 18th 2017 on the prevention of money laundering and terrorist financing (AML Law) stipulates that reporting entities must define and implement effective policies, procedures and internal control measures in order to comply with the binding provisions relating to financial embargoes.

what DOES IT MEAN PRECISELY?

It means that all reporting entities are required to define a control system allowing to observe the financial sanctions.

In concrete terms, reporting entities are expected, in a manner adequate with their nature and size :

• To develop internal control policies, procedures and measures.

These include the development of risk management models, customer acceptance, due diligence measures as regards customers and transactions, the reporting of suspicious transactions, the keeping of documents and records, internal control, fit and proper measures when recruiting staff, etc.

• to make their staff members and agents or distributors aware of the financial sanctions and the measures designed to comply with the financial sanctions.

WHO ARE THE REPORTING ENTITIES?

The obligation to define a control system does not apply to everyone, but only to entities subject to the LBC law and which are stipulated in Article 5 of the AML law. These are primarily financial institutions, such as banks, insurers and stockbrokers, but the AML law also applies to several non-financial professions, such as notaries, lawyers, estate agents, diamond merchants, accountants, etc.

TO WHICH FINANCIAL SANCTIONS DOES THE OBLIGATION APPLY?

The LBC law has for main objective the prevention of the use of the financial system for money laundering, terrorist financing and the proliferation of weapons of mass destruction. Therefore, the obligation stipulated in the AML law to develop a monitoring system applies only to financial sanctions imposed under sanctions regimes against terrorism (for instance, the national list, the sanctions system against IS/Al Qaida...) or against the proliferation of weapons of mass destruction (for instance, the sanctions regime against North Korea).

However, it goes without saying that a monitoring system developed to comply with financial sanctions in the context of the fight against terrorism or the proliferation of weapons of mass destruction can also be used to comply with financial sanctions imposed under other sanctions regimes.

WHO SUPERVISES THE OBSERVANCE OF THIS OBLIGATION?

Compliance with the obligation to define and implement a monitoring system for financial sanctions is monitored by the supervisory authorities exercising the AML monitoring on reporting entities.  Article 85 of the AML law states which is the supervisory authority for which reporting entities.

Besides the monitoring performed by the supervisory authorities, the Treasury is competent to look for any infraction against the financial sanctions and to report it.

WHAT IS THE DIFFERENCE WITH ENHANCED DUE DILIGENCE MEASURES FOR HIGH-RISK COUNTRIES?

It is important to distinguish between the obligation on reporting entities to:

• define a monitoring system enabling them to comply with financial sanctions;
• take enhanced due diligence measures in respect of high-risk countries.

Although they are both mentioned in the AML law and some countries are referred to in both measures, it concerns very different obligations:

• The obligation to define a monitoring system enabling them to comply with financial sanctions (see Article 8 of the AML law) is essentially focused on the development of the system as such, and specifically targets individuals and entities involved in the financing of terrorism or the proliferation of weapons of mass destruction.
• The obligation to take enhanced due diligence measures in respect of high-risk countries (see Article 7 of the AML law) aims to exercise greater vigilance in business relationships and transactions with natural persons, legal entities and financial institutions established in countries identified by the FATF or the EU as countries with strategic shortcomings in the fight against money laundering and the financing of terrorism or the proliferation of weapons of mass destruction. See more information about this obligation on the Webpage of the FPS Finance

In addition, countries to which sanctions, embargoes or similar measures apply, such as those adopted by the European Union or the United Nations, are mentioned by the AML law as as an indicative geographical factor representing a higher potential risk and which must be taken into account in the risk assessment that reporting entities must carry out as part of their risk-based due diligence obligations.

useful information  ​law of September 18th 2017 on the prevention of the use of the financial system for the purposes of money laundering and terrorist financing and limitations to the use of cash; Website of the National Bank of Belgium on the obligation to define a control system enabling them to comply with financial sanctions (Article 8 of the AML law) Website of the FPS Finance on the obligation to apply a high level of vigilance in respect of high-risk countries (see article 7 of the AML law)

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