The Act of January 11, 1993 on Money Laundering, which applies the Directive of the EC Council of June 10, 1991, aims at preventing the use of the financial system for purposes of money laundering.
The scope of the Act is limited to the laundering of money or assets proceeding from illegal activities such as a crime committed on the stock exchange or consisting of an illegal public appeal on savings, substantial and organized tax fraud involving complicated mecanisms or procedures with an international dimension, blackmail with violence, fraudulent insolvency, financial swindle.
Pursuant to the Act on Money Laundering, some obligations are incumbent upon a number of financial institutions and individuals, such as credit institutions, brokers, insurance companies, companies for exchange and deposit, investment advisers and portfolio managers, companies and persons professionally engaging in the trade of currencies, consumer credits, credit cards, mortgage loans and financial leasing.
Upon entering into a regular business relation or whenever a person requests to execute a transaction representing an amount equal to or exceeding 10,000 ECU, the above-mentioned financial institutions and individuals must establish the identity of their counterparty by means of a document of evidence.
If there are reasons to suspect that a counterparty is not acting for its own account, all appropriate measures must be taken in order to establish the identity of the individual or company for which the client is acting.
If it is impossible for a counterparty to reveal the identity of the company or individual for which it is acting (because the client is e.g. a lawyer, bailiff or notary and therefore subject to proper deontological rules), a statement must be signed by said counterparty confirming inter alia that, to the best of its knowledge, the transaction is not connected to money laundering.
The financial institutions must appoint one or more individuals of a sufficiently high level, preferably executives,who are in charge of the application of the Act on Money Laundering within the organisation. The identity of these individuals must be communicated to the Commission for Banking and Finance.
Said individuals must submit at least once a year a general report in writing to the directors of the financial institution.
A copy of the documents evidencing the identity of the counter-party or of the entities or individuals for which the counter-party has acted (or a copy of the document referring to this document of evidence), must be preserved by the financial institution for a period of at least five years following the termination of the relationship with that counterparty.
A report in writing must be established for each transaction of which it is presumed that it is connected to money laundering, in view of its nature or exceptional character. This report must be preserved during at least five years by the individual in the company who is in charge of the application of said Act.
If there are reasons to believe that a certain transaction is connected to money laundering, the "Cell for the Processing of Financial Information ("Cel voor Financi%le Informatie-verwerking"), an entity which has been established for the purpose of the Act on Money Laundering, has to be informed of such transaction prior to the execution thereof. This entity may suspend the execution of the transaction during maximum 24 hours.
If it is not possible or appropriate to notify the Cell in advance of such transaction, such notification must be made as soon as possible after the execution of the transaction. At the same time, the Cell must be informed of the reason(s) why it was not possible to give prior notification.
The Cell may pass on the information to the public prosecutor who may suspend the execution of the transaction for a period exceeding 24 hours.
The content of this article is intended to provide general information on the subject matter. It is therefore not a substitute for specialist advice.
De Bandt, van Hecke & Lagae - Brussels. (32-2) 517.94.79.