The financial sector calls for more intensive cooperation in the fight against money laundering
21 September 2020 - 6 min Reading time
The number of reports of suspicious transactions has almost tripled in ten years
Protecting society against money laundering and terrorist financing is an absolute priority for Belgian banks. In recent years, stricter regulations and stricter supervision have also been introduced in this area. The banks have therefore made huge investments and efforts to step up the fight against money laundering and assume their responsibility as gatekeepers. This is also apparent from the figures of the CTIF-CFI (Cell for Financial Information Processing), in 2019, credit institutions accounted for 73% of money laundering files that were passed on to the judicial authorities. This for a total amount of 845 million euros.
Banks are therefore a fundamental link in the fight against and detection of money laundering, but are of course only one part of a broader whole. More cooperation between all parties can therefore bear even more fruit. Febelfin therefore advocates more consultation between the financial sector and the public authorities (government, anti-money laundering cell, judicial authorities, etc.) in order to exchange information efficiently in order to jointly step up the fight against money laundering.
Regulations and supervision have become considerably stricter in recent years
National and European laws oblige banks to detect, investigate and, if necessary, report suspicious practices or transactions to the competent authorities. But fraud networks are becoming increasingly difficult to unravel. The regulations in this regard have therefore been continuously tightened in recent years: additional obligations have been systematically imposed on banks in terms of their anti-money laundering policy, and fines and penalties have been increased.
As a result, banks have massively adapted their internal organization and invested in - and continue to do so - stricter monitoring and detection procedures. These procedures allow banks to fully assume their legal role in the fight against money laundering and to report suspicious customers, transactions or facts to the anti-money laundering cell (CFI), so that they can be further investigated and possibly reported to the public prosecutor's office.
In addition, supervision has also been tightened. European supervisors are taking increasingly stricter and more decisive action against infringements. This is no different in Belgium: the number of inspections and sanctions is rising noticeably. The criminal penalties are up to 2,500,000 euros, in addition to prison terms.
Banks play a key role
The fight against money laundering and terrorist financing remains challenging, and banks today play a key role in detecting fraud. We therefore receive a good report from the independent Financial Action Task Force (FATF). This intergovernmental task force regularly evaluates countries on the quality of their money laundering prevention: “The Belgian financial sector has a good understanding of the risks and generally seems to take appropriate preventive measures, including in high risk situations.”
The fact that banks are one of the most important actors in the fight against money laundering is also evident from the figures of CTIF-CFI:
- According to the latest figures of 2019, credit institutions reported 11,237 suspicious transactions to CTIF-CFI. By way of comparison: in 2010 there were 3,870, almost tripling CTIF
- CFI's 2019 annual report shows that credit institutions account for 73% of money laundering files that are passed on to the judicial authorities. This concerns 845 million euros (out of a total amount of 1.15 billion euros).
We need more collaboration and information exchange
It is clear that the banks are a fundamental link in preventing and detecting money laundering as much as possible. But they are only part of a larger whole. The government has an equally important function in this regard. More cooperation between all parties is therefore necessary.
“Today, banks provide information to the government and anti-money laundering cell, but it often stops there. After all, they receive very little information in return. Febelfin therefore calls for more cooperation between the financial sector and the public authorities (government, anti-money laundering unit, judicial authorities, etc.) to exchange information in a secure manner, in order to increase efficiency and to join forces in the fight against fraud and money laundering”, says Karel Baert, CEO of Febelfin.
Such forms of cooperation between all stakeholders involved have already been set up in other European countries, such as the Netherlands and the United Kingdom. Banks are absolutely in favor of setting up such a platform in Belgium as well.
In addition, the fight against money laundering would benefit from more options for information exchange between financial institutions. For example, banks are not permitted in all circumstances to share information about suspicious transactions or customers with other banks. A formal and secure framework for such exchange is desirable.
Legislation must support the fight against financial crime
Year after year, the role of banks in the fight against financial and organized crime is growing. In addition to the legal obligations, banks also have a moral commitment to society to fully fulfill their role as gatekeepers.
Banks must therefore be able to apply a comprehensive risk-based approach at all times, of course in the first place when accepting customers. “If there are suspicions of money laundering, a bank should always have the option to refuse customers or close accounts. Legislation that prevents this goal and obliges banks to provide services to all companies is difficult to reconcile with this. That is why the Belgian banking sector is strongly opposed to a minimum basic banking service that is granted indiscriminately to all companies. A banking relationship with companies that do not attach great importance to the traceability and transparency of transactions is therefore usually at odds with tackling financial crime,” concludes Karel Baert.
