27 July 2023 - 7 min Reading time
On 18 June, the consultation platform against money laundering existed for two years. How does the banking sector view the progress and achievements of this cooperation? We spoke to Gregory Machenil, Director Legal Affairs & Compliance at Febelfin.
Banks have a gatekeeper function: they ensure that criminal organizations and fraudsters do not gain access to the financial system. For example, proceeds resulting from criminal activities cannot be laundered and end up in the legal circuit. In a simplified way, the banks fulfill this gatekeeper function roughly in two ways:
To fulfill this gatekeeper role, banks make significant investments. In addition to investing in the necessary infrastructure (e.g. further automation via IT detection tools), banks are also investing in their employees. Banks adopt profiles that are suitable for recognizing atypical transactions and, in accordance with the legislation, provide specific training and refresher courses in order to be able to fight optimally.
Very important. The fight against tax fraud is of course not new. This has long been a priority for Belgian banks, and this has only increased in recent years. Banks are the most important stakeholders in passing on information to the government. Last year, for example, CTIF-CFI received no less than 53,000 reports of suspected suspicious transactions, 52% of which were reported by the banking sector (for more information, please refer to the annual report of CTIF-CFI.
The sector therefore plays a major social role in the fight against money laundering, because the banks do not want to participate in money laundering or terrorist financing in any way. In this way they protect society against this form of crime.
This call was a combination of circumstances. The gatekeeper function of the banks is, in addition to a crucial mission, also a legally mandated role. A role that the banks play with a great sense of duty together with other sectors that are subject to anti-money laundering legislation (such as insurers, notaries, lawyers, etc.). The financial sector has long believed that the fight against money laundering was a shared task with the government and wanted to join forces to optimize information sharing. There was, of course, already cooperation between the sector and the government, but it was rather piecemeal: bilaterally between the individual stakeholders.
Some global and European banks were also reprimanded. This led to political attention and consequently a further tightening of anti-money laundering legislation. Banks had to make even more efforts in the fight against money laundering and take stricter action. The banks naturally followed this up, but also stated that it was a battle they could not continue to fight alone: a more structured cooperation was necessary to curb money laundering.
That is why Febelfin reached out to other stakeholders in 2020, such as regulators (FSMA, CTIF-CFI and NBB), the government, the police and other private players (Assuralia BV). The sector called for more cooperation against money laundering between private and public stakeholders: it came up with the proposal to set up an anti-money laundering consultation platform. On June 18, 2021, the AML consultation platform officially started.
The consultation platform brings all players around the table for consultation moments and a constructive dialogue. The biggest goal of the platform is to share insights. Stakeholders bundle the puzzle pieces of information that each of us has via the consultation platform to create a better overview. In this way we gain more insight into trends, typologies and larger issues related to money laundering and terrorist financing. Through this cooperation you also create an alliance in the fight against money laundering.
The consultation platform is also thinking of concrete solutions to take even better action against money laundering practices. At the moment, banks can only share information with each other about potentially suspicious transactions to a limited extent. In the context of the new European anti-money laundering regulations that are coming up (the new European AML package), Febelfin advocates broadening that legal framework and enabling broader exchange between banks and other stakeholders.
I am very satisfied so far: the platform has helped to identify what is going on and what are the real difficulties that banks, regulators, governments and society face in the fight against money laundering. In my opinion, we succeeded with the platform in exchanging information and expertise about developments and in making that information exchange easier. We also managed to identify new typologies and trends in the field of money laundering, e.g. with regard to the risks of money laundering associated with crypto-currencies.
An evolution towards more precise information exchange. Each stakeholder is currently involved in this platform based on their own authority. Each partner therefore logically has its own role (that of supervisor, policy maker, regulator, federation) which entails advantages, but also limits. We must try to transcend that. In order to allow even more information sharing and to create truly targeted solutions, amendments to the legislation will of course also be necessary, and that is precisely what is now on the table at European level via the EU AML package. But of course making such changes also takes time, so we have to be patient and continue to work constructively, whatever we plan to do!