The Money Laundering and Terrorist Financing (Prevention) Act is designed to prevent people and companies from laundering money or spending money on terrorist activities. The Act came into effect on 1 August 2008 and is designed to promote ‘clean’ business transactions. The government sees it as a key instrument in the battle against organised crime.
Based on the term ‘institution’, Section 1 of the Act lists the parties subject to this Act. These include banks, insurers, investment institutions, administrative service providers, accountants, tax consultants, trust offices, solicitors and civil-law notaries. In the first chapter of the Act, there is an up to date overview of institutions subject to disclosure.
Financial service providers must check the identity of their customers and check who is the ‘ultimate beneficial owner’ of a transaction (know your customer). They must then check for any sanctions against this beneficiary or if the beneficiary has been the subject of negative publicity.
Furthermore, institutions subject to mandatory disclosure must report any ‘unusual transactions’ to the Belgian Financial Intelligence Processing Unit (CTIF-CFI). This concerns transactions for which certain indicators apply. CTIF-CFI assesses whether or not a transaction is suspect, and may then forward it to an Attorney-General.
Any institutions subject to mandatory disclosure which do not forward unusual transactions and any companies which do not correctly perform the mandatory identity checks risk a substantial fine or non-compliance penalty, with possible criminal proceedings.
The provisions of the Wwft have been amended several times and another amendment is pending. This time, the amendment is based on the introduction of the 4th European anti-money laundering directive. The details of the amendment are as yet unknown. However, football firms and other companies associated with professional sports are currently being considered for inclusion in the scope of the Act. Privacy aspects and the gambling sector are two other focal areas and the proposal is to have any business transactions based on cash payments within its scope too. The imminent amendments can be expected to have major consequences for companies subject to mandatory disclosure.
Compliance with the legislation is a labour intensive process for most companies. However, there are several options which can lessen the load. There are automated solutions for checking the identity of the ‘ultimate beneficial owner’ of a transaction, for example. This offers many benefits, such as reducing time and human error. Furthermore, the software changes along with the amendments. That ensures continuous compliance with the rules, preventing fines and loss of reputation. This ensures that:
Prior to automating your KYC-policy, Graydon enriches, analyses and screens your full portfolio to create a ‘clean slate’.