Central contact points in Belgium of financial institutions governed by the law of another Member State: Comments and recommendations

1. Background

Firstly, it should be noted that, in accordance with the provisions of Directive 2015/849 (hereinafter “the Directive”), the provisions of the Anti-Money Laundering Law and of the Anti-Money Laundering Regulation of the NBB have a territorial scope. As a result, they apply in particular to financial institutions that are governed by the law of another EEA country or of a third country and that are established on Belgian territory to offer financial services or products there, regardless of the form of the institution. The fact whether or not the institution exclusively takes the form of one or more independent agents or independent distributors operating under representation contracts concluded with the financial institution, without the latter establishing any other form of organisation (branch) on Belgian territory, in no way alters the fact that this financial institution, within the limits of the activities it carries out in Belgium through its agents or distributors, (i) is subject to all obligations set out in Book II of the Anti-Money Laundering Law and to the provisions of the Anti-Money Laundering Regulation of the NBB – including the obligations regarding appropriate organisation –, (ii) is required to notify CTIF-CFI of any suspicious transactions carried out in Belgium, (iii) is subject to the obligations regarding financial embargoes and asset freezes applicable in Belgium, including those resulting from the Belgian list of persons subject to targeted financial sanctions, (iv) falls under the supervisory and sanction powers of the NBB, (v) etc. (for further details on this subject, see the EBA Opinion dated 3 March 2021). 

To facilitate the effective implementation of the above principles, Article 15 of the Anti-Money Laundering Law requires financial institutions that are governed by the law of another EEA country and which provide financial services in Belgium “through one or more persons established in Belgium who represent the institution for that purpose” to appoint a central contact point (hereinafter referred to as “CCP”) situated on Belgian territory, “under the conditions set by the National Bank of Belgium through a regulation adopted in accordance with the implementing measures of Directive 2015/849 referred to in Article 45(10) of the said Directive”.

The obliged entities subject to this obligation are, specifically, the payment institutions and electronic money institutions that are governed by the Law of another EEA country (hereinafter referred to as “European payment or electronic money institutions”) and respectively provide payment services or distribute electronic money in Belgium solely through agents or distributors. On behalf of the institution that appointed it and in the same way as the AMLCO appointed pursuant to Article 9, § 2, of the Anti-Money Laundering Law would do if the European payment institution or electronic money institution concerned operated in Belgium through a branch (see point 2 of the “Governance” page), this CCP should ensure compliance with the legal and regulatory AML/CFTP provisions applicable in Belgium and facilitate the NBB’s performance of its supervisory tasks, particularly by providing it with all documents and information requested by it.

The Directive’s implementing measures , as referred to in its Article 45(10) and mentioned in Article 15 of the Anti-Money Laundering Law, are the regulatory technical standards of the European Commission (“RTS”), which determine:

  • the cases in which EEA countries in whose territory payment institutions or electronic money institutions governed by the law of another EEA country provide payment services or distribute electronic money through agents or distributors (hereinafter referred to as the “host country”) may require a CCP to be appointed on their territory (see Article 3 of the RTS);
  • the minimum functions to be performed by the CCP if its appointment is required (see Articles 4 and 5 of the RTS), as well as certain functions that the host country of the CCP could require it to perform additionally (see Article 6 of the RTS).

The ESAs present these regulatory technical standards to the European Commission for adoption. Once adopted, these legal acts are directly applicable in EEA countries. The rules adopted at the European level are supplemented at the national level by the provisions of Article 27 of the Anti-Money Laundering Regulation of the NBB which, in accordance with the aforementioned technical standards, establish:

  • the cases in which the European payment or electronic money institutions providing payment services or distributing electronic money in Belgium through agents or distributors should appoint a CCP on Belgian territory (see Article 27, § 1, of the Anti-Money Laundering Regulation of the NBB);
  • the functions which this CCP is required to perform in addition to the minimum functions provided for in the RTS (see Article 27, § 2, of the Anti-Money Laundering Regulation of the NBB).

As such, Belgium exercises the options provided for in the RTS, allowing EEA countries to require (i) that a CCP be appointed on their territory, and (ii) that this CCP perform functions in addition to those laid down in these RTS.

In other words, European payment or electronic money institutions offering payment services or distributing electronic money in Belgium solely through agents or distributors should refer to:

  • Article 27, § 1, of the Anti-Money Laundering Regulation of the NBB, adopted pursuant to Article 3 of the RTS, to determine the cases in which they should appoint a CCP situated in Belgium;
  • Articles 4 and 5 of the RTS, read in conjunction with Article 27, § 2, of the Anti-Money Laundering Regulation of the NBB, to know which functions should be performed by this CCP.

2. Appointment of a CCP in Belgium

European payment or electronic money institutions operating in Belgium through agents or distributors should appoint a CCP situated in Belgium if any of the following criteria are met (see Article 27, § 1, first paragraph, of the Anti-Money Laundering Regulation of the NBB, adopted pursuant to Article 3, paragraph 1 of the RTS):

  1. the European institution concerned provides payment services or distributes electronic money in Belgium through at least ten agents or distributors;
  2. this institution effects payment transactions or distributes or redeems electronic money in Belgium the cumulative amount of which (i) is expected to exceed three million euros at the end of the financial year or (ii) has exceeded three million euros in the previous financial year;
  3. the information necessary to assess whether the previous two criteria are met is not made available to the Bank in a timely manner;

Moreover, in any case, even if the previous criteria are not met, a CCP situated in Belgium should also be appointed in the following cases:

  1. when the agents or distributors of the European institution concerned that are situated in Belgium effect transactions there that may involve the use of cash or anonymous electronic money (see Article 27, § 1, second paragraph, 1°, of the Anti-Money Laundering Regulation of the NBB, adopted pursuant to Article 3, paragraph 2 of the RTS).

    Transactions that “may involve the use of cash or anonymous electronic money” not only refer to cases where funds are received from customers in these forms by the payment or electronic money institution, but also to cases where transfers of funds received in any form by the payment institution can be delivered in these forms to the beneficiaries in Belgium, or where non-anonymous electronic money can be redeemed in cash or converted to anonymous electronic money on Belgian territory.

    Transactions that may involve cash or anonymous electronic money are particularly risky in terms of ML/FT, which justifies the requirement to appoint a CCP on Belgian territory when such transactions are effected there, (i) even if the payment or electronic money institution concerned only operates there through a single agent or distributor, and (ii) regardless of the value of the transactions effected, as the quantitative criteria referred to in Article 27, § 1, first paragraph, of the Anti-Money Laundering Regulation of the NBB do not apply in those cases. This particularly risky nature is apparent (see the page “Main reference documents”):

    • from the ratio legis of the provisions of the European Regulation on transfers of funds (Articles 5 to 7), which impose enhanced customer identification measures for transfers of funds involving cash or anonymous electronic money;
    • from the ratio legis of Book III of the Anti-Money Laundering Law, which limits the use of cash;
    • from the Supranational Risk Assessment Report published by the European Commission in accordance with Article 6 of the Directive;
    • from the EBA Risk Factor Guidelines dated 1 March 2021.

    Furthermore, the use of transactions involving cash is mentioned by CTIF-CFI in a very large number of money laundering or terrorist financing typologies, which it publishes in its successive annual reports, thereby confirming the high ML/FT risk associated with this type of transactions.

  2. when the NBB decides and publishes on its website that the performance of a specific activity in Belgium so requires, on the grounds that this activity is considered as presenting high ML/FT risks, either by the European Commission in the supranational risk assessment conducted pursuant to Article 6 of the Directive, by the coordinating bodies in the national risk assessment referred to in Article 68 of the Anti-Money Laundering Law, or by the NBB itself based on a documented analysis (see Article 27, § 1, second paragraph, 3°, of the Anti-Money Laundering Regulation of the NBB, adopted pursuant to Article 3, paragraph 2 of the RTS);

    If payment or electronic money institutions perform other activities than those referred to in point a) above, that would be identified in the future as presenting a particularly high ML/FT risk, and if they only perform these activities on Belgian territory through one or more agents or distributors, the NBB could require them to appoint a CCP situated in Belgium.  
     

  3. when the NBB requires a European payment or electronic money institution to do so, on the grounds that it deems this appropriate, based on a documented analysis, in light of the high ML/FT risks to which this institution is exposed by performing a specific activity in Belgium (see Article 27, § 1, second paragraph, 3°, of the Anti-Money Laundering Regulation of the NBB, adopted pursuant to Article 3, paragraph 3 of the RTS).

    In that case, the Bank will decide on an individual basis, with due regard to the specific situation of the payment or electronic money institution concerned. This could be the case, in particular, when the NBB finds that a European payment or electronic money institution that has not established a CCP in Belgium grossly fails to comply with the Belgian anti-money laundering legislation and regulations in the context of the activities it carries out through its Belgian agents and distributors, and that this institution does not seem to be able to remedy these serious shortcomings from its registered office, as a result of which the ML/FT risks associated with the activities carried out in Belgium should be considered high if they are not subject to adequate reduction and management measures.

3. Functions of the CCP in Belgium

3.1 General principles

The overall objective of appointing a CCP is to ensure the presence, in the country on the territory of which a financial institution governed by the law of another EEA country offers financial services solely through agents or distributors, of a person or entity responsible for ensuring the proper implementation of the AML/CFTP provisions in place on that territory.

The positioning of a person or entity assuming such a central function on the – in this case Belgian – territory aims, on the one hand, to better guarantee the quality and speed of the reporting of suspicions to CTIF-CFI (especially with regard to transactions that are particularly exposed to ML/FT risk, i.e. transfers of funds involving the handling of cash or anonymous electronic money) and, on the other hand, to facilitate the monitoring, both by the European payment or electronic money institution itself and by the NBB, of the activities of a potentially very large number of agents or distributors in Belgium.

It should be stressed that it is the European financial institution, not the CCP, which is subject to the Anti-Money Laundering Law and which remains responsible for the proper performance of its legal and regulatory AML/CFTP obligations. Unlike the European financial institution concerned, which is responsible for the actions of its agents or distributors and of the CCP appointed by it in Belgium, the CCP therefore cannot be subject to the administrative measures referred to in Articles 93 and 94 of the Anti-Money Laundering Law or to the administrative sanctions referred to in Articles 132 to 135 of the Law.

It should also be noted that, in accordance with Article 95 of the Anti-Money Laundering Law, when the NBB finds that a European payment or electronic money institution has committed in Belgium a serious breach of the AML/CFTP provisions applicable – namely the provisions of Book II of the Anti-Money Laundering Law, the Anti-Money Laundering Regulation of the NBB, the RTS, the European Regulation on transfers of funds or the due diligence requirements imposed by the binding provisions on financial embargoes – it may, as part of the administrative measures it is authorised to impose, prohibit the European payment or electronic money institution concerned from providing services in Belgium through one or more agents or distributors in Belgium designated by the Bank.

3.2 Functions of the CCP

Pursuant to Articles 4 and 5 of the RTS, the functions to be performed by the CCP appointed in Belgium are as follows:

  1. ensuring compliance with the AML/CFTP rules. To that end, the CCP should:
    • facilitate the development and implementation of the policies, procedures and internal control measures referred to in Article 8 of the Anti-Money Laundering Law by keeping the European payment or electronic money institution that appointed it informed of the legal and regulatory AML/CFTP requirements applicable on Belgian territory;
    • monitor, on behalf of the European payment or electronic money institution that appointed it, the effective compliance by the agents and distributors through which the payment or electronic money institution offers services in Belgium (i) with the legal and regulatory AML/CFTP requirements applicable on Belgian territory and (ii) with the policies, procedures and internal control measures adopted by the said institution pursuant to Article 8 of the anti-Money Laundering Law;
    • inform the head office of the European payment or electronic money institution that appointed it of any potential violation or non-compliance found with the agents and distributors of this institution in Belgium, including any information that could affect the ability of these agents and distributors to comply with the policies, procedures and internal control measures, or that could influence the risk assessment of the institution in another manner;
    • ensure, on behalf of the European payment or electronic money institution that appointed it, that corrective measures are taken when the agents and distributors of this institution in Belgium do not comply or run the risk of not complying anymore with the legal and regulatory AML/CFTP requirements applicable on Belgian territory;
    • ensure, on behalf of the European payment or electronic money institution that appointed it, that the institution’s agents and distributors in Belgium and their staff meet the training requirements referred to in Article 11 of the Anti-Money Laundering Law (see the “Training and educating staff” page); and
    • represent the European payment or electronic money institution that appointed it in its contacts with the competent Belgian AML/CFTP authorities, particularly with CTIF-CFI and FPS Finance (for notifications of asset freezing).
  2. facilitating the NBB’s monitoring of compliance with AML/CFTP rules. For this purpose, the CCP should, on behalf of the European payment or electronic money institution that appointed it:
    • represent the said payment or electronic money institution in its contacts with the NBB;
    • be able to access information held by the agents and distributors of the institution concerned that are situated in Belgium;
    • answer any request from the NBB regarding the activities of this institution’s agents and distributors situated in Belgium and provide the NBB with any relevant information held by that institution or by its agents and distributors situated in Belgium. Regular reporting may be required at the request of the NBB;
    • facilitate the on-site inspections conducted by the NBB at premises of the agents and distributors of the payment or electronic money institution concerned that are situated in Belgium.

Aside from the aforementioned functions, the CCP appointed in Belgium should perform the following additional functions (see Article 27, § 2, of the Anti-Money Laundering Regulation of the NBB):

  1. detect atypical transactions or, at the very least, ensure that the criteria used to detect atypical transactions are (i) in compliance with the provisions of the European Regulation on transfers of funds, of the Anti-Money Laundering Law and Regulation of the NBB, and (ii) adequate for the activities performed in Belgium by the European payment or electronic money institution concerned;
  2. decide whether a reporting of suspicions is necessary pursuant to Article 47 of the Anti-Money Laundering Law and, where appropriate, decide on the content of such a reporting;
  3. answer, in accordance with Article 48 of the Law, any request for information from CTIF-CFI on the activities performed by the agents or distributors of the European payment or electronic money institution concerned that are situated in Belgium.

3.3 Location, form and implementation arrangements

Regarding the location of the CCP, the Anti-Money Laundering Law provides that, whenever a CCP is required, it should be situated on Belgian territory (see Article 15 of the Law) and that, in such cases, the natural person appointed pursuant to Article 9, § 2, of the Law who is responsible for performing the functions of CCP, should also be established In Belgium (see Article 9, § 4, of the Anti-Money Laundering Law).

Conversely, neither the Belgian legal framework nor the European RTS lay down rules regarding the form to be taken by the CCP. However, this form should be adequate to enable the CCP to effectively perform all the functions listed above for the entire network of agents or distributors established in Belgium.

The NBB therefore considers it the responsibility of the European payment or electronic money institution to determine the form of its CCP, taking into account the principle of proportionality. As such, the NBB expects the institution, in particular, to be able to demonstrate to it (i) that the human and technical resources located in Belgium to enable the CCP to fully perform its functions for the entire network of agents or distributors established in Belgium, are adequate, particularly considering the extent of the network, the number and volume of the transactions carried out in Belgium, the level and characteristics of the ML/FT risks associated with the activities performed in Belgium, etc., and (ii) that the form of the CCP is appropriate for pooling and managing these resources adequately and consistently.

Taking into account the above, the CCP could thus take the form, for example, (i) of one or more staff members in Belgium who report hierarchically to the compliance department or the AMLCO of the European payment or electronic money institution, (ii) of one or more of the agents or distributors established in Belgium (or of the only agent or distributor established in Belgium) who perform(s) the functions falling under the responsibility of the CCP in addition to its/their operational functions when carrying out transactions or establishing business relationships with customers, or (iii) of an independent expert specifically charged with performing these functions by the institution through an agency agreement, etc.

In any case, the NBB expects the payment or electronic money institution to be able to demonstrate that the person responsible for performing the functions of the CCP in Belgium, as referred to in Article 9, § 4, of the Anti-Money Laundering Law, possesses the required qualities listed in Article 9, § 2, of the Law. As such, this person should possess:

  • the professional reliability needed to perform his/her functions with integrity;
  • the adequate expertise, knowledge of the Belgian legal and regulatory AML/CFTP framework, availability, hierarchical level and/or powers, both within the payment or electronic money institution and with regard to its agents or distributors established in Belgium, that are necessary to perform its functions effectively, independently and autonomously;
  • the power to propose to the payment or electronic money institution, on his/her own initiative, all necessary or useful measures, including the implementation of the means required, to guarantee the compliance and efficiency of the internal AML/CFTP measures.

The conditions set out in 2° and 3° above are assessed on a case-by-case basis, taking into account the principle of proportionality and, therefore, the characteristics of the relevant network of agents or distributors established in Belgium and of the activities performed.

Moreover, for reasons of efficiency, it is acceptable to outsource the executive tasks falling under the responsibility of the CCP appointed in Belgium in full or in part to another entity belonging to the same group. These tasks include quality control of the performance of the agents or distributors, ongoing supervision aimed at detecting atypical transactions, analysis of these transactions in accordance with the internal procedures, particularly the collection of any additional information, and the development of an opinion based on this analysis regarding the (non-)suspect nature of the transaction under consideration. However, it should be noted that outsourcing cannot infringe on the responsibility of the CCP to fully perform its functions. For example, if the analysis of atypical transactions is outsourced to another entity of the group, the CCP should retain the power to decide, on the basis of this analysis, whether or not to submit a suspicious transaction report to CTIF-CFI. Likewise, when tasks related to the supervision of the activities of agents or distributors are outsourced to another entity of the group, the CCP should retain the right to decide on the actions to be taken with regard to agents for which shortcomings have been identified. Moreover, the CCP should ensure that the arrangements for performing the outsourced functions are adequate, and it should retain the ability to adapt them if necessary. Generally speaking, if the organisation of the CCP is outsourced in such a manner, the comments and recommendations formulated in point 3 of the “Governance” page should be taken into account. For more information on the outsourcing aspect, reference is also made to the “Performance of obligations by third parties” page.

Disclaimer: This English text is an unofficial translation and may not be used as a basis for resolving any dispute.

Disclaimer: The content of this page is currently being reviewed and may be modified following the entry into force of the Law of 20 July 2020 containing various provisions on the prevention of money laundering and terrorist financing and on the restriction of the use of cash.