Guidelines on policies and controls for the effective management of ML/TF risks when providing access to financial services

By issuing FSMA_2023_20, the FSMA has decided to implement the EBA Guidelines on policies and controls for managing ML/TF risks when providing access to financial services (EBA/GL/2023/04), which were issued on 31 March 2023. These guidelines address the issue of ‚de-risking,‘ which pertains to the denial of financial services to specific customer groups due to heightened ML/TF risks.
According to the guidelines, a customer can only be denied services based on ML/TF risk factors after exploring alternative measures, such as increasing monitoring intensity. The guidelines also outline the necessary steps for institutions when contemplating the refusal or termination of a business relationship with a customer due to ML/TF risk factors, emphasizing the importance of documenting such decisions. Furthermore, the guidelines elucidate the interplay between access to financial services and AML/CFT obligations, particularly when customers have valid reasons for not meeting traditional CDD requirements.
The FSMA believes that these guidelines provide much-needed clarity on the interpretation and application of specific provisions within the Law of 18 December 2017 and the FSMA Regulation of 3 July 2018. Consequently, starting from 3 November 2023, the FSMA will integrate these guidelines into its supervisory policy. It intends to utilize them, notably in the evaluation of risk assessments and policies and procedures related to ML/TF prevention, within the entities under its regulatory purview.
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Furthermore, the FSMA also issued FSMA_2023_21 implementing the EBA Guidelines EBA/GL/2023/03, which amend Guidelines EBA/2021/02 on customer due diligence and the factors credit and financial institutions should consider when assessing the money laundering and terrorist financing risk associated with individual business relationships and occasional transactions under Articles 17 and 18(4) of Directive (EU) 2015/849.
The guidelines specifically address the phenomenon of „de-risking“ for NPOs, where NPOs are denied access to financial services due to higher risks of money laundering. The FSMA emphasizes the importance of understanding the governance, financing, activities, location, and beneficiaries of NPOs to determine their money laundering risk profile. The guidelines outline risk factors and questions to be addressed during the evaluation process, as well as risk factors that reduce money laundering risks for NPOs.
The FSMA will incorporate these guidelines into its supervisory policy from 3 November 2023, and will use the consolidated version of the EBA’s guidelines on money laundering and terrorist financing risk factors to assess the adequacy of risk assessments and policies developed by relevant entities.
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Entities in scope of FSMA_2023_20 & FSMA_2023_21 include Belgian authorized investment firms engaged in portfolio management and investment advisory services, branches of foreign investment firms in Belgium, Belgian management companies overseeing collective investment undertakings in compliance with Directive 2009/65/CE, credit funds, Belgian management companies of alternative investment funds and their managers, branches of foreign management companies overseeing collective investment undertakings, branches of foreign management companies overseeing alternative investment funds, Belgian investment companies involved in securities marketing, providers of virtual and legal currency exchange services, and providers of wallet custody services in Belgium.