2.1. Tasks

As part of thef second line of defence, the AMLCO is responsible for implementing and guiding the financial institution’s AML/CFTP framework. The role and responsibilities of the AMLCO should be clearly defined and documented. More specifically, the AMLCO is entrusted with the following tasks, as detailed in the EBA Guidelines of 14 June 2022:

1. developing and maintaining an ML/FT risk assessment framework for the carrying out of the overall and of the individual risk assessments;
2. implementing the organisational measures listed in Article 8 of the Anti-Money Laundering Law, ensuring that they are regularly evaluated and, if necessary, modified or updated;
3. proposing the adjustments required in the event of changes to the statutory or regulatory requirements or ML/FT risks, and proposing the best way to remedy any deficiencies or shortcomings revealed by monitoring and supervisory action;
4. monitoring the effective application of AML/CFTP controls by business and internal units, which make up the first line of defence;
5. providing advice before employees at a sufficiently senior level take final decisions on whether to enter into or continue business relationships with high-risk customers, in accordance with the financial institution’s risk-based internal AML/CFT policies and procedures. If employees do not follow the AMLCO’s advice, they should properly document their decision and specify how they intend to mitigate the risks raised by the AMLCO;
6. analysing atypical transactions and situations in which due diligence requirements could not be fulfilled (in accordance with Articles 45 and 46 of the Anti-Money Laundering Law);
7. deciding, where necessary, to report suspicions to CTIF-CFI (in accordance with Article 47 of the Anti-Money Laundering Law and provisions implementing Article 54 of the Law). In this respect , the AMLCO autonomously decides to report suspicions to CTIF-CFI without having to first submit this decision to the senior officer responsible for AML/CFTP;
8. responding to requests for additional information by CTIF-CFI (in accordance with Articles 48 and 49 of the Anti-Money Laundering Law);
9. educating and training the financial institution’s staff and, where applicable, agents and distributors on the institution’s AML/CFTP framework;
10. developing an annual AML/CFTP monitoring programme covering, in particular, the application of the required AML/CFTP measures by staff, agents and distributors who are in contact with customers;
11. ensuring a proper flow of AML/CFTP-related information within the financial institution and the reporting to the management bodies (the board of directors and the management committee/senior management), as well as to the supervisory authorities. In this respect, the AMLCO shall prepare and submit at least once a year an activity report for the attention of the management committee (or senior management in the absence of a management committee) and to the board of directors (see point 2.5 below). In addition, the AMLCO should in any event bring the following to the attention of the senior officer responsible for AML/CFTP: (a) areas where AML/CFTP control measures should be implemented or improved; (b) proposals for appropriate improvements in line with point (a); (c) a progress report on the main remediation programmes, at least annually as part of the aforementioned activity report, and information provided on an ad hoc basis or periodically, depending on the improvements, on the level of exposure to ML/FTP risks and the measures taken or recommended to manage these risks effectively; and (d) whether sufficient human and technical resources have been allocated to the AMLCO and whether these need to be supplemented.

2.2. General principles

Pursuant to Article 9 §2 of the Anti-Money Laundering Law, financial institutions should appoint one or more persons tasked with implementing and guiding the AML/CFTP framework (“AMLCO”). In practice, financial institutions generally appoint an AMLCO who, depending on the nature or size of the financial institution and on its ML/FT risk profile, is either head of an AML unit or works alone.

The NBB recommends the centralised model, which consists of appointing a single person to serve as AMLCO, from amongst the members of the independent compliance function.

Where the financial institution's organisational structure so justifies (e.g. an business line-based organisation), it is possible to assign this function to several persons, each with their own area of expertise (decentralised model), provided:

1. each AMLCO meets the AML/CFTP suitability requirements referred to in point 2.3 below and has the necessary hierarchical level and powers to ensure the effective, independent and autonomous exercise of the AMLCO function. Specifically, none of the AMLCOs may depend hierarchically on an operational business unit or function); and
2. efficient coordination structures have been put in place to ensure the overall coherence of the AML/CFTP framework within the financial institution.

The practise observed by the Bank of appointing AML correspondents within the commercial departments of a financial institution, with whom the AMLCO cooperates to carry out certain tasks, could prove suitable for ensuring effective and appropriate implementation of ML/FT preventive measures, depending on the specific characteristics of the financial institution concerned.

However, the AMLCO function cannot under any circumstances be split between a member of the compliance function and AML correspondents from the commercial department who report hierarchically to the head of that department. In that case, the hierarchical relationship does not allow the NBB to consider that the requirements in terms of independence and autonomy of the AMLCO function, as set out in Article 9 §2, third subparagraph, point 2° of the Anti-Money Laundering Law, are met, notwithstanding the existence of two reporting lines (i.e., to the compliance officer for the performance of AML/CFTP tasks and to the head of the commercial department for other tasks and functions). When such an organisation is implemented, the AMLCO should remain fully responsible for the entire function, including those tasks for which the AMLCO cooperates with AML correspondents.

2.3. Requirements applying to the appointment of the AMLCO

Pursuant to the third subparagraph of Article 9 §2 of the Anti-Money Laundering Law, and in order to ensure the effective, independent and autonomous exercise of this function, the AMLCO should possess:

1. the required professional integrity,
2. adequate expertise and knowledge of the Belgian statutory and regulatory AML/CFTP framework,
3. the necessary degree of availability, and
4. the necessary hierarchical level and powers within the institution, including the power to propose, at his ir her own initiative, to the board of directors and the management committee or, if applicable, to senior management, all necessary or useful measures to guarantee the compliance and effectiveness of the AML/CFTP framework.

2.3.1. Financial institutions governed by Belgian law

§ 1. Position on the organisation chart

The AMLCO should be appointed from amongst the members of the compliance function. This selection should be made by the financial institution’s management committee or, in the absence of a management committee, by its senior management. The AMLCO may be the head of the compliance function (“N-1”) ora staff member of the compliance function (“N-2”), in the case of a medium-sized or large company. 

The financial institution’s internal procedures should ensure that the AMLCO has direct and unrestricted access at all times to all information necessary to perform his/her duties. The AMLCO shall decide which information (s)he considers relevant in this respect.

In the event of a major incident, the AMLCO should be able to report and have direct access to the board of directors.

The AMLCO should be appointed from among the financial institution’s staff who are physically based in Belgium, without prejudice to the principle of proportionality. This condition is derived from the territorial scope of application of the Anti-Money Laundering Law, compliance with which the AMLCO is responsible for ensuring, and from the requirement set out in Article 9 §2, third subparagraph, point 2° of the Anti-Money Laundering Law, pursuant to which the AMLCO must have, in particular, knowledge of the Belgian statutory and regulatory AML/CFTP framework and the necessary availability to ensure the effective, independent and autonomous performance of his or her tasks. If this requirement is derogated from on the basis of the principle of proportionality, the financial institution should have in place the necessary systems and controls to ensure that the AMLCO has access to all information and systems required to perform his or her duties and that the AMLCO is available to meet with CTIF-CFI and the supervisory authority without delay. The financial institution must also be able to provide the supervisor with evidence that the measures put in place by the institution are adequate and effective.

As stated under point 2.2, the AMLCO function cannot be assigned to AML correspondents, for the reasons set out therein. 

§ 2. AML/CFTP suitability and possible overlap with the "fit & proper” prudential assessment process

• The AMLCO heads the compliance function.

The AMLCO is expected to meet the AML/CFTP suitability requirements set out in point 2.3 above, and financial institutions are expected to verify the AML/CFTP suitability of the persons they intend to appoint to this position.

An AMLCO who also heads the compliance function of a financial institution must undergo the assessment of integrity, knowledge, skills, and experience (“fit & proper” assessment) required by sectoral prudential rules. It should be recalled that this assessment falls within the remit of the prudential supervisor and is thus carried out by either the NBB or, for credit institutions and in accordance with the applicable rules on the allocation of powers, the European Central Bank. For more information on this subject, see Communication NBB_2022_34 of 20 December 2022 on the update of the fit and proper manual.

Given this overlap, financial institutions are expected to:

• explicitly mention on the “new appointment” fit & proper form for a candidate for head of an independent control function, the fact that this person is also called upon to perform the function of AMLCO; and
• immediately notify the NBB by e-mail of the appointment as AMLCO of the current head of an independent control function.

The procedures set out under point 3 below apply to the abovementioned notifications.

Since 1 June 2018, candidates for head of the compliance function of credit institutions governed by Belgian law, stockbroking firms governed by Belgian law, and insurance companies governed by Belgian law have been required to pass the NBB/FSMA aptitude test, which also covers AML/CFTP. Passing the test demonstrates knowledge of the Belgian statutory and regulatory AML/CFTP framework, required for the AMLCO function. However, it does not demonstrate that all criteria set out in Article 9, § 2 of the Anti-Money Laundering Law have been met.

• The AMLCO is a staff member of the compliance function.

Medium-sized or large financial institutions with a compliance team may appoint an AMLCO from among the members of this compliance (N-2). The AMLCO is expected to meet the AML/CFTP suitability requirements set out under point 2.3 above, and financial institutions are expected to verify the AML/CFTP suitability of the persons they intend to appoint to this position.

Not heading an independent control function, the “fit & proper” prudential assessment and the aptitude test referred to above will usually not apply in respect of the N-2 AMLCO. Financial institutions concerned are expected to notify the NBB immediately by e-mail of the appointment of the N-2 AMLCO. The procedures described under point 3 below apply to this notification.

The financial institution should ensure that the AMLCO works on an ongoing basis as part of its overall business continuity management. It should consider the possibility that the AMLCO may exit their position and ensure that there is an available replacement with the required AML/CFTP expertise to whom the AMLCO’s duties can be delegated should the AMLCO be absent for a period of time or should their integrity be called into question. Financial institutions are expected to report such circumstances and the identity of the person acting for the AMLCO immediately by e-mail, as described under point 3 below.

§ 3. Availability

AMLCOs should have sufficient time to perform their tasks properly. In this respect, please refer to point 2.4.2 on the organisational arrangements to support the AMLCO function.

Entrusting the AMLCO function to a person who performs it on a full-time basis may be disproportionate in small financial institutions and/or those that are exposed to low ML/TF risks. In such cases, combining the function of AMLCO with that of senior officer responsible for AML.CFTP may be considered for reasons of proportionality, as described under point 5.5 below.

§ 4. Language skills

The AMLCO is expected to demonstrate a sufficient professional command of one of Belgium’s national languages, having regard in particular to the knowledge of the Belgian statutory and regulatory AML/CFTP framework required of AMLCOs and in view of the tasks with which the AMLCO is entrusted (see point 2.1). It may be acceptable for the AMLCO to have only a command of a language that is customary in international circles when the financial institution concerned can demonstrate, on the one hand, that the conditions to apply the principle of proportionality are met and, on the other hand, that this command alone is not such as to jeopardise the AML/CFTP suitability of the AMLCO, including the requirement of knowledge of the Belgian statutory and regulatory framework, or the effective performance of the AMLCO’s duties.   

2.2.2. Belgian branches of financial institutions governed by foreign law

The AML/CFTP suitability requirement set out under point 2.3 apply.

For the reasons set out in §1 of point 2.3.1 and subject to the application of the principle of proportionality (see point 5), the NBB considers that the AMLCO of the Belgium branch of a financial institution governed by the law of an EEA country or of a third country should be appointed from among those staff members who are physically based at the branch in Belgium (and not from among employees who work physically at the parent company), having regard to the territorial scope of application of the Anti-Money Laundering Act, the statutory requirement of knowledge of the Belgian statutory and regulatory AML/CFTP framework, and the availability required of the AMLCO.

When the AMLCO also heads the compliance function of the Belgian branch of a financial institution governed by the law of a third country, the AMLCO must undergo the fit & proper prudential assessment referred to in §2 of point 2.3.1. In view of this overlap, financial institutions concerned are expected to mention explicitly on the “new appointment” fit & proper form for a candidate for an independent control function the fact that this person is also called upon to perform the AMLCO function.

In all other cases, the NBB must be notified immediately by e-mail of the appointment of the AMLCO.

The procedures set out under point 3 below apply to the abovementioned notifications.

2.4. Organisation

2.4.1. Adequacy of human and technical resources

The governing bodies of financial institutions (the board of directors and the management committee or senior management) should ensure that the AMLCO has at all times adequate human and material resources that enable him to comply effectively with the applicable statutory and regulatory AML/CFTP obligations. The resources allocated to AML/CFTP must be proportionate to the ML/FT risks.

2.4.2. AML unit or stand-alone AMLCO

Depending on the nature and size of the financial institution and its ML/FT risk profile, the AMLCO may either head an AML within the compliance function or act on a stand-alone basis.

§ 1. AML unit

The NBB recommends setting up an AML unit within the compliance function focusing on the obligations provided for by or under the Anti-Money Laundering Law when the financial institution is large and/or has a high ML/TF risk profile. This unit  is headed by the AMLCO and should be composed of persons with integrity and adequate knowledge of AML/CFTP matters. In this respect, the NBB recommends that the AMLCO be involved in the procedures relating to the recruitment and assignment of employees to the AML unit. The AMLCO coordinates the work of the unit and plays a central role in its most important decisions (e.g. reporting to CTIF-CFI). The AMLCO may combine this role with that of head of compliance, provided that the AML unit includes one or more people dedicated solely to the management of AML/CFTP-related issues.

§ 2. Stand-alone AMLCO

In smaller financial institutions and/or those with a low ML/FT risk profile, the AMLCO may be the sole person responsible for AML/CFTP matters. In this case, the AMLCO is a function in its own right and cannot, in principle, be combined with other functions except with that of senior officer responsible for AML/CFTP as described under point 5.5).

2.4.3. Interactions with AML correspondents who are in direct contact with customers

In order to carry out customer and transaction due diligence properly, it may be necessary for the AMLCO to appoint AML correspondents within the financial institution’s departments or external distributors, who can act as intermediaries for AML/CFTP matters. In this respect, the AMLCO should recruit people with a suitable profile and ensure that they receive, upon recruitment and subsequently on an ongoing basis, useful training specifically adapted to the tasks expected of them in terms of due diligence.

2.5. Activity report by the AMLCO

Article 7 of the Anti-Money Laundering Regulation of the NBB requires the AMLCO to establish an activity report and send it to the management committee (or to the senior management if there is no management committee) and to the board of directors at least once a year. A copy of this report should be sent to the NBB (see the page Reporting by financial institutions).

This report is an important document for the management bodies, as it allows them to properly perform their tasks. The objective is to periodically inform these bodies at the highest level of the obliged financial institution of the nature and intensity of the ML/FT risks to which it is exposed, and of the measures taken or recommended by the AMLCO to reduce and effectively manage these risks. Notwithstanding the great importance of AML/CFTP to prudential supervision (from the perspective of the compliance function), the objectives set out in the Anti-Money Laundering Law also aim to combat crime, which justifies AML/CFTP receiving a specific treatment and special attention. The NBB therefore asks that the AMLCO’s annual activity report is established separately from the annual activity report of the compliance function.

The NBB recommends that the AMLCO’s annual activity report contains at least the following information:

This description should include a brief description of the human and technical resources allocated to AML/CFTP by the financial institution, and the confirmation that these resources appear sufficient or, if that is not the case, an assessment of the additional resources that are deemed necessary to enable the financial institution to meet its AML/CFTP obligations; 

Where the financial institution has tasked its senior officer responsible for AML/CFTP with performing the functions of AMLCO in accordance with Article 9 §3 of the Anti-Money Laundering Law, the annual activity report should contain the confirmation that the circumstances justifying this decision have remained unchanged or, if that is not the case, a description of the measures that the institution has taken or will take to respond to the changing circumstances;

Where the financial institution has decided to outsource all or some of the tasks of the AMLCO function to a third party or to another entity of the group, the AMLCO’s annual activity report should mention the checks performed with regard to the performance of the service provider as well as any significant incidents that have occurred in the past year in the context of the outsourcing, and contain an assessment of the completeness, timeliness and quality of the performance of the subcontractor and, where appropriate, a description of the measures taken or proposed to take full account of this assessment;

Where appropriate, it could be useful for the AMLCO’s annual activity report to be based on the responses provided by the financial institution to the periodic or thematic questionnaires established by the NBB and completed by the institution in the past year. In this respect, see the page Reporting by financial institutions.

The principle of proportionality should be applied when establishing the annual activity report. The level of information to be included in it may vary depending on the scale and diversity of the ML/FT risks to which the financial institution is exposed. For instance, the NBB expects the AMLCO’s annual activity report to be much more detailed in case of a financial institution carrying out diversified and large-scale activities, including high-risk activities, than in case of a financial institution that offers a more limited range of products and services associated with lower risks on a smaller scale. In any case, however, the level of information provided in the annual activity report should be sufficient to enable the financial institution’s senior management to form a view of the nature and intensity of the ML/FT risks to which it is exposed, as well as of the adequacy and efficiency of the ML/FT prevention mechanisms implemented in the institution and, where appropriate, of the improvements to be made to them.

In order to better guarantee the quality of the activity reports produced by the AMLCOs of financial institutions and to ensure that these reports provide an effective added value for the senior management of the financial institutions to which they are addressed, in particular by avoiding that these reports are limited to referencing the content of internal policies and procedures or that they omit important information and, in general, with a view to increasing their relevance, the NBB has drawn up an AMLCO report template:pdf - word

The NBB invites financial institutions to adopt this template, with a view to:

• explicitly mention on the “new appointment” fit & proper form for a candidate for head of an independent control function, the fact that this person is also called upon to perform the function of AMLCO; and
• immediately notify the NBB by e-mail of the appointment as AMLCO of the current head of an independent control function.
  • The AMLCO is a staff member of the compliance function.
  1. an explicit statement of whether or not a review of the overall risk assessment imposed by Article 16 of the Anti-Money Laundering Law was required for the reporting year as well as a justification of the decision taken;
  2. the main conclusions of the update of the overall risk assessment required on the basis of Article 16 of the Anti-Money Laundering Law, where such an update has been performed in the past year;
  3. a brief description of the AML/CFTP organisation structure and, where appropriate, of any significant changes made in the past year and of the underlying reasoning, distinguishing in particular between the organisation of the supervision by the persons who are in direct contact with customers or instructed with carrying out their transactions, and the organisation of the functions of the AMLCO;
  4. a brief description of any changes made to the risk-based approach implemented and to the policies, procedures, implementation processes and AML/CFTP-related internal control measures, as well as the reasoning behind these changes;
  5. a structured overview of the work carried out by the AMLCO in the past year, including information on:
     
     1. the nature, number and amount of the atypical transactions detected and transmitted to the AMLCO for analysis,
     2. the nature, number and amount of the atypical transactions effectively analysed by or under the authority of the AMLCO,
     3. the nature, number and amount of the reports of suspicious transactions to the CTIF-CFI (broken down by country of operation),
     4. the number and nature of monitoring missions carried out to verify the implementation of policies, control measures and procedures by employees, agents, distributors and service providers, as well as the adequacy of monitoring resources deployed by the financial institution for AML/CFTP purposes,
     5. the nature and amount of the trainings provided and of the awareness-raising actions undertaken, and
     6. a description of any other measures adopted by the AMLCO;
  6. an analysis of any AML/CFTP-related developments or trends and specific methods and means found with regard to, in particular, the type of customers, the type of transactions, the currencies concerned, or all other relevant information;
  7. supervisory activities undertaken by the supervisor, including communications with the financial institution, as well reports submitted, violations identified and sanctions imposed, measures taken by the financial institution to remedy the violations identified and the current stage of such remedial action, without prejudice to any other periodic reports that may be required in the event of a supervisory activity or remedial action; and
  8. all other useful information on the operation of the AMLCO function and the measures to prevent ML/FT.
  • achieving an overall improvement in the quality of the AMLCO’s activity report and, consequently, in the awareness of the senior management of financial institutions with regard to AML/CFT issues;
  • secondarily, enabling the NBB to adopt a harmonised and coherent approach to processing the information reported to it annually in the area of AML/CFT by the financial institutions under its supervision (to this end, the NBB invites the AMLCOs of these financial institutions to provide it with a copy of their activity report in .docx file format - see the page Reporting by financial institutions).

Insofar as the financial institution remains fully responsible for the AMLCO function, it could be permitted, pursuant to the principle of proportionality and/or for reasons of efficiency, to outsource the executive tasks of the AMLCO function that are assigned to it by the Anti-Money Laundering Law and the Anti-Money Laundering Regulation of the NBB, in full or in part to a third party or to another entity belonging to the same group.

For more information on the principles and concrete arrangements such an outsourcing should comply with, see the page Performance of obligations by third parties.