Persons to be identified: Comments and recommendations by the NBB

Contents

1. Categories of persons to be identified and whose identity should be verified

1.1 Enumeration

The Anti-Money Laundering Law and the Anti-Money Laundering Regulation of the NBB distinguish four categories of persons who should be identified by the financial institutions and whose identity should be verified:

  • the customers (Article 21 of the Law and 10 of the Regulation):
    • with whom they establish a business relationship;
      1. one or more transactions which appear to be linked and which amount to a total of EUR 10 000 or more; or
      2. without prejudice to the obligations laid down in the European Regulation on transfers of funds, one or more credit transfers or transfers of funds that appear to be linked and that amount to a total of more than EUR 1 000, or regardless of the amount if the financial institution receives the funds concerned in cash or in the form of anonymous electronic money;who, outside the framework of a business relationship, occasionally carry out:

        Pursuant to Articles 5(3)(a) and 7(4)(a) of the European Regulation on transfers of funds, the obligation to identify and verify the identity of the payer and payee in case of a transfer of funds applies regardless of the amount of the transaction when the payment service provider receives or remits the transferred funds in cash or in anonymous electronic money;

    • who are not referred to above and with regard to whom there is a suspicion of ML/FT;
    • with regard to whom there are doubts regarding the veracity or accuracy of the data that was previously obtained in order to identify them;
    • when there are reasons to doubt whether the person wishing to re-establish a previously established business relationship is actually the customer identified in the framework of this business relationship or his authorised and identified agent;
  • the agents of the aforementioned customers (Article 22 of the Law),
  • the beneficial owners of the customers and of their agents (Article 23 of the Law)
  • and the beneficiaries of life insurance policies or of equivalent policies (Article 24 of the Law).

For more information on the persons to be identified and whose identity should be verified and, in particular, on the notions of “business relationship”, “transfer of funds” and “beneficial owner”, see the comments in the Explanatory Memorandum of Articles 21 to 24 of the Anti-Money Laundering Law (see the page "Main reference documents". 

1.2 Application of a risk-based approach

As for all due diligence obligations, a risk-based approach is also adopted for the identification and identity verification obligation, in accordance with Article 19 of the Anti-Money Laundering Law. Each financial institution must henceforth determine, based on the risk identified by it, which information should be obtained to identify a person and which information should be verified to ascertain his/her identity. This is a substantial change compared to the Law of 11 January 1993, which adopted a rule-based approach and listed which information should be obtained and verified in all cases in order to fulfil the identification and verification obligation.

Consequently, the legal exemptions from the identification obligation that were previously mentioned in Article 11 of the Law of 11 January 1993 are not included in the Anti-Money Laundering Law. Henceforth, when business relationships are established or occasional transactions concluded with customers who were mentioned in the aforementioned Article 11 of the Law of 11 January 1993, it will fall upon the financial institution to perform an individual risk assessment in accordance with Article 19, § 2, of the Law and to determine, on the basis of the results of this assessment, the intensity of the measures to be taken to identify and verify the identity of the customer, which may be lower in cases of low risk but must be higher in cases of high risk.

For more information in this regard, see the page “Object of the identification and identity verification”.

1.3. Internal procedures

As a reminder, the NBB recommends that financial institutions, in the context of the internal procedures to be adopted pursuant to Article 8 of the Anti-Money Laundering Law, establish, in particular, procedures for the due diligence measures to be implemented with regard to customers and transactions, which notably enable them to ensure that the persons to be identified are listed exhaustively.

For more information on this subject, see the page “Policies, procedures, processes and internal control measures”.

2. Specific derogation: low-risk issuance of electronic money

2.1. Possibility of derogation

Article 25 of the Anti-Money Laundering Law provides for the possibility of derogation for financial institutions issuing electronic money. These institutions may, where the overall assessment of the ML/FT risks specifically associated to their issuing activity shows that these risks are low, decide to neither identify nor verify the identity of the customers (and, where appropriate, of their agent(s) and beneficial owner(s)) who provide them with funds for the issuance of electronic money.

2.2. Conditions for application of the derogation

However, this possibility of derogation is subject to multiple conditions. In addition to the fact that the overall risk assessment carried out by the electronic money issuer must demonstrate that the level of ML/FT risks to which it is exposed as a result of this activity is low, the following cumulative conditions must be met:

  1. the payment instrument cannot be reloaded or, if it is reloadable, it can only be used in Belgium and only to make payments up to a maximum monthly limit of EUR 150;
  2. the maximum amount stored electronically does not exceed EUR 150;
  3. the payment instrument is used exclusively to purchase goods or services; it follows in particular that it cannot be accepted to perform a money remittance operation;
  4. the payment instrument cannot be funded with anonymous electronic money;
  5. the electronic money issuer concerned carries out sufficient monitoring of the transactions or business relationship to enable the detection of unusual or suspicious transactions.

2.3. Non-application of the derogation

Even if all the conditions listed above are met, the derogation is not applicable when a customer:

  1. is redeemed in cash, at the monetary value of the electronic money, 
  2. withdraws this value in cash, or
  3. carries out remote payment transactions within the meaning of Article 2, 23° of the Law of 11 March 2018

if the amount redeemed, withdrawn or paid, as the case may be, exceeds EUR 50.

In these three cases, where the legislator considered that the risk could not be regarded as low, the electronic money issuer is required to take appropriate measures to identify and verify the identity of the customer concerned (and, where appropriate, of his agent(s) and beneficial owner(s)) at the time of the refund or withdrawal of the electronic money or at the time when the customer carries out remote payment transactions using electronic money (that was previously issued without any such measures).

With regard to anonymous prepaid cards issued in third countries, the institutions referred to in Article 5, § 1, 4°, 6° and 7° of the Anti-Money Laundering Law, which offer payment services consisting in acquiring payments transactions, as referred to in point 5 of Annex I.A. of the Law of 11 March 2018, may accept payments made with such anonymous prepaid cards only if such cards comply with conditions equivalent to those laid down in the first and second paragraphs of the same Article of the Law. Where appropriate, these institutions must therefore have effective systems in place which enable them to check - at the time when the payment transaction is accepted - that these legal conditions are met and must immediately refuse the payment transaction if this should not be the case.

In the same vein, the NBB highlights the fact that, where circumstances have given rise to suspicions of ML/FT, either at the time of establishment of the business relationship with the customer or subsequently, that lead the electronic money issuer to report a suspicion to CTIF-CFI and, in accordance with Article 22 of the Anti-Money Laundering Regulation of the NBB, to carry out an individual re-assessment of ML/FT risks revealing that the level of risk associated with the given situation can no longer be regarded as low (which should logically be the case - see the page “Reporting of suspicions”), the said issuer can no longer invoke the derogation provided for in Article 25 of the Law. The issuer should immediately identify and verify the identity of the customer (and, where appropriate, of his agent(s) and beneficial owner(s)), in accordance with Articles 21 to 23 of the Law.

2.4. Documentation

Finally, since the above-mentioned possibility of derogation is not absolute but subject to certain limitations, the NBB recommends that the financial institutions applying the derogation be able not only to submit the overall risk assessment that establishes the low level of risk, which must be documented, updated and made available to the NBB pursuant to Article 17 of the Law (see the page “Reporting by financial institutions”), but also to demonstrate to the NBB that, in all cases where they have applied Article 25 of the Law, each of the legal conditions to benefit from this derogation is met.

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