Embargo and assets freezing measures are taken as part of financial sanctions regimes. Financial sanctions are restrictive measures taken against governments of third countries, natural persons, legal persons or de facto groups, in order to put an end to certain types of criminal behaviour.

A financial sanctions regime is an instrument used by international or European institutions or the Belgian government for various purposes, including foreign policy, the fight against terrorism and its financing or the fight against the proliferation of weapons of mass destruction.
Although financial institutions must comply with all financial sanctions, this web page focuses mainly on financial embargoes and assets freezing measures related to the fight against terrorism and its financing, and to the fight against the proliferation of weapons of mass destruction. For the specific due diligence obligations relating to the fight against the proliferation of weapons of mass destruction, see the page Due diligence on business relationships and occasional transactions and detection of atypical facts and transactions, where it is recalled that transactions that could be related to the proliferation of weapons of mass destruction should also be considered atypical because of the intrinsic characteristics of these transactions or of the persons acting as customers, agents, beneficial owners or counterparties in these transactions, in particular because of their links with the countries concerned or with persons or entities known to be involved in the proliferation of weapons of mass destruction.

The term “financial embargo" is generally understood to mean a restrictive measure or a sanction taken against a country at the national and/or international level for various reasons, as explained above. The term "assets freeze" refers to a temporary restriction of the right of ownership of a natural or legal person in the context of the fight against terrorism or the proliferation of weapons of mass destruction.

Embargo and assets freezing measures must be implemented by financial institutions as soon as they enter into force. They create an obligation of result on their part. Unlike other provisions of the Anti-Money Laundering Law, the application of embargo and assets freezing measures is not subject to a risk-based approach.

Attention is also drawn to the fact that violations of embargoes and assets freezes may give rise to criminal sanctions and that the Law of 13 May 2003 relating to the implementation of restrictive measures adopted by the Council of the European Union against some states, persons and entities also provides for sanctions in case of infringements of European regulations and decisions. . Since the entry into force of the Law of 2 May 2019 containing various financial provisions, the General Treasury Administration of the FPS Finance is competent to identify and record any infringements of financial restrictive measures. While the identification of such infringements does not fall within the NBB's legal competence, it is nevertheless incumbent on it, as the supervisory authority designated by the Anti-Money Laundering Law, to ensure that the financial institutions within its competence have developed and implement policies, procedures and internal control measures that are efficient and commensurate with their nature and size, in order to comply with the mandatory provisions on financial embargoes, as required by Article 8 § 1, 3°, of the Anti-Money Laundering Law (see point 3 below).

Pursuant to Article 8, § 1, 3°, the obliged entities should develop and implement policies, procedures and internal control measures that are efficient and commensurate with their nature and size in order to comply with the mandatory provisions on financial embargoes.

In accordance with Article 23 of the Anti-Money Laundering Regulation of the NBB, financial institutions should set up a monitoring system to monitor compliance with the binding provisions concerning financial embargoes and assets freezes.

3.1. Expectations of the NBB regarding the monitoring system

The monitoring system must screen customer databases and transactions involving the receipt or provision of funds, financial instruments or economic resources, to detect whether a customer or the beneficial owner of one of the above-mentioned transactions is subject to an assets freezing measure.

Pursuant to Article 23 of the Anti-Money Laundering Regulation of the NBB, this monitoring system should:

1. cover all customers’ accounts and contracts and all their transactions;
2. allow rapid detection of any infringements of the provisions on embargoes and freezing of assets or detection in real time whenever these provisions require it;
3. be automated, unless the financial institution can demonstrate that the nature, number and volume of transactions to be monitored do not require it; and
4. be subject to an initial validation procedure and a regular review.

The NBB also draws the attention of the financial institutions to the following:

3.1.1 Freeze lists to be taken into account 

The monitoring system should take into account all the financial embargo and freezing mechanisms described in point 2 above. The list used by the monitoring system should therefore be updated very regularly and whenever a new person or entity is added in accordance with the rules laid down in the procedure for monitoring transactions with a view to complying with financial embargo and assets freezing obligations. The AMLCO must therefore provide for a legal follow-up to monitor changes to the lists of financial embargoes and assets freezes. If the financial institution has branches abroad, these branches should comply with the local regulations on assets freezing. In that case, the group's parent company may also take into account the freeze lists of countries with which it has a branch-type link.

3.1.2. Setting up of the monitoring system

The monitoring system should make it possible to detect:

• on the one hand, customers, agents and beneficial owners whose identification data are identical to the available identification details, including aliases, of a person or entity that appears on an official list of sanctions applicable in Belgium; and

• on the other hand, the counterparties of outgoing financial transactions carried out by a customer or an agent whose surname, first name or alias or company name are identical to the data included in an official list of sanctions applicable in Belgium (N.B.: the NBB also considers it useful that the monitoring system allows for the detection of the originators of incoming financial transactions. If it appears that the originator (and only the originator) of the incoming financial transaction is included on an official list of sanctions applicable in Belgium, the execution of the incoming financial transaction would not lead to assets being made available to such a person or entity and therefore would not infringe the rules on financial embargoes and assets freezing; however, from the perspective of ML/FT prevention, such a transaction should be considered as atypical or even suspicious and a review of the risk profile of the customer and related persons may be required, where appropriate accompanied by a reporting of suspicions to CTIF-CFI - see point 5.4. below).

The NBB therefore recommends that financial institutions avoid basing their monitoring system on an exact match type reconciliation function and that they should determine what they deem to be a reasonable level of similarity. As an indication, it is noted that in practice, the most frequently used level of similarity is 85%.

3.1.3. Scope of the monitoring system

The screening mechanisms of the monitoring system should make it possible to detect funds, financial instruments and economic resources that:

• belong to or are owned by a listed person or entity;
• are held or controlled by a listed person or entity;
• are made available, directly or indirectly, to a listed person or entity.

3.1.4. Frequency of the screening

Financial institutions should carry out a screening before entering into a business relationship and before carrying out an occasional transaction, as well as when carrying out transactions involving third parties, such as, in particular, transfers of funds to third parties ordered by their customers or the receipt of transfers of funds executed by a third party on behalf of their customers.

Financial institutions should also recheck their customer databases when new persons or entities are added to the existing assets freeze lists.

3.1.5. Screening of counterparties to domestic transactions

Financial institutions’ monitoring system must be able to detect correspondences as referred to in point 3.1.2, regardless of whether the transaction is domestic or non-domestic. Accordingly, that system must screen the counterparties to their customers’ domestic transactions; failure for a financial institution to effect such screening would amount to a breach of its obligations in respect of which the NBB will have to consider imposing administrative measures to remedy the situation as soon as possible and, where appropriate, imposing sanctions.

Various financial institutions in Belgium have organised the reciprocal multilateral outsourcing of the screening of counterparties to domestic transactions and to that end have instituted rules applicable among themselves (the ‘Domestic Sanction Screening System’).

Insofar as the Domestic Sanction Screening System is effectively implemented, the NBB considers that participating financial institutions may avail themselves of this system to demonstrate their adequate organisation within the meaning of Article 8, §1, 3° of the Anti-Money Laundering Law and compliance with Article 23 of the Anti-Money Laundering Regulation of the NBB, in respect of the screening of counterparties to domestic transactions where such counterparties are customers of a participating financial institution.

The effective implementation of the Domestic Sanction Screening System comprises the effective conduct of audits by or on behalf of the participating financial institutions, verifying the effectiveness of the screening carried out on behalf of these institutions.

3.2. Analysis of alerts generated by the monitoring system

The purpose of the analysis of the alerts is to determine whether the person or entity detected by the monitoring system is the person who is subject to a freezing measure or a homonym of that person.

There is homonymy when:

• the spelling of the surname and first name or alias or corporate name is identical to that of the listed person or entity, including where the surname is not distinguishable from the first name;

• the spelling of the surname and first name or alias or corporate name differs from that of the listed person, due in particular to different transcriptions from the same foreign alphabet, but sounds similar.

3.2.1. Role of the AMLCO

The AMLCO should, under his responsibility, put in place a process to analyse, as quickly as possible, alerts generated by the monitoring system. To this end, one or more persons from the AMLCO team should be appointed to carry out this task. If necessary, in case the AMLCO works alone, this function may be delegated to an AMLCO correspondent in an operational department, who will work under the responsibility of the AMLCO. The NBB insists that, where this possibility is availed of, the AMLCO remains fully responsible for all tasks related to the analysis of alerts generated by the monitoring systems, even where these tasks are delegated to an AMLCO correspondent in an operational department.

3.2.2. Steps to be taken in the event of an alert

The AMLCO must define in a procedure the steps to be taken in the event of an alert (see point 3.2. below). This procedure should include in particular:

• the comparisons to be made to identify cases of homonymy;

• the data that must be collected to allow the alerts to be processed adequately;

• the modalities of the reporting to the FPS Finance - Treasury Department,

• etc.

In the course of processing an alert, the AMLCO may contact the FPS Finance - Treasury Department, but this exchange of information is to be distinguished from the formal reporting mentioned in point 5 below.

3.2.3. Suspension of the execution of all transactions

In the event of an alert, financial institutions should suspend the execution of all transactions to or from a person or entity that may be listed, until the alert has been processed. This suspension may be subject to conditions such as the provision, by the customer, of additional information or the provision of documentation on the proposed transactions or the counterparties involved.

If the analysis of the alert leads the AMLCO to conclude that the customer or beneficiary of a transaction is subject to a financial embargo or assets freeze, this has several consequences.

5.1. Prohibition to enter into a relationship 

Financial institutions may not enter into a relationship with a person or entity subject to a financial embargo or assets freezing measure.

5.2. Prohibition on assets being made available

Implementing a freezing measure implies freezing all assets of the listed customer. Transactions aimed at making assets available to a third party may not be carried out. The term "assets" is defined broadly and covers funds, financial instruments and economic resources. The term "economic resources" refers to all assets of any kind, whether tangible or intangible, movable or immovable, which are not funds but can be used to obtain funds, goods or services.

For bank-type financial institutions, this implies that the accounts of listed customers must remain inactive. In the case of financial institutions within the insurance industry, the performance of life insurance contracts must be frozen in any phase of the contract, save where only the insured is a listed person, as the insured neither pays nor receives funds.

5.3. Immediate reporting to the FPS Finance - Treasury Department

The NBB stresses that where a financial institution applies an assets freezing measure, it should contact the FPS Finance - Treasury Department immediately (cf. the Treasury’s website or using the following e-mail address: [email protected]).

Financial institutions are expected to do this as soon as possible and, in any case, as soon as the analysis of the alert has demonstrated that the person or entity detected is indeed the person or entity that is subject to a freezing measure.

The NBB recommends that this reporting be made by the AMLCO. In that case, the AMLCO provides the General Administration of the Treasury with all the information at its disposal, so as to enable it to carry out the necessary verifications (for example: a copy of the identity card or passport of the person concerned, reference to the Regulation or Decision which imposes the sanction and which includes the name of the person or entity that is subject to the sanction, etc.).

5.4. Review of the risk profile of a listed customer and of the persons related to him, and, if necessary, reporting to CTIF-CIF

Financial institutions should review the risk profile of customers included in a list of embargoes or assets freezes and of the persons related to them. They should implement appropriate due diligence measures with respect to the customer concerned and the persons related to him and should carry out a thorough examination of previously executed transactions, and, more broadly, of the functioning of all business relationships with the listed person or entity, which may be aimed at making funds, financial instruments or economic resources available to the listed person or entity or may be related to money laundering, terrorist financing or the financing of the proliferation of weapons of mass destruction. If the review of the customer’s risk profile leads to a decision to terminate the business relationship, such decision may under no circumstances have the effect of returning the assets subject to the freezing measure to the customer.

Besides the assets freezing measure and its notification to the FPS Finance - Treasury Department, it may also be necessary to report a suspicion to CTIF-CFI (see the page Reporting of suspicions).

5.5. Lifting of financial embargo and assets freezing measures

If a financial embargo and assets freezing measure can be lifted, the financial institution should contact the FPS Finance - Treasury Department without delay to determine the concrete measures that should be taken.