3.1.Expectations regarding the detection and reporting of suspicious transactions and funds to CTIF-CFI

The investment of assets abroad, whether inside or outside the EEA, by Belgian residents cannot a priori be considered unlawful. However, such an investment may, in certain cases, have (or have had) the purpose of concealing the illicit origin of the assets concerned, for example the fact that they are the proceeds of serious tax fraud, or of carrying out a predicate offence to money laundering.

Financial institutions receiving large amounts of assets from abroad to be credited to a customer's account or as payment for an insurance premium due by the customer, should therefore carry out a thorough examination of this transfer of assets in order to ascertain whether it is consistent with the purpose and nature of the business relationship or the intended transaction and with the customer's risk profile (see the page “Customer and transaction due diligence”). These due diligence obligations should be fulfilled in accordance with the risk-based approach required by Articles 7 and 19 §2 of the Anti-Money Laundering Law. Where necessary, in particular if the transfer involves a large sum in absolute terms or in relation to the customer's profile, this examination should focus in particular on the origin of the assets.

Any transfer of assets that cannot be regarded as a normal or ordinary transaction of the customer, in particular because of the amount, the apparent complexity of the transaction, etc., should be considered "atypical" and should therefore be subject to an in-depth analysis in accordance with Article 45 of the Anti-Money Laundering Law. Such reports of "atypical" transfers of assets should be the result of the due diligence exercised both by the agents who are in direct contact with customers or who are responsible for carrying out their transactions, and by the automated transaction monitoring system (see also point 3.4.2 below). Under the risk-based approach, account should inter alia be taken of the fact that the assets are transferred from abroad. In this respect, see in particular Articles 38 and 39 of the Anti-Money Laundering Law, which require that enhanced due diligence measures be implemented with regard to business relationships or occasional transactions with natural or legal persons or with legal arrangements, such as trusts, that involve a high-risk third country (see Articles 4(9) and 38 of the same Law), and with regard to business relationships or transactions, including the reception of assets, that are linked to a State with low or no taxes (Article 39 of the same Law). The NBB also considers that particular attention should be paid, in this context, to transfers from a country that is known to be or to have been widely used to transfer assets there for the purpose of committing tax fraud or concealing the proceeds thereof.

Where an atypical transfer of assets from abroad is reported to the AMLCO in accordance with Article 35 §1(1) of the Anti-Money Laundering Law, the in-depth analysis to be conducted by the AMLCO in accordance with Article 45 of the same Law (see the page “Analysis of atypical facts and transactions”) should aim in particular to clarify and document, according to the circumstances, why the assets in question were invested abroad, in order to decide whether or not their transfer to the customer's account with the Belgian financial institution concerned is suspicious within the meaning of article 47 of the same Law (see the page “Reporting of suspicions”). The financial institution should decide, under the responsibility of its AMLCO and based on the documented justification resulting from the AMLCO’s analysis, whether all suspicion of money laundering can be reasonably excluded or not and, accordingly, whether a suspicion should be reported to CTIF-CFI.

The Anti-Money Laundering Law does not prohibit a financial institution from receiving assets, repatriated or not, when it knows, suspects or has reasonable grounds to suspect that these assets are related to money laundering. However, pursuant to the first subparagraph of Article 47 §1 of the Anti-Money Laundering Law, financial institutions should, in any case, report to CTIF-CFI when they know, suspect or have reasonable grounds to suspect that funds, transactions, attempted transactions or facts are related to money laundering or terrorist financing. Financial institutions are therefore required to report to CTIF-CFI as soon as they are approached by a potential or existing customer with a view to a potential repatriation of assets that they know, suspect or have reason to suspect are the proceeds of one or more of the criminal activities listed in Article 4, 23° of the Anti-Money Laundering Law, including serious tax fraud, whether organised or not (“attempted transaction”).

However, this reporting obligation does not require the financial institution to identify the predicate criminal activity to the money laundering (see the second subparagraph of Article 47 §1 of the Anti-Money Laundering Law). In addition, the explanatory memorandum to the Anti-Money Laundering Law sets out that when an obliged entity suspects that certain funds have an illicit origin that could be tax fraud, it should report this to CTIF-CFI without having to establish beforehand whether the tax fraud is actually serious or not. Therefore, the financial institution does not have to conduct further investigations in order to distinguish between potential serious tax fraud and possible simple tax fraud. Conversely, if the AMLCO’s in-depth examination provides sufficient assurance that, even if there is a suspicion of tax fraud, such fraud cannot be considered serious, the statutory obligation to report suspicions to CTIF-CFI does not apply to the relevant assets or the transfer thereof. The AMLCO can reach such a conclusion inter alia because the amounts involved are limited, both in absolute terms and in relation to the characteristics of the customer, or because it is clear that the suspected tax fraud has not led to the fabrication and use of falsified documents or to the use of complex structures or a complex organisation.

In accordance with the definition of money laundering in Article 2, 3° of the Anti-Money Laundering Law, the slightest suspicion that the customer knows or cannot reasonably be unaware of the illicit origin of the assetsshould be sufficient grounds for the financial institution to suspect money laundering and, consequently, to give rise to the obligation to report this suspicion to CTIF-CFI. Where donees, heirs or legatees claim to have no knowledge of the origin of the assets transferred to them by the donor or the deceased by way of donation or upon the latter's death, the financial institution should thus assess the credibility of this claim, taking into account the specific features of the case (in particular the nature and intensity of the relationship between the donor and the donee or the deceased and the heir or legatee). If such a claim comes from persons who cannot reasonably be considered to have been unaware of the origin of the assets that the donor or the deceased transmitted to them by way of donation or upon the latter's death, this may indicate that this person wishes to conceal the origin of the assets, and could give rise to suspicions of money laundering.

In any case, it is not permissible for a financial institution to decide not to report a suspicion to CTIF-CFI because it believes that the offences from which the assets may derive are time-barred; this assessment falls within the exclusive competence of the judicial authorities. Furthermore, the sole effect of the limitation is to preclude criminal proceedings and the imposition of criminal penalties; it does not allow to consider the facts in question as lawful.

In addition, neither the potential death of the perpetrator of a predicate criminal activity, as referred to in Article 4, 23° of the Anti-Money Laundering Law, nor the donation of the proceeds of that activity erases the illicit nature of the origin of the assets concerned.

The nature of the tax evaded also is not a relevant criterion for determining whether or not the assets should be considered to have an illicit origin; serious tax fraud that has allowed to evade indirect taxes (VAT, excise duties, tax on stock-exchange transactions (TSEO), tax on securities accounts (TSA), etc.) falls equally within the definition of serious tax fraud as fraud that has allowed to evade direct taxes.

3.2.Expectations regarding the verification of the origin of the assets – supporting documents

Depending on the level of risk identified, the financial institution should seek to corroborate the customer's statement on the origin of the assets (to be) repatriated, by cross-checking it with other reliable and independent sources of information. In this respect, the level of rigour is expected to increase in proportion to the money laundering risk.

• When the assets are acquired by donation, it is generally recommended to obtain a copy of the deed of donation (or of any written confirmation of the manual or bank gift which the donor may have addressed to the donee). It should be noted, however, that while the deed of donation is proof of the direct acquisition of the assets by the donee, it does not provide any information on the acquisition of these assets by the donor or on the origin of the donor's assets. Depending on the risks involved, the donee's financial institution should extend its enquiries to that end.
• When the assets are acquired by way of a legacy or inheritance, a copy of the declaration of estate may be useful to support the assessment of the transaction in terms of the prevention of money laundering, in that it proves that the assets were received directly. However, a proper declaration does not exempt the financial institution from reporting to CTIF-CFI if it suspects or has reasonable grounds to suspect that the inherited assets are the proceeds of criminal activity (e.g. serious tax fraud - as referred to in the Anti-Money Laundering Law - at the time of repatriation) attributable to the deceased. Furthermore, this financial institution is also obliged to report to CTIF-CFI if it knows, suspects or has reasonable grounds to suspect that the assets transferred to it are the proceeds of serious inheritance tax fraud attributable to the heirs. This is the case, for example, if the financial institution knows, suspects or has reasonable grounds to suspect that, although a declaration of estate has been made, none or only part of the assets transferred are mentioned in this declaration. It is all the more obliged to report to CTIF-CFI if it knows, suspects or has reasonable grounds to suspect that no declaration of estate has been made.
• Where the customer claims that the assets derive from the sale of real estate (by the customer or e.g. the donor or deceased), it is useful to obtain a copy of the relevant deed of sale.
• Where the customer claims that the repatriated assets derive from savings accumulated over the years through deductions from the remuneration received abroad by the person concerned (the customer or e.g. the donor or deceased), the financial institution should first assess the credibility of the alleged origin of the assets, not only on the basis of the level of the remuneration of the person concerned at a given date, but also taking into account additional information, such as the period during which this remuneration was received, or the amount of the expenses borne by the person concerned during this period (in particular due to the person's family situation, investments in real estate, etc.). The institution should then determine what documentation on the person's savings capacity it considers sufficient to substantiate the legitimacy of the origin of the assets, particularly from a tax perspective. Wherever possible, pay slips, tax returns or tax assessment notices may be used for this purpose.

Where it is not possible to document the origin of the assets by means of the above documents, the financial institution should seek to obtain other forms of documentation to substantiate the legitimacy of the origin of the assets and decide whether the available documentation is sufficient to satisfy a reasonable person that the transaction does not raise suspicions of money laundering.

When all documentation eventually collected to support the justification of the transaction and the origin of the assets is insufficient in the light of the requirements of the financial institution’s internal procedures, in particular when the circumstances make it impossible for the customer to provide certain supporting documents (e.g. when the customer invokes the long time elapsed since the acquisition of the assets by the donor, the loss or destruction of supporting documents, etc.), the financial institution should decide under the responsibility of its AMLCO:

a) If there is reason to suspect that the lack of sufficient documentation raises or supports a suspicion of money laundering (e.g. if it results from the customer's intention to conceal) or if the deficiencies in the documentation are such that the credibility of the justification provided cannot be reasonably substantiated and thus the suspicions cannot be dispelled; in these cases, the suspicions must be reported to CTIF-CFI; or

b) If the lack of sufficient documentation is exclusively due to material problems arising from the specific features of the individual situation (events occurred too long ago, unintentional destruction of useful documents, etc.), but is not such as to call into question the justification of the legitimacy of the transaction or the origin of the assets, or to raise or support suspicions of money laundering; in these cases, the financial institution may consider it appropriate not to submit a report to CTIF-CFI; on the other hand, it is strongly recommended that the financial institution's reasoning and decision be properly laid down in writing, that the factual elements on which this decision is based be documented as much as possible and that the whole be retained in such a way that it can be produced if necessary; furthermore, the financial institution should take into account in the individual risk assessment the shortcomings in the documentation that could be collected in order to determine the level and nature of the due diligence to be exercised with regard to the customer's future transactions.

In this context, each financial institution should determine the extent to which a simple statement by the customer as to the donor's background and the origin of the assets donated - in particular, the tax status of these assets - may constitute the basis for justifying the legitimacy of the transaction and the origin of the assets. However, such a statement by the customer may be considered only if it appears reasonable having regard to the risks associated with the customer and the transaction. Under a reasonable risk-based approach, full account should be taken of the fact that the mere signing of a written statement by the customer or, a fortiori, the mere oral statement by the customer, without corroboration by additional verifications and documentation, has very little persuasive power.

3.3.Examination of the legitimacy of repatriated assets from a tax point of view

3.3.1. Introduction

Given the high ML/FT risk associated with repatriations of large sums , the NBB strongly recommends financial institutions to conduct a due diligence examination before accepting the assets. When a financial institution nevertheless receives repatriated assets before it has been able to complete its documented examination of the legitimacy of the origin of the assets and of the transaction, and therefore has not yet been able to determine whether it can consider the assets to be of legitimate origin or whether a suspicion should be reported to CTIF-CFI, the financial institution enters a critical period until it has completed this examination and decided whether or not a suspicion exists. The NBB considers that in view of the high risk associated with this situation, the financial institution must, on the one hand, do everything in its power to keep this critical period as short as possible and, on the other hand, subject to enhanced due diligence the account to which the assets concerned are credited. If, during this critical period, the customer requests transfers of assets or cash withdrawals of large amounts from this account, it is the opinion of the NBB that the financial institution should subject these requests to enhanced scrutiny and take them into account when determining whether a suspicion exists. Should, after such transfers have been executed, the documented examination of the legitimacy of the origin of the assets and of the repatriation lead to the conclusion that suspicions of money laundering indeed exist, the suspicious transaction report submitted to CTIF-CFI should clearly mention all transfers made from the account concerned. Furthermore, it should be noted that Article 31, second subparagraph of the Anti-Money Laundering Law prohibits any transfer, withdrawal or remittance of funds or securities to the customer or to the customer's agent from the account concerned before the identity of the customer and of any agents or beneficial owners of the customer has been actually verified, where financial institutions make use of the option provided for in said Article of not completing such verification prior to entering into a business relationship, in the specific circumstances listed in the internal procedures and in accordance with the conditions laid down by the same Law.

3.3.2. Analysis of the legitimacy from a tax point of view of the assets upon their receipt by the financial institution

The Anti-Money Laundering Law does not prohibit a financial institution from receiving assets (repatriated or not) when it knows, suspects or has reasonable grounds to suspect that these assets are related to money laundering. If a Belgian financial institution agrees to receive assets of which it knows, suspects or has reason to suspect that they derive from serious tax fraud as referred to in the Anti-Money Laundering Law, it should ensure, in principle upon receipt of these assets, that the customer has actually taken all necessary measures to regularise the tax status of these assets. Given the exemption from criminal and tax liability it grants to the taxpayer, such regularisation would resolve the initially illicit nature of the origin of the assets derived from serious tax fraud. Consequently, it is recommended to obtain from the customer the documents issued by the tax authorities which make it possible to document that the assets in question have been subject to the applicable tax regime from the beginning or that they have been or are being regularised, and that the taxes due have actually been paid. In this context, due to the generally large sums involved, a mere statement, even in writing, by the customer or the customer’s adviser specifying that the measures for the tax regularisation of the repatriated assets have been taken and that the taxes due have been paid, cannot generally be considered sufficient.

Financial institutions should also avoid situations where the customer, after having taken the necessary measures to regularise the tax status of part of his/her assets invested abroad, in particular by means of a "one-off declaration", repatriates not only these regularised assets but also, simultaneously, other assets that he/she has decided not to regularise, without the financial institution subjecting these additional non-regularised assets to due diligence measures in order to ascertain their legitimate origin from a tax perspective (NB. On the other hand, it may be that the capital invested abroad has a perfectly legitimate origin and that only the income generated by this capital should be considered as deriving from serious tax fraud. Depending on the situation, only part of the repatriated assets may thus have to be subject to tax regularisation measures. It is the responsibility of the financial institution to carry out the relevant analysis and to document the legitimate origin of all of the customer assets it holds).

In the absence of such a tax regularisation, the financial institution should gather and analyse all relevant information to be able to decide whether this information can reasonably dispel the suspicion that the repatriated assets are, in whole or in part, the proceeds of serious tax fraud or whether, if this is not the case, it should report a suspicion to CTIF-CFI.

3.3.3. Application of the Law of 21 July 2016 ("DLU/EBA quater")

In respect of assets for which the required analysis cannot dispel suspicions of laundering of the proceeds of serious tax fraud, account should be taken of the possibility for the customer to proceed (until 31 December 2023) with tax regularisation under the Law of 21 July 2016 establishing a permanent system of tax and social regularisation ("DLU/EBA quater").

Taking into account the significant differences between the Anti-Money Laundering Law and the Law of 21 July 2016, reporting a suspicion of laundering of the proceeds of serious tax fraud to CTIF-CFI would be unfounded in the following two cases:

a) If, as part of the regularisation procedure, the customer has been able to provide proof that all repatriated assets have been subject to the ordinary tax regime (see Article 11 of the Law of 21 July 2016). This proof also makes it possible to rule out, for the purposes of the Anti-Money Laundering Law, the suspicion that these assets derive from serious tax fraud.

b) If the customer has filed a regularisation declaration for the repatriated assets without being able to provide the proof required under the Law of 21 July 2016 that these assets have been subject to the ordinary tax regime, and if this has resulted in the inclusion of the amounts concerned in the basis for calculating the regularisation fee actually paid. In this case too, the assets concerned should no longer be regarded as the proceeds of tax fraud by virtue of the tax and criminal immunity granted to the customer.

However, if the customer has decided not to file a regularisation declaration for the repatriated assets on the grounds that he/she is unable to provide the written proof required by Article 11 of the Law of 21 July 2016, but nevertheless has evidence that he/she considers sufficient, should he/she be subject to criminal proceedings, to support the credibility of the allegation that the assets concerned have been subject to their ordinary tax regime, the financial institution to which those assets are repatriated should assess the evidence put forward by the customer in order to decide whether it can reasonably be considered sufficient to rule out the suspicion that the assets derive from serious tax fraud. In the latter case, the financial institution may decide not to report a suspicion to CTIF-CFI.

Finally, if the customer has decided not to file a regularisation declaration for the repatriated assets on the grounds that he/she is unable to provide the written proof required by Article 11 of the Law of 21 July 2016, and is otherwise unable to provide evidence to support, should he/she be subject to criminal proceedings, the credibility of the allegation that the assets concerned have been subject to their ordinary tax regime, the financial institution to which those assets have been repatriated should consider that there is a suspicion of laundering of the proceeds of serious tax fraud, and report this suspicion to CTIF-CFI.

3.4.Organisation and internal control

3.4.1. Additional requirements with regard to governance

See the Governance page.

In addition, Article 9 §2, third subparagraph, 2° of the Anti-Money Laundering Law provides that AMLCOs should, in particular, possess the adequate expertise that is necessary to perform their functions effectively, independently and autonomously. Where, due to its business model, a financial institution frequently receives large, repatriated sums , it should ensure that the AMLCO him-/herself has the necessary expertise to act on suspicions of laundering of the proceeds of serious tax fraud. Given the potentially highly technical nature and possibly high complexity of the analysis of repatriation transactions and, in particular, of their tax aspects, it may be useful or even necessary for the AMLCO's analysis to rely on the expertise of specialist advisors, particularly in the field of tax law. Where appropriate, such specific expertise may be provided by establishing an ad-hoc committee within the financial institution. In that event, care should be taken to ensure that appropriate measures are implemented to prevent conflicts of interest on the part of such advisors and/or such a committee and to ensure the objectivity of the opinions provided. In any case, the decision whether to consider a transaction as suspicious should remain the prerogative of the AMLCO appointed in accordance with Article 9 §2 of the Anti-Money Laundering Law.

3.4.2. Additional requirements on policies, procedures, processes and internal control measures

See the page “Policies, procedures, processes and internal control measures”.

As repatriations require a specific examination, it is also recommended that financial institutions establish and implement a procedure to enable customers to give advance notice of their intention to carry out repatriations, and to enable financial institutions to gather the relevant information needed to analyse these repatriations at an early stage. Finally, given the particularities of repatriation transactions, it may be advisable for financial institutions with frequent exposure to such transactions to establish appropriate internal procedures for analysing them and formulating an appropriate justification of the legitimacy of the assets on the basis of the documentation that is necessary to support the credibility of that justification.

It may also be necessary, depending on the level of risk for the financial institution of being confronted with repatriations of assets , that the criteria applied by the persons in direct contact with customers and transactions (see Article 16 of the Anti-Money Laundering Regulation of the NBB) and the criteria applied in the automated transaction monitoring system (see Article 17 of the same Regulation) be defined in such a way as to allow for effective detection of repatriations of assets . The criteria to be used by those agents and by the automated system to identify and report atypical transactions should be established by the financial institutions in their internal policies and procedures. For example, in addition to the amount of the transfer, other potential criteria to be taken into account include the countries from which the assets are transferred, the complexity or opacity of the legal structure of the originator of the transfer, the reasons for the transfer, the relationship between the donor (as originator of the transfer), and the done (as beneficiary of the transfer), etc. For the definition of these criteria, see the page “Risk-based approach and overall risk assessment” and in particular the EBA Risk Factors Guidelines mentioned thereon.