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Anti-money laundering

The Belgian Anti-Money Laundering legislation of 11 January 1993 applies to registered diamond traders since 2004. Regulations were drafted in 2006 (Royal Decree of 22 October 2006) specifically for the diamond industry, in which the sector-specific anti-money laundering obligations were further elaborated (Royal Decree of 7 October 2013)

More information on the anti-money laundering issue can be found in our Doing Business guide

The most frequently asked questions are hereunder answered by the AML & Compliance helpdesk : 

What is a diamond trader? Does this include brokers, jewelers?

A diamond trader is any trader (including diamond brokers) registered as a diamond trader with the Licensing Service of the Federal Public Service Economy (in Dutch abbreviated as FOD Economie). Diamond jewelers are not obliged to register; however, jewelers that want to import loose diamonds to set in jewelry need a registration number. 

All Belgian registered diamond companies are listed on the website www.registereddiamondcompanies.be and are assigned a unique registration number. Once registered, every diamond trader is subject to various obligations (such as anti-money laundering legislation, yearly stock declarations and Kimberley Process declarations in case of rough diamond transactions, etc.).

What is my registration number and where do I find it?

Every diamond trader based in Belgium is obliged to register with the Licensing Service of the Federal Public Service Economy (in Dutch abbreviated as FOD Economie) in Antwerp.

Your registration number is not the same as your VAT-number, but is a specific number assigned to you when registering as a diamond trader.

Your registration number can be found via the website: www.registereddiamondcompanies.be

What is money laundering and terrorist financing?

 

1. Money laundering: all actions connected with money of illegal origin, such as the conversion, transfer, acquisition, possession, use, ... of funds deriving from criminal activities.

 

Money laundering always has an underlying crime, such as drug trade, corruption, illegal trade (for example : trading rough diamonds without a Kimberley Process certificate).

Money can be laundered by using a shell company, overseas of underground banking, etc…

 

2. Financing of terrorism: gathering and/or providing funds, whereby there is at least knowledge that the funds will be used (in part) by or for a terrorist, a terrorist organization or a terrorist offence.

 

 

I am registered as a diamond trader but do not have any activity buying or selling diamonds. Do I need to submit the annual AML activity report?

Even if you didn’t have any activity in the past year, you still have to complete and submit the AML activity report. However, the form only has to be completed partly until the third question : “Are you a Belgian registered diamond company with

commercial transactions in diamonds in the last year?” You may answer ‘no’ to this   question.

 

The AML activity report  is then complete and you can submit it online (via www.registereddiamondcompanies.be ) or send it to tthe License Service of the Federal Public Service of Economy (in Dutch abbreviated as Fod Economie) to the following  address: Theaterbuilding - Bureau 11.06 , Italiëlei 124, bus 71 - 2000 Antwerpen, for the attention of Daniel Daeyaert. Additionally you can make a remark on the last page in your  report that you had no activity last year.

How is anti-money laundering (AML) regulated in Belgium and what are the sanctions?

Belgian Law dd. 11 January 1993 to prevent the use of the financial system for the laundering of money and the financing of terrorism.

Applicable to the diamond sector since 2004

Royal decree of 2006, comprising of AML-regulations for the diamond sector

Royal Decree of 7 October 2013  replacing Royal Decree of 2006,  to implement the Law of 11 January 1993 in the diamond sector.

 

All diamond dealers are obliged to fully comply with the Law and the Regulations.

In short, what do I have to do according to this law?
 

  • Submit a yearly AML activity report to the License Service of the Federal Public Service of Economy
  • Appoint an AML responsible person in my company
  • Identify my clients via ID cards and bylaws
  • Verify the documents received
  • Perform a risk analyses
  • Notify suspicious transactions to the Financial Intelligence Unit (in Dutch abbreviated as CFI).

I have only sold one stone in the last year; must I fill in the anti-money laundering activity report?

Even if you only had one transaction in the last year, you still need to complete the form in full. However you may add a remark on the form regarding the limited activity in your company.

Do I need an AML officer in my company and what are my obligations as an AML officer?

It is obliged to appoint one or more anti-money laundering officers in your company.

 

You are free to appoint anyone of your management or employees as the responsible person for anti-money laundering who has the professional experience, the hierarchical level and the powers necessary to effectively and autonomously perform the function. The nomination of the AML-officer will have to be done simultaneously with the registration of the diamond dealer.

 

The AML officer is tasked to implement the Law, the Regulations to manage the Client Acceptance Policy, train other staff members on the AML regulations, notify suspicious activity to the Financial Intelligence Unit (in Dutch abbreviated as CFI), create awareness on the cash limits, etc..

 

The AML officer is the primary contact person for the CFI and the License Service of the Federal Public Service of Economy (in Dutch abbreviated as Fod Economie), for example in case of an inspection. Therefore it is important to appoint a person in your office that is always present.

 

The ultimate (legal) responsibility remains with the company and directors of the company, except when the AML officer would maliciously misconduct.

 

Do I need to attend an AML seminar and do I need a certificate?

The law requires you to stay updated with the AML legislation. Therefore, AWDC organizes seminars on a monthly basis with the latest updates on the AML obligations. After having attended a seminar, you obtain an attendance certificate.

In case you would be subject to an administrative control by the Licensing Service of the Federal Public Service Economy (in Dutch abbreviated as FOD Economie), the certificate proves that you attended a seminar. It is therefore definitely wise to keep this certificate at hand.

AWDC recommends that you attend an AML seminar every year to stay updated.

To register for a seminar, go to www.awdc.be/events.

Why does this law not apply in other countries?

The AML law in Belgium is quite strict and Belgium is a frontrunner when it comes to compliance and transparency, especially in the Belgian diamond industry. Nevertheless, anti-money laundering is a global issue, which should be tackled in all countries, also outside of Europe. Compliance initiatives in other diamond trade centers do exist, and this creates a more level playing field. Nonetheless, there is more work to be done to reach the same level as in Belgium. 

As a diamond broker, am I subject to anti-money laundering legislation?

If you only invoice your commission, you are not subject to anti-money laundering legislation but you do have to submit your AML activity report partly.

If you sell diamonds out of your own stock you are subject to all anti-money laundering obligations.

How do I get started to comply with AML legislation?

Start by creating a file for each client in which you gather identification data and all communication with your client with regard to the identification process (e-mails, letters, any written comments about a verbal contact, etc.). Also add a report to this file in which you describe the investigation measures that were taken and the reasons why the outcome was negative or positive. This file can also be stored on your computer, whereby it is recommended to print out the first page of a report. Just bear in mind that the Licensing Service of the Federal Public Service Economy can perform an unannounced control and you will need to be able to find everything easily.

I have had the same client for years; do I still need to identify him?

Yes, even if you have been dealing with a client for years, you need to identify him and request all identification documents. 

 

The Belgian law requires that, while dealing with clients, all identification documents need to be updated every two years.

 

In case you don’t deal with a client anymore, you don’t need to update these files.

 

You do have to store documents (even when you don’t deal with these clients anymore) for 5 years in your archives.

Is it not enough that a client has already gone through an identification check by the banks or is a member of a bourse?

No. Bourses just have an identity card of a natural person; they have no other information on the companies of their members and they are not able to control or monitor the transactions their members perform.

A Belgian diamond trader might be in the situation where he decides not to continue with a transaction because he finds it suspicious. In this scenario, banks are not involved since there is no payment. Nevertheless, it is important that the Belgian diamond trader reports this suspicious client to the Financial Intelligence Unit  (in Dutch abbreviated as CFI). This is why it is important that Belgian diamond traders are also subject to AML legislation (banks are often not involved in suspicious activity).

May I use the EU VAT number to identify European clients?

When doing a transaction in the European Union, it is advised to double-check the VAT number of your client (or supplier).

This can easily be done via the following link :  

http://ec.europa.eu/taxation_customs/vies/vieshome.do?locale=nl

However, the EU VAT number is not sufficient to identify your client. The law requires that you identify your client according to specific documents described in the law. More information on what documents you need to gather on your client, are found in the answers hereunder.

How do I check the identity of my client and verify this?

A. If your client is a Belgian registered diamond trader, you can print the details of this company from the website www.registereddiamondcompanies.be.

 

A printout is sufficient and you do not need any further documents from this client.

 

Of course, if you notice something suspicious, please notify AWDC or the Financial Intelligence Unit  (in Dutch abbreviated as CFI) if you think there is a risk of money laundering or terrorism .
 

B. If your client is a Belgian company but is not registered as a diamond trader (i.e., a jewelry company), you identify him as you would identify a foreign client. (see hereunder)

 

C. If your client is a Belgian or foreign natural person (which means, a single person without a company), you ask for:

  • a valid ID, or;
  • a valid proof of registration in the aliens register, or;
  • a valid document issued by a Belgian public authority which states that this person is residing legally in Belgium.

 

D. If your client is a foreign company, you will need the following documents:

  • Copy of the statutes;
  • List of directors/managers;
  • Copy of the identity card or passport of the representative;
  • Proof that the representative may represent the company;
  • Names of the ultimate beneficiaries (i.e. you gather information on who owns 25% or more of your client's shares and ask information on names, birth dates, and place of residence).

TIP : listed companies (beursgenoteerde bedrijven) do NOT need to be identified ! 

To inform your client about this obligation, AWDC drafted a letter in different languages that lists all the documents that a foreign client has to provide. Download the client letter by clicking on it : 

- Client letter English version

- Client letter Dutch version

- Client letter Italian version

- Client letter Hebrew version

- Client letter Hindi version

- Client letter French version

- Client letter Spanish version

- Client letter Russian version 

- Client letter German version 

- Client letter Chinese version

 

 

Are there extra tools to identify foreign clients?

A. KYC Database (Bureau Van Dijk)

AWDC offers a free database to all Belgian diamond traders. The data is delivered through an external provider (Bureau Van Dijk) and comprises identification details (including shareholder structures, any beneficiaries and names of directors, etc.) for 250 million companies worldwide, as well as various sanctions lists, Politically Exposed Persons lists and FATF high risk countries. The database also screens according to specific risks pertaining to the diamond industry.

This tool helps diamond traders to verify information received from clients and also provides better insight into the potential risks that come with transactions and/or business relations.

One should note that the database is not always entirely complete, and its use should only be considered as an additional aid for identifying the customer. It most certainly should not be the only source of information.

Diamond traders that wish to utilize the database must follow a brief practical training session at AWDC in order to learn how to use the system. Only then will they receive access to the system. It is important to stress that the KYC database is an additional value in the compliance process of the diamond trader that can be used as extra verification.

To get access to the database, please contact the AML & Compliance helpdesk via 03/222.05.06 or dorien.vandersanden@awdc.be – 03/222.05.03 – trst@awdc.be

B. Israel

Via the website www.israelidiamond.co.il you can contact the representative of the Israeli diamond industry.

Email: support@israelidiamond.co.il 

Tel.: +972-54-3452913

The following information may be requested:

  1. If the diamond trader has the necessary license.
  2. If the diamond trader is member of a bourse.

The following websites are only available in Hebrew:

 

  1. Registrar of Companies:
    http://ecom.gov.il/Counter/alternative/cde/CdeInputPage.aspx?counter=20&catalog=1&category=companyextract&language=he
  2. Website of “The Israeli Corporations Authority”
    http://havarot.justice.gov.il/

 

C. United States

The following page contains a link to all useful webpages of the different states in the U.S. They can be used to search for certain information concerning U.S. companies. The published information differs from state to state.

http://www.companieshouse.gov.uk/links/usaLink.shtml

 

D. India

Website of the Ministry of Corporate Affairs

http://www.mca.gov.in/DCAPortalWeb/dca/MyMCALogin.do?method=setDefaultProperty&mode=14

Website of the Ministry of Commerce and Industry

http://dgft.gov.in/

 

(Go to 'View your IEC' and you will find all the details in a list). You need the name of the firm that you wish to invoice, including their Import/Export number).

 

E. United Arab Emirates

 

Website of the “Department of Economic Development”:

https://eservices.dubaided.gov.ae/Pages/Anon/GstHme.aspx?lid=1

 

F. THAILAND 
 

Website of the Thai Gems and Jewelry Traders Association, that comprises most of the reputable companies as a member.

 

http://www.en.thaigemjewelry.or.th/Membership-Thaigemjewelry

Am I allowed to request a copy of my clients’ ID according to Belgian privacy laws and foreign law? What if foreign law is in conflict with Belgian law?

Belgian anti-money laundering legislation has priority over Belgian privacy laws, so according to Belgian law you are allowed to request a copy of an ID card in order to fulfill your anti-money laundering obligations.

If a foreign client is unwilling to provide a copy of his ID card, this should be considered as a high risk in your client acceptance policy. If your client refers to legislation that forbids him/her to provide a copy of his/her ID card,  (e.g. some government companies) your client should be able to provide evidence by reference to the specific legal exception. In such cases, the anti-money laundering responsible person should draft a report to keep in the identification file explaining for example why he/she decided to accept the client despite the lack of a copy of an ID card.

Also, you can recommend the client to erase the signature and to write on the copy:  “copy destined for AML-purposes for company XXX dd. XX/XX/XXXX

What if I do not receive all the documents from my client or my client refuses to provide certain documents?

Send a reminder to your client with the friendly request to provide you with the necessary documents and the remark that Belgian legislation obliges you to identify your client and verify their identity before making a diamond transaction.

If no response follows, and you already closed the diamond transaction, we recommend that you make a printout of the e-mails and reminders sent to the client. Also print out all information available on the Internet (i.e. positive media, Bureau Van Dijk report, website of the client, references from other diamond traders, etc.).

Finally, draft a short report wherein you explain why you decided to deal with the client, even though you did not have all the documents (i.e. good reputation of client, recommended by someone, you have been dealing with that client for over twenty years, etc.).

Nevertheless, if your client refuses to provide a copy of his identity card and/or a copy of the company statutes and/or names of the ultimate beneficial owners, this is to be considered as highly suspicious. The law requires that you refrain from entering into a transaction with this client. Also, the anti-money laundering responsible person (the AML officer) should mention this in his client acceptance policy.

How long must I keep files and documentation?

There is a difference between keeping identification documents updated (see question hereunder) and keeping them stored!

You must store your AML documents for a minimum period of 5 years after the termination of the relevant business relationship or the execution of the transaction in question.

When do I have to update identification documents?

Belgian law requires that, when dealing with clients, all identification documents need to be updated every two years.

In the event that you no longer deal with a client, you do not need to update their files.

How and where do I have to submit my AML activity report?

Since January 2016, registered diamond traders can also submit their AML activity report online via www.registereddiamondcompanies.be .

Contact the FPS Economy via 02/277.99.24 or the AWDC AML & Compliance helpdesk for your login and password and check the tutorial enclosed for submittal online.

You can still send the paper version of the AML activity report to the License Service of the Federal Public Service of Economy (in Dutch abbreviated as Fod Economie) to the following  address Theaterbuilding - Bureau 11.06 , Italiëlei 124, bus 71 - 2000 Antwerpen for the attention of Daniel Daeyaert or give it at the front desk of AWDC.

Don’t forget to make a copy after filling it in, in case your bookkeeper needs a copy !

By logging in to your account on www.registereddiamondcompanies.be , you can consult the online submitted AML-activity reports of your company.

Do I also need to identify suppliers?

If the diamond transaction was paid through a bank-wired transfer, no identification of your supplier is needed.

If you paid a diamond transaction in cash (i.e. green money) partly or wholly, you have to identify your supplier as you identify your clients. (see previous)

Concerning the limitations for use of cash in Belgium: see the answers on cash limits.

Note that if you are a member of the Responsible Jewellery Counsil (RJC), identification of your suppliers is always required. 

I heard that the Licensing Service of the Federal Public Service Economy (in Dutch abbreviated as FOD Economie) performs unannounced controls in the diamond area.

Yes. The Licensing Service of the Federal Public Service Economy (in Dutch abbreviated as FOD Economie) performs unannounced controls approximately two times a year.

The last two accounting years will be checked: the identification files for your clients’ (if you have all identification data) cashbooks will be verified to see if cash payments were made (i.e. they will check if diamond transactions were paid in green money); proof of payments for diamond transactions.

What is a third party intermediary?

This can be a company auditor, accountant, bookkeeper, notary or a bank that helps you with the identification and verification of clients and with updating the resulting data.

If you make use of a third party intermediary, you are still personally responsible and you have to be fully compliant with the anti-money laundering regulations.

Therefore, the diamond trader has to check whether the identification details provided by the third party intermediary are correct, and of course remain alert for other risks when executing the transaction (for example, your client insists on cash payments).  If necessary, the diamond trader will perform a supplementary or even a completely new client survey at his own initiative.

What is an ultimate beneficial owner?

An ultimate beneficiary is the natural person or persons for whose account or benefit a transaction is carried out or a business relationship entered into, or who is or are the final owner(s) of or have ultimate control over the client.

If the client is a company, the following persons are considered to be ultimate beneficiaries:

- The natural person or persons that are the ultimate owner of more than 25% of the shares or voting rights of that company or who directly or indirectly hold such percentage;

- The natural person or persons who otherwise have actual control over the management of the company.

 

If the client is a legal person other than a company, such as a foundation, a non-profit association, a trust, a fiduciary or similar legal construction that manages or distributes monies, the following persons are considered the ultimate beneficiaries:

-           If the future beneficiaries are already designated, the natural person or persons who control 25% or more of the equity of the legal person or legal construction;

-           If the future beneficiaries have not yet been designated, the abstractly defined group of persons in whose interest the legal person or legal construction was primarily founded or mainly operates;

-           The natural person or persons who have control over 25% or more of the equity of the legal person or legal construction.

 

If the client or the holder of a controlling interest in a listed public company (in accordance with article 11, § 1, 2° of the law), the shareholders are not required to be identified nor verified.

Why do we have to identify the ultimate beneficiary? 

This is because of the risk of people who are hiding their identity. A fraudulent business person could try to hide his identity by, for example, installing complex company structures.

The ultimate beneficial owner is the person who basically benefits from the company and therefore has an interest in the transactions performed by the company.  When this owner is known as a ‘fraudulent’ person, it can have an effect on the legitimacy of your client’s dealings with you. 

By identifying the ultimate beneficial owner, you can be sure that there are no persons in the company or behind the company, who are in any way involved in illegal activity.

What are the limitations for use of cash in Belgium?

Payments in cash are limited in the anti-money laundering legislation to a maximum of 3,000 euro.  Please be aware of the risks, as dealing in cash above this amount is considered a criminal office and the fines for illegitimate use of cash are very high! 

 

 

Can I still accept cash (abroad)?

The cash limits of the country where the transaction is executed apply. For example, when you complete a sale in Hong Kong, the cash limits of Hong Kong apply. It is however important to note that cash transactions cannot be traced as easily as bank transfers, and are therefore often linked to money laundering practices. Please make sure that you always have evidence of the transactions and discuss the transfer of the cash money to your bank account with your accountant and/or bank.

Note that you have to declare all amounts above 10,000 euro cash at customs when entering the EU.

Why do criminals use cash?

There are countless means of laundering the proceeds of crime. Criminals favor cash, as it is a bearer negotiable instrument: it belongs to the person who holds it. Unlike money which is transferred electronically, it is difficult to ascertain the source of cash and impossible to know the intended beneficiary. Although not all use of cash is criminal, all criminals use cash at some stage in the money laundering process either because their criminal activities generate cash profits, or because cash is used as an instrument to disguise the criminal origin of profits.

What are the sanctions for not complying

1. Fines amount to 500 EUR, and the amount increases for recurring non-compliance.  Companies can also be obliged to follow an AML-seminar.

2. In case of not submitting the AML activity report : firstly, a reminder and registered letter is sent to remind you of your obligation. If the AML activity report is still not submitted after these reminders, fines up to 1.000 EUR can be imposed, depending if it’s a first time or not.

3. General fines for not complying with the AML-legislation : between 250 EUR and 1.250.000 EUR, after having heard the respective company.

In case the above-mentioned cash restrictions were not respected, a fine of 250 EUR to 225.000 EUR can be claimed, with a maximum of 10% of the paid cash amount.  

The debtor and the creditor are both liable to pay this fine !

I still have questions.

Should you have any further questions, remarks or doubts, please contact the AWDC AML & Compliance Helpdesk:

 

T: 03 222 05 06 or 03 222 05 03

 

E: trst@awdc.be or dorien.vandersanden@awdc.be 

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