Compliance and AML in Belgium: a booming sector with growing pains
| Published date | 08 May 2009 |
| Pages | 113-133 |
| DOI | https://doi.org/10.1108/13685200910951893 |
| Date | 08 May 2009 |
| Author | Antoinette Verhage |
| Subject Matter | Accounting & finance |
Compliance and AML in Belgium:
a booming sector
with growing pains
Antoinette Verhage
Research Group Social Analysis of Security,
Ghent University, Ghent, Belgium
Abstract
Purpose – The purpose of this paper is twofold: first, the paper will map Belgian compliance officers’
practices and challenges, and second, it makes an attempt to assess the effectiveness of their input in
the anti-money laundering (AML) chain in Belgium: what are actual results of the fight against money
laundering?
Design/methodology/approach – The research starts from a criminological point of view,studying
the preventive AML-policy by focusing on the compliance function in banks. In order to study this
preventiveapproach more concretely,a survey was sent to Belgiancompliance officers,asking about their
practices. Second,the available statistics on 13 years of AML in Belgiumwere studied.
Findings – The function of compliance officer implies a number of challenges or “growing pains”;
problematic access to information, lack of feedback from the authorities, limited investigative means.
Furthermore, although the investments of private organisations in AML have been substantial, the
outcome of the AML chain seems modest.
Research limitations/implications – This paper reflects the first phase of an on-going research
(2006-2009). The results presented here are therefore preliminary.
Originality/value – Belgium implemented a regulatory framework in 2001, obliging the installment
of a compliance function within banks. The value of this research lies in the fact that
this booming professional group has never been subject of research before, even though they play a
crucial role in AML in particular and crime fighting in general. It is therefore of great importance to
study compliance officers’ views, practices, and opinions in order to get a grip on this new type of
“policing”.
Keywords Belgium, Moneylaundering, Crimes, Regulation
Paper type Research paper
1. Introduction
In February of this year, a newspaper article reported on the ever-increasing demand
for “skilled anti-money laundering professionals”. Quoting from the article: “apart from
immediate concerns stemming from the credit crunch, the research finds that battling
money laundering (AML) remains a top priority for financial institutions as new
regulation continues to be introduced”[1].
The observation that, even in times of credit crisis, anti-money laundering (AML) is
considered to be one of the main concerns for financial institutions in the USA raises
several questions. Not only can we question why AML is such an issue for banks and
what motives inspire them to give such a priority to AML, but it also arouses an
interest in who these “anti-money laundering professionals” actually are, what they do
and how they prevent money laundering by their work.
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1368-5201.htm
Compliance
and AML
in Belgium
113
Journal of Money Laundering Control
Vol. 12 No. 2, 2009
pp. 113-133
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685200910951893
This paperhas two goals. First, it aims to presentthe initial findings of researchon the
AML profession[2],in Belgium also summarisedunder the term “compliance officer”.One
of the official tasks of the compliance officer in Belgium, fixed in both legislation and
regulation, is AML, which implies that AML officers or money laundering reporting
officersoften fall within the authorityof the compliance department.We aim to discuss the
incentives and grounds for studying this compliance function. By presenting the initial
findings of our research,we aim to paint a picture of “the Belgian complianceofficer”. We
do so by illustratingthe practice of AML in financialinstitutions and by pointing out what
problems they encounter during their work. In order to put this in a more international
perspective, we will reflect on two studies, carried out in The Netherlands and France,
which allows for a more comparative outlook on the compliance function.
The second goal is to shed some light on the impact of this function participating in
the AML battle. We will discuss possible methods to measure its effects and make an
attempt to evaluate effectiveness of the AML system in Belgium. We aim to do so by
providing a general overview of the AML chain in Belgium and its results.
2. The compliance function in Belgium
2.1 Anti-money laundering; made in the USA, imported in Europe
To illustrate the divergent interests underlying the battle against money laundering,
which has formed the basis for the framework in which compliance officers are
functioning today, we will briefly discuss the background to the compliance function
as we know it today.
The AML movement has been intensifying ever since it started in the late 1980s, early
1990s in the USA (Stessens, 2000, p. 165). The twin-tower terrorism of September 11 has
extended this battle by adding the obligation to report transactions that are potentially
linked to terrorist financing (Naylor, 2007, p. 5). The “official” origins of this battle
against money laundering are found to a large extent in the “war on drugs” rhetoric
during the Reagan governments (Levi, 2002, p. 182). During this period, the image of an
increasing drug crime problem was created, with large sums of money in control of
criminal elements. This underground economy was said to be growing considerably,
leading to a fear among policy makers for the infiltration into and abuse of the formal
economy through the proceeds of drug crime. A picture was drawn in which mafia-like
organisations were trying to take over formal economic and political spheres, profiting
from a growth in the cocaine market (van Duyne et al., 2005, p. 120). As traditional crime
prevention and repression methods no longer seemed to be effective, policy makers
stated that this type of organized crime needed an appropriate approach. The approach
of transnational crime should no longer be limited to jurisdictional borders, and civil
punishment seemed to be more effective (Findlay, 1999, p. 50). This philosophy led to the
development of the “follow the money” (and corresponding criminal forfeiture) tactic,
aimed at preventing crime from paying (Nelen, 2004, p. 525). This philosophy is rooted in
the concept of the perpetrator as a homo economicus (van Overtveldt, 2007, p. 137),
aiming at the realisation of specific goals, such as wealth, health or social status
(Kleemans, 2001, p. 158). Compliance with regulation should therefore be achieved
through deterrence and deterrence experiences (Wikstro
¨m, 2006, p. 1). Although in those
days, little was known about either the phenomenon of organised crime, or about the
methods to identify flows of money (Naylor, 2007, p. 2), and the deterrent effect of
sanctions and punishment were questioned (Kleemans, 2001, p. 161), this was the
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