Belgium is not on the FATF List of Countries that have been identified as having strategic AML deficiencies
Compliance with FATF Recommendations
The last follow-up to the Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Belgium was undertaken by the Financial Action Task Force (FATF) in 2018. According to that Evaluation, Belgium was deemed Compliant for 21 and Largely Compliant for 16 of the FATF 40 Recommendations. It was also been deemed Highly Effective for 0 and Substantially Effective for 4 with regard to the 11 areas of Effectiveness of its AML/CFT Regime.
US Department of State Money Laundering assessment (INCSR)
Belgium was deemed a Jurisdiction of Primary Concern by the US Department of State 2018 International Narcotics Control Strategy Report (INCSR). The Overview from the report is as follows: -
Belgium’s location and considerable port facilities drive the Belgian economy. Belgium’s Port of Antwerp (the Port) is the second busiest port in Europe by gross tonnage and, together with the ports of Rotterdam and Hamburg, handles the bulk of European maritime trade. With this large volume of legitimate trade inevitably comes the trade in illicit goods. Antwerp is the primary entry point of cocaine into Europe from South American ports.
Belgium is both a destination and a transit country for drugs and is involved in production. According to the Financial Information Processing Unit (CTIF), Belgium’s FIU, Belgian police services are increasingly investigating drug money laundering activity. Most of the laundered funds are derived from foreign criminal activity and are heavily associated with the recent explosion in cocaine trafficking at the Port. While some drug proceeds are transported in bulk to cocaine source countries, some stay in Belgium as payment to the many criminal logistical organizations that move cocaine from containerized cargo at the Port.
Belgium’s FIU remains vigilant to increasingly sophisticated money laundering methods, promoting rigorous analysis and increased cooperation with judicial authorities. CTIF introduced new analytical mechanisms in 2018 to improve the flow of information, foster cooperation with the federal prosecutor, and enhance partnerships and analysis of STRs
There are no international sanctions currently in force against this country.
BRIBERY & CORRUPTION
Rating (100-Good / 0-Bad)
Transparency International Corruption Index 76
World Governance Indicator – Control of Corruption 91
Corruption is rare and is not an obstacle for doing business in Belgium. Overall, Belgium has a well-developed legal framework, and the Criminal Code criminalises both public and private bribery, passive and active bribery, and bribery of national and foreign public officials. Facilitation payments are illegal under Belgian law. Gifts and hospitality are permitted only below a certain, undefined threshold, but they do not impede business in the country. Corruption prevention efforts greatly vary between the country's regional governments. The Flemish government has anti-corruption policies that are more developed than the Wallonia government. For further information - GAN Integrity Business Anti-Corruption Portal
This modern, open, and private-enterprise-based economy has capitalized on its central geographic location, highly developed transport network, and diversified industrial and commercial base. Industry is concentrated mainly in the more heavily-populated region of Flanders in the north. With few natural resources, Belgium imports substantial quantities of raw materials and exports a large volume of manufactures, making its economy vulnerable to shifts in foreign demand, particularly with Belgium’s EU trade partners. Roughly three-quarters of Belgium's trade is with other EU countries.
In 2015, Belgian GDP grew by 1.4%, the unemployment rate stabilized at 8.6%, and the budget deficit was 2.7% of GDP. Prime Minister Charles MICHEL's center-right government has pledged to further reduce the deficit in response to EU pressure to reduce Belgium's high public debt, which remains above 100% of GDP, but such efforts could also dampen economic growth. In addition to restrained public spending, low wage growth and high unemployment promise to curtail a more robust recovery in private consumption.
The government has pledged to pursue a reform program to improve Belgium’s competitiveness, including changes to tax policy, labor market rules, and welfare benefits. These changes risk worsening tensions with trade unions and triggering extended strikes.
Agriculture - products:
sugar beets, fresh vegetables, fruits, grain, tobacco; beef, veal, pork, milk
engineering and metal products, motor vehicle assembly, transportation equipment, scientific instruments, processed food and beverages, chemicals, base metals, textiles, glass, petroleum
Exports - commodities:
chemicals, machinery and equipment, finished diamonds, metals and metal products, foodstuffs
Exports - partners:
Germany 16.9%, France 15.5%, Netherlands 11.4%, UK 8.8%, US 6%, Italy 5% (2015)
Imports - commodities:
raw materials, machinery and equipment, chemicals, raw diamonds, pharmaceuticals, foodstuffs,
transportation equipment, oil products
Imports - partners:
Netherlands 16.7%, Germany 12.7%, France 9.6%, US 8.7%, UK 5.1%, Ireland 4.7%, China 4.3% (2015)
Investment Climate - US State Department
The Belgian economy is expected to grow 1.4 percent in 2016, primarily driven by rising household consumption and external demand. Lower energy prices and interest rates, and a favorable euro/dollar exchange rate are all expected to stimulate economic growth and fuel exports, especially given Belgium’s unique position as a logistical hub and gateway to Europe. However, the recovery remains fragile: weak consumer confidence, low competitiveness and economic slowdown in the euro area may constrain growth prospects, and a highly rigid labor market and complicated tax regime remain liabilities to investment. Since June 2015, the Belgian government has undertaken a series of measures aiming to reduce the tax burden on labor and to increase Belgium’s economic competitiveness and attractiveness to foreign investment.
Unfortunately, the EU court decision in January 2016 declaring Belgian tax incentives illegal, the perceived and proven foreign terrorist fighter threat and the recent terrorist attacks on Brussels may cause further downward pressure on Belgium’s growth and further reduce its attractiveness as an FDI destination.
Belgium boasts an open market well connected to the major economies of the world. As a logistical gateway to Europe, host to the EU institutions and a central location closely tied to the major European economies (Germany in particular), Belgium is an attractive market and location for U.S. investors. The Belgian government was active in the rescue of its major banks and the financial markets have largely stabilized, following reductions in bank debt and exposure to risky derivative markets. Foreign and domestic investors are expected to take advantage of improved credit opportunities and increased consumer and business confidence. Finally, Belgium is a highly developed, long-time economic partner of the United States that benefits from an extremely well-educated workforce, world-renowned research centers, and the infrastructure to support a broad range of economic activities.
Belgium’s international competitiveness has been hindered by a rigid labor market that makes Belgian employees relatively expensive compared to neighboring countries. Belgium’s nominal corporate tax rate, at 33.99 percent, is one of the highest in Europe and is only mitigated by a myriad of subsidies and tax deductions. The on-going Sixth State Reform has slowly been shifting certain responsibilities from the federal to the regional governments. However, it is not yet clear how these evolving responsibilities may affect some of the incentives and deductions in place. A January 2016 EU ruling which voids 36 fiscal rulings between the government and multinational and Belgian companies retroactively to 2004 also creates investor uncertainty and casts a shadow over Belgium’s attractiveness as a preferred FDI location.
Belgium has a dynamic economy and continues to attract significant levels of investment in chemicals, petrochemicals, plastic and composites; environmental technologies; food processing and packaging; health technologies; information and communication; and textiles, apparel and sporting goods, among other sectors. Over the past few years, Belgium has lost some of its traditional manufacturing base, which had benefitted from U.S. investment. Over the past five years for instance, the U.S. automotive industry has almost completely pulled out of Belgium. American companies in particular have made recent investments in petrochemicals, health technologies, and information and communication.
Other Useful Links
FATF AML Deficiency List
US Dept of State Money Laundering assessment