FATF Flags Structural Weaknesses in Belgium’s Fight Against Financial Crime

The Financial Action Task Force (FATF) published its 2025 mutual evaluation of Belgium on December 16, identifying substantial deficiencies in the country’s ability to combat illicit financial activity. Although Belgium is largely compliant with international technical standards, the assessment underscores a serious lack of personnel and technological capacity within investigative and enforcement bodies. According to the report, Belgian authorities must urgently address deep-rooted shortcomings in the supervision of virtual assets and the prosecution of complex financial crimes if the country is to move out of enhanced follow-up monitoring. FATF concluded that existing enforcement efforts fall short of matching the increasingly sophisticated methods used by organized criminal and terrorist networks operating in and through Belgium. The evaluation effectively lays out a three-year blueprint for strengthening national defenses against organized crime and terrorist financing.

A key concern raised in the report is the absence of an effective regulatory framework for digital assets and virtual asset service providers. Despite the elevated risk posed by these technologies, Belgium has yet to appoint a dedicated authority responsible for licensing and supervising businesses operating in this space. This regulatory gap presents a major vulnerability, allowing criminal groups to exploit virtual assets to transfer funds across borders with limited risk of detection. While financial supervisors show a solid grasp of risks in the traditional banking sector, their capacity to identify and address illicit activity in newer areas such as virtual assets and informal transfer systems like hawala remains notably weak. The lack of a comprehensive licensing and oversight regime for virtual assets undermines the resilience of Belgium’s financial system and significantly hampers efforts to counter modern money laundering techniques.

The FATF report also highlights how chronic shortages of funding and staff continue to undermine the effectiveness of money laundering investigations and prosecutions. Belgian law enforcement agencies often prioritize cases based on how quickly assets can be seized or how profitable an investigation appears, rather than on the scale, complexity or strategic importance of the criminal organization involved. This reactive model enables professional money launderers and organized crime groups to remain active when their proceeds are difficult to trace or confiscate. To address this imbalance, the evaluation stresses the need for significant investment in both human capital and advanced technology for public prosecutors and the judicial police. Without these resources, Belgium’s justice system remains ill-equipped to dismantle complex, transnational criminal networks that exploit the country’s role as a logistical hub for drug trafficking and cash movements.

Concerns were also raised about the limited deterrent effect of Belgium’s administrative sanctions regime and the lack of transparency surrounding enforcement actions. Financial supervisors rarely impose substantial penalties, and when sanctions are applied, decisions are often anonymized or not made public. This approach weakens the preventive impact of enforcement and reduces its educational value for the wider financial sector. The FATF evaluation points to the need for a stronger legal framework that allows for more frequent, visible and proportionate sanctions in order to promote a culture of compliance. In addition, supervision of non-financial sectors remains uneven, with high-risk industries such as diamond trading experiencing fragmented oversight and persistently high levels of non-compliance due to infrequent inspections.

The report further examines the role of Belgium’s financial intelligence unit, describing it as a central component of the national anti-money laundering system but noting that its effectiveness is constrained by outdated information technology and insufficient coordination with other law enforcement bodies. Although the unit generates high-quality strategic intelligence, that information is not consistently or effectively translated into money laundering prosecutions. Upgrading IT systems to enable real-time data processing and sharing is identified as a critical priority. The evaluation also observes that, while Belgium has a solid legal framework for seizing and confiscating criminal assets, the actual amounts recovered do not reflect the country’s assessed risk level. FATF concludes that a more assertive and coordinated asset recovery strategy is necessary to ensure that criminal activity does not remain financially rewarding within Belgium.

By fLEXI tEAM