Amicable settlement proposed by the Board of Directors of the NBB and accepted by BANK X

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Amicable settlement proposed by the Board of Directors of the NBB and accepted by BANK X This amicable settlement, reached with due regard to the report of the Auditor dated 24 August 2015, was proposed by the Board of Directors of the National Bank of Belgium (hereinafter the "NBB") to BANK X on 1 September 2015, and was accepted by the latter on 23 September 2015.

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Having regard to Articles 36/9 and 36/10 of the Act of 22 February 1998 laying down the organic statute (hereinafter referred to as "the Act of 22 February 1998") of the National Bank of Belgium (hereinafter the "NBB"); Having regard to the decision of the Board of Directors of the NBB of 28 August 2013, whereby it was established that there were serious indications of the existence of a practice on the part of BANK X that could lead to the imposition of an administrative fine within the meaning of Article 40 of the Act of 11 January 1993 on the prevention of the use of the financial system for money laundering and terrorist financing. The serious indications were related to BANK X's compliance with its duty of vigilance regarding certain banking transactions carried out by one of its clients; Having regard to the decision of the Board of Directors of the NBB of 28 August 2013 to order, pursuant to Article 36/9, §1, first paragraph of the Act of 22 February 1998, the Auditor to conduct an investigation in the interest and against the said serious indications; Having regard to the fact that the transactions covered by this file took place in the period from 17 July 2008 to 24 June 2011, i.e., both before and after the amendment of the Act of 11 January 1993 by the Act of 18 January 2010. With regard to the facts dating from before 5 February 2010, i.e., before the entry into force of the legislative amendment of 18 January 2010, it can be established that the obligations imposed at that time on credit institutions by the Act of 11 January still exist today and that the legal and regulatory provisions in force since 5 February 2010 do not impose less far-reaching obligations on credit institutions. The obligations applicable up to 4 February 2010 continued to exist after that date and to this day and can be sanctioned. Consequently, the investigation focused on compliance with the Act of 11 January 1993 and its implementing measures as applicable at the time of the facts in question, i.e., depending on the case, the legal and regulatory regime before or after the legislative amendment of 18 January 2010. Having regard to Articles 4, § 2 and 8 of the Act of 11 January 1993 as applicable before the legislative amendment of 18 January 2010 and to Article 14 of the same Act as applicable since the aforementioned amendment. In essence, these articles determine that institutions subject to the scope of the law must demonstrate ongoing vigilance regarding the business relationship and ensure careful examination of the transactions carried out and, if necessary, the origin of the funds in light of the knowledge they have of their client, their activities, and profile. Furthermore, these articles determine that the institutions in question must examine with particular attention the transactions they consider particularly susceptible to money laundering or terrorist financing due to the nature of the transactions or their unusual character given the client's
activities, the accompanying circumstances of the transactions, or the status of the persons involved, and that these institutions must draw up a written report on this examination. Having regard to Article 35 of the CBFA Regulation of 27 July 2004 concerning the prevention of money laundering and terrorist financing and Article 30 of the CBFA Regulation of 23 February 2010 concerning the prevention of money laundering and terrorist financing. In accordance with these articles, credit institutions must, within a timeframe determined according to risk, verify and update client data relevant for anti-money laundering and counter-terrorist financing purposes when they have indications that this data is no longer up to date.

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Having regard to Articles 36 and 37 of the CBFA Regulation of 27 July 2004 concerning the prevention of money laundering and terrorist financing and Articles 31 and 32 of the CBFA Regulation of 23 February 2010. In accordance with these, credit institutions must first organize appropriate first-line supervision, i.e., supervision by the company's employees who are in direct contact with clients, whereby these employees, based on appropriate criteria provided by the institution, detect atypical transactions, pay specific attention to them, and draw up a written report which they submit to the institution's anti-money laundering officer. Furthermore, credit institutions must, in accordance with these provisions, supplement this first-line supervision with second-line supervision, which uses an automated monitoring system that must meet certain specific requirements and which must deliver written reports on the detected atypical transactions to the anti-money laundering officer. Having regard to Articles 12 and 13 of the Act of 11 January 1993 as applicable before the legislative amendment of 18 January 2010 and to Articles 23 and 24 of the same Act as applicable since the aforementioned amendment. Under these provisions, credit institutions must, when they know or suspect that a transaction to be carried out is related to money laundering or terrorist financing, notify the CFI (Financial Intelligence Processing Unit) before carrying out the transaction or, insofar as a report before the execution of the transaction is not possible, immediately after the execution of the transaction; Having regard to Article 36/10, § 3 of the Act of 22 February 1998, which allows the Board of Directors to propose an amicable settlement and, if its proposal is accepted, to publish it in a non-nominative manner on the NBB website; Having regard to the fact that BANK X effectively had the opportunity to review the findings of the Auditor's report before formulating its final comments in its letter of 18 May 2015; Having regard to the fact that the final report of the Auditor was sent to BANK X along with the proposal for an amicable settlement;

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Considering that the investigation in the interest and against led to the following findings:
In the period from 17 July 2008 to 24 June 2011, considerable amounts were deposited in cash on Mr. A's personal accounts at BANK X on multiple occasions. These deposits occurred in the majority of cases on the same date as deposits of considerable amounts in cash on the accounts at BANK X of BVBA B, of which Mr. A was the managing director.
Furthermore, during the same period, two significant cash withdrawals were made from Mr. A's personal accounts, namely a cash withdrawal of €80,000 on 22 July 2009 from savings account 1 and a cash withdrawal of €250,000 on 6 June 2011 from savings account 2.
The aforementioned cash deposits occurred following frequent visits by BANK X agent C to Mr. A – first at his restaurant B and subsequently at his home address – during which Mr. A handed over to Mr. C a cash amount to be deposited on the BANK X account of BVBA B and, on the other hand, a cash amount to be deposited on one of his personal BANK X accounts.
The cash withdrawal of €250,000 also took place via BANK X agent C, who ordered the relevant cash amounts at the head office and handed them over to Mr. A. The cash withdrawal of €80,000 also took place via BANK X agency Mr. C.
The large cash deposits on Mr. A's personal BANK X accounts as well as the two mentioned large cash withdrawals exhibited an unusual character both within the meaning of Article 8 of the Act of 11 January 1993 as applicable before the entry into force of the legislative amendment of 18 January 2010 and within the meaning of Article 14 of the same Act as applicable after this amendment, notably given:

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• the frequency of the cash deposits on Mr. A's personal accounts, which each followed a visit by BANK X agent C to restaurant B and which in the majority of cases occurred simultaneously with cash deposits on the accounts of BVBA B at BANK X;
• the size of two cash withdrawals from Mr. A's personal accounts, namely the cash withdrawal of €80,000 on 22 July 2009 from savings account 1 and the cash withdrawal of €250,000 on 6 June 2011 from savings account 2.
  The investigation revealed that BANK X did not revise Mr. A's AML risk profile after the initial risk profile determination until after the cash withdrawal on 6 June 2011 of €250,000, which led to a compliance investigation and a report to the CFI.
  The investigation also revealed that BANK X's first-line employees did not follow up on these transactions. They did not take the initiative to draw up a written report on them or report the transactions to the bank's central AML Unit. Given the circumstances of the cash withdrawals, i.e., the simultaneity of the cash deposits on Mr. A's personal accounts and on the current account of BVBA B, they should at least have questioned the origin of the funds deposited on Mr. A's personal accounts. They should have asked themselves this question given the size of the cash withdrawals from Mr. A's personal accounts. They should therefore have considered these transactions as atypical and reported them to the AML officer for further analysis. Regarding second-line supervision, it was found that the bank's central AML Unit did not follow up on the aforementioned cash deposits. It was found that these deposits, although cumulatively large, did not generate an alert in D, the bank's second-line monitoring system, because their size remained below the daily and weekly filters in D. Regarding the cash withdrawals, the investigation showed that no filter was provided for them in D. The bank's central Compliance and AML services did not follow up on the cash withdrawal of €80,000 on 22 July 2009 from account 1. The cash withdrawal of €250,000 on 6 June 2011 from savings account 2 was the first and only one of the aforementioned transactions that, following the launch of the procedure for supplying cash by the head office in local agencies, led to an investigation by the central compliance services. This investigation ultimately led to a report by BANK X to the CFI on 9 July 2011.

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Having regard to the statements of BANK X recorded during the investigation, which confirm the described factual elements; Considering that BANK X provided full cooperation in the course of the investigation and having regard to the other elements in the file that constitute mitigating circumstances on the part of BANK X; Considering that the amount of the amicable settlement must be proportional to the nature of the facts; For these reasons, the Board of Directors of the NBB proposes to BANK X, as an amicable settlement within the meaning of Art. 36/10, § 3 of the Act of 22 February 1998, the payment of the sum of €50,000; If this proposal is accepted, it allows for a definitive settlement of the proceedings instituted against BANK X. Pursuant to Art. 36/10, § 3 of the Act of 22 February 1998, the amicable settlement will be published in a non-nominative manner on the NBB website. The amounts to be paid under this settlement will be collected for the benefit of the Treasury by the Administration of the Land Registry, Registration, and Domains.