Financial Services and Markets Authority (FSMA)

The Financial Services and Markets Authority (FSMA) was created to strengthen oversight of Belgium’s financial system. Before FSMA, supervision was fragmented. This sometimes allowed market misconduct and risks to go unchecked. FSMA is an independent authority tasked with ensuring transparency, protecting investors, and maintaining market stability.

What Is the Financial Services and Markets Authority?

Financial Services and Markets Authority (FSMA) is Belgium’s main financial regulator. It supervises banks, insurers, investment firms, and listed companies. Its role is to protect investors, maintain market integrity, and ensure transparency.

FSMA was formed in 2011, replacing the Banking, Finance, and Insurance Commission (CBFA). It operates under the Financial Services and Markets Act of 2002. Belgium adopted the “Twin Peaks” model at this time. Under this model, FSMA handles market conduct while the National Bank of Belgium (NBB) oversees prudential supervision.

Financial Supervisory and Markets Authority’s role includes ensuring that firms comply with Belgian AML/CFT laws, which incorporate EU AML Directives (AMLDs) and FATF (Financial Action Task Force) recommendations. Its importance for compliance is high: failure to meet FSMA’s standards can attract regulatory sanctions, financial penalties, reputational damage, or legal consequences.

How does FSMA enforce AML/CFT rules in Belgium?

The FSMA enforces AML/CFT rules under the Law of 18 September 2017, which obliges firms to conduct due diligence, monitor transactions, keep records, and report suspicious activity to the CTIF-CFI.

Its oversight includes audits and thematic inspections of high-risk sectors such as currency exchange offices and virtual asset providers. The FSMA also issues guidance, for example, on the role of compliance officers, to clarify regulatory expectations.

When firms fail to comply, the FSMA may impose fines, public warnings, or license withdrawals. It also works closely with the National Bank of Belgium, CTIF-CFI, EU authorities, and the IMF, which has recognized Belgium’s supervisory framework as strong.

Who Is Obliged to Comply With FSMA’s AML Regulations?

Under Belgian law, the entities obliged to comply with FSMA’s AML regulations include a wide range of financial institutions and certain non-financial professions. Virtual Asset Service Providers (VASPs) engaged in fiat-to-crypto exchange or custodial wallet services fall under this coverage. VASPs operating in Belgium or with a permanent establishment can register with the FSMA. While service providers outside the EEA are prohibited from offering such services in Belgium.

Additionally, designated non-financial businesses and professions (DNFBPs), such as real estate agents, auditors, accountants, notaries, and tax advisers. High-value dealers in art, antiques, or precious metals must comply as well.

What Specific Obligations Must Businesses Meet Under FSMA Supervision?

Businesses under FSMA supervision must follow FSMA Belgium Regulations, which require multiple layers of compliance, including:

• Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD): Identifying clients, beneficial ownership, and risk profiling. Special attention is required for Politically Exposed Persons (PEPs) and high-risk jurisdictions.
• Risk‐Based Approach (RBA): The entities have to evaluate and record their ML/TF risk exposure. This comprises client types, geographies, products, and delivery channels.
• Transaction Monitoring and Suspicious Transaction Reporting (STR/SAR): Monitoring of transactions and business relationships on a continuous basis, identifying abnormal or suspicious behavior, and filing reports with CTIF-CFI.
• Sanctions & Crypto Regulation: Companies have to monitor international sanctions lists while also making sure any crypto-related services are well registered and run according to legal demands. Moreover, the advertising and communication of these services have to comply entirely with the FSMA’s regulatory standards.
• Internal Controls & Governance: Having designated AML/CFT compliance officers, clear internal policies, staff training, audits, and ensuring compliance with laws/regulations. FSMA has also set guidelines regarding its duties and work.
• Record Maintenance: Keeping client identification details, beneficial owner information, transactional details, risk assessments, and internal policies for a legal term.

What Are FSMA’s Recent Developments In Crypto-services?

Over the past few years, Belgium has enhanced the regulatory environment of digital assets, most notably through legislation that came into force in 2022. The legislation imposed AML obligations on VASPs, like between fiat and crypto exchanges and custodial wallet providers. Any VASP present in Belgium is required to register with the FSMA, while providers from outside the EEA are not allowed to offer these services in the country.

In addition, the FSMA issued rules on the marketing of virtual currencies. These rules require communications to be clear, risk-focused, and accompanied by mandatory warnings. Large-scale advertising programs must also be reported to the authority in advance.

Belgium’s strategy is determined by its compliance with EU AML directives. Initiatives like MiCA are aimed at bridging regulatory gaps in the crypto sector.

Apart from these efforts, FSMA has also conducted consumer awareness programs warning against scams associated with non-registered platforms. This reflects its dual responsibility as both a market supervisor and an investor protector.

What Are Common Compliance Pitfalls Under FSMA’s AML Regulation?

FSMA inspections often reveal deficiencies in beneficial ownership verification and record-keeping. Though many companies collect UBO information, they do not properly verify it or keep documentation long enough. These loopholes undermine the validity of customer due diligence.

Another persistent challenge is transaction monitoring and control. Certain institutions use outdated systems that overlook emerging risks such as virtual assets, while others under-resource their compliance teams. Compliance officers may lack authority or support, whereas internal audits are often ineffective in spotting flaws early.

FSMA also reports highlight non-compliance in virtual asset services, such as unregistered operations, unauthorized cross-border activity, or misleading promotions. These violations attract regulatory notice and usually lead to public warnings or sanctions.

What Sanctions Can FSMA Impose for Non-Compliance?

According to FSMA Belgium regulations, the authority can impose sanctions based on the level of non-compliance. Minor infractions can lead to formal warnings, while remedial orders oblige firms to correct governance, compliance, or risk management problems. Some violations lead to suspension or cancellation of a license and some trigger criminal prosecution.

A case in point is the one million euros fine levied upon Belfius for the issuance of bonds without an FSMA-approved prospectus. By avoiding this provision, the bank denied investors concrete and credible information. This information is necessary for transparency and protection of the bond market. The case proved that even well-established institutions are not exempt from strict enforcement. It served as a strong warning to other firms about the consequences of disregarding prospectus requirements.

Apart from financial or legal sanctions, companies suffer reputational loss because the FSMA publishes enforcement actions. Its Sanctions Committee makes decisions with the prospect of appeal in Belgian courts.

How Does FSMA Cooperate With International AML Bodies and Belgium’s FIU (CTIF-CFI)?

FSMA cooperates very closely with Belgium’s Financial Intelligence Processing Unit (CTIF-CFI) for receiving STRs/SARs, sharing intelligence, and helping shape regulatory policy. FSMA is also involved in EU-level AML regulatory evolution, EU Directive compliance (AMLD4-6), and aligns with FATF standards. Belgium was assessed under the IMF’s FSAP program, and FSMA’s practices were recognized positively for many aspects, including product and conduct supervision.

FSMA’s International cooperation is also based on overseeing VASPs and sanctions compliance globally and in the EU. The organization’s work is increasingly important with the perspective that financial crime is global, especially in digital assets and money laundering schemes.

FSMA supports IOSCO in promoting the development of global standards for securities regulation. This involves informing policy regarding market integrity, crypto-assets, and market abuse, which in turn strengthens Belgium’s standards and reduces financial risks