The accountant is contacted by a potential new client, Mr. Hakan, a Turkish national and car dealer, about handling the bookkeeping for his company, Turkcar. Mr. Hakan also wants to set up a new company, TurkInvest, to purchase two apartments for €375,000, using a €350,000 loan from his sister and €25,000 in cash. The accountant asks for assistance with verification due to concerns about filing a suspicious transaction report. The assistant advises asking Mr. Hakan for more information on the loan, sister, and funds' origin to properly verify the client and understand the legal origin of the money to assess if a STR is warranted.

1. International seminar
Anti-money laundering legislation
29th November 2013

2. Case 1
Designated categories of offenses for
money landering

3. What is considered to be a “serious tax crime”
under your domestic law for the purpose of the
anti-money laundering prevention?

4. • Until July 2013 Belgian AML (Act of 93) : “serious
and organized tax fraud with substantial complex
mechanisms or processes of international scale”
Indicators provided by Royal Decree.
• Since July 2013 a new crime was initiated in our
tax codes: serious tax fraud (higher imprisonment
possible). Adapted in Belgian AML.

5. •
“serious and organized tax fraud with substantial complex mechanisms or
processes of international scale”. No legal definition.
– Problem of interpretation in practice
– The presence of one of the indicators provided by the authorities by Royal
Decree do not automatically lead to serious and organized tax fraud
•
“serious tax fraud”
– The seriousness will be judged upon ‘the creation or use of false documents’,
‘the substantial amount of the transaction and the unusual character of this
amount considering the activities or equity’, and also the presence of
indicators stipulated in the Royal Decree of 3 June 2007.
– Organization of the tax fraud might contribute to the seriousness of the crime,
but is no condition present of serious tax fraud.
– What does this mean for financial institutions in terms of amounts ?
 Principle of legality (forseeable criminal offenses?)
 Principle of equality ?

6. What is the relevance under your domestic law
of the fact that the due taxes might be
prescribed and/or the criminal prosecution for
tax crimes is prescribed as well?

7. • The prescription of Money laundering is in theory
5 years, 10 years if legally interrupted, but is
considered to be an “ongoing crime”, because
f.ex. the illegal proceeds are continuously
concealed by the offender or new transactions
are being made with the “poisoned money”;
• The fact that the tax fraud (predicated offence) is
prescribed, does not prevent the filing of a STR,
nor will it prevent prosecution for money
laundering.
– What with regard to tax crimes that were committed
before the installment of AML ?

8. Do you encounter problems with AML
application from financial institutions after a
self-declaration?

9. • F. ex. Certificate on self-declaration is basic, only
mentioning the total amount of regularized
income abroad and gives no direct indication on
the held assets;
• Financial Institution have to perform a CDD on
the origin of the funds. Problem of partly selfdeclarations;

10. Do you experience a general increase of
awareness of AML & KYC with financial
institutions and non-financial persons for tax
fraud?

11. • YES
• General increase of awareness of Financial
institutions, but also of other non-financial
reporters

12. •
In 1970 a 25 year X marries with an older and wealthy architect Y. In 1975 the architect deceases
and X inherits a fortune of 4 million euro, placed on a Swiss bank account. X is the only inheritor. X
has no knowledge of the origin of the capital placed on the Swiss bank account. X did not declare
this fortune for inheritance tax purposes, nor has disclosed this account in her tax declaration for
income tax purposes.
•
In 2013 she decides to buy a new house for an amount of 850.000 euro and transfers the money
from her Swiss bank account to an escrow account of the Notary.
•
What if X tells you that the money is held by a discretionary Trust in Jersey ?
Case related questions:
• Is it likely that the financial institution or the Notary will file a STR (Suspicious Transaction Report)
to the FIU (Financial Intelligence Unit)?
•
Assume the Notary and financial institution would enquire X about the origin of the funds. Her
explanation is that this originates from her late husband who has died 38 years ago. Does this
influence 1) ?
•
Supposing that the due taxes are prescribed and/or the criminal prosecution for tax crimes is
prescribed? Is it likely that X would be prosecuted for money laundering?

13. Case 2
Threshold for cash payments

14. What is the threshold for cash payments under
your domestic law?

15. • Selling of good(s) by a trader or services provided
in one or more transaction between which there
seems to be a connection cannot exceeds 5.000
EUR (3.000 EUR as from 1 January 2014)
• Sanction is a fine of from 250 to 225.000 EUR, but
not more then 10% of the amount that was
illegally paid for in cash

16. • List of traders or service providers that have to
inform the FIU (no list available yet)  selfincrimination
• Real estate
– Price of the real estate cannot be paid for in
cash as from 1 January 2014.
– The threshold is 5.000 EUR until then.

17. A Nigerian person X wants to buy a second hand car for 20.000 EUR in cash from a professional
second hand car dealer in your domestic country.
•
What is the threshold for this cash transaction? 5.000 EUR; 3000 EUR as from 01/14
•
What can be the sanction(s)/consequences if the car dealer ignores the threshold on cash
payments and accepts the cash, consequently puts it on the company bank account? Fine
imposed by the FOD Economy according to AML. Criminal prosecution?
•
Does the threshold applies on a deposit in cash by X with the financial institution of Y
account instead of paying directly to X in cash? Although this is not officially accepted by
AML, the FIU tends to accept this, since compliance is shifted and executed by the financial
institution
•
The auditor of the company picks up several cash transactions, in total 30 for 2012 that
exceed the threshold for tax transaction. All these cash transaction are properly booked in
the company. Is there an obligation for the auditor to file a STR with the FIU? No not
automatically. Only if the auditor assumes money laundering, he has to file a STR. The
auditor will however inform his client on the threshold for cash payments.
•
What is the sanction for violating the threshold?
Sanction is a fine of from 250 to 225.000 EUR, but not more then 10% of the amount that
was illegally paid for in cash. This sanction does not prevent criminal prosecution for
money laundering if the public prosecutor feels that the car dealer is involved in money
laundering activities.

18. Case 3
Identification and verification of
Ultimate Beneficiary (UBO) + STR

19. You are contacted by an accountant in your home country.
The accountant explains you that he has recently received an e-mail by a potential new
client, Mr. Hakan from Turkish nationality. Mr. Hakan informed him that he’s a resident in
your home country, and a car dealer for 8 years now, performing his activities through a
limited liability company Turkcar. Mr. Hakan isn’t satisfied with his current accountant (in
his opinion he charges too much) and is looking for an accountant to do the bookkeeping
of Turkcar. The accountant is eager to accept the new client, who is willing to pay a
retainer fee of 7.500 EUR to handle the bookkeeping of Turkcar upon first request.
Mr. Hakan also mentions that he wants to set up a new company to buy two apartments
(value for the two is 375.000 EUR). The new company, TurkInvest will rent the apartments
for living and might buy more real estate in the future. Mr. Hakan requests the accountant
to set up the new company and to prepare the purchase of the real estate in cooperation
with a Notary of his choice.
In answer to the accountant question, how Newco will acquire sufficient funds for the
purchase of the real estate, Mr. Hakan presents a loan agreement for 350.000 EUR with
his sister, a Turkish resident. Mr. Hakan informs the accountant that the remaining 25.000
will be paid by him in cash upon the Notary deed.
When the accountant asks Mr. Hakan to inform him on his sister, he informs him that his
sisters owns a restaurant in the heart of Istanbul.
The accountant request you to assist him with the identification and verification progress
of the new customer and his business.
The accountant tells you that although Mr. Hakan seems a nice guy and Turkcar a
legitimate company, he’s not sure whether he should file a suspicious transaction report
with the FIU.

20. • Ask for more substantial information on the origin of the
funds;
– Verify if the accountant has preformed a full CDD and
verification, including PEP screening of his client (and sister) and
the origin of the funds;
– Legal and financial information (history) on Mr. Hakan his sister
in order to understand the legal origin of the funds. ;
– Declaration of the Turkish Financial Institution on credit of the
sister
– Document and analyze the loan agreement between TurkInvest
and the sister;
– Establish the payment capacity of TurkInvest from potential
rent
– Explain threshold in cash with regard to real estate transactions

21. Tuerlinckx Advocaten cvba
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