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On 8 June 2021, the National Bank of Belgium (NBB) published its Circular on repatriations (NBB_2021_12). The publication takes place amidst budgetary woes, political debate, social pressure and recent press articles about black market capital allegedly being repatriated to Belgian financial institutions.

In this Circular, the NBB gives further guidance on how to investigate repatriations and when to report to the Financial Intelligence Processing Unit (CTIF - CFI).Specific attention is given to repatriations that took place in the past. In this regard, the NBB included specific expectations regarding the internal audit function.

Expectations for internal audit

The expectations regarding internal audit are set out in Article 63 of the Circular.

The NBB expects internal audit to assess the current and past internal procedures for vigilance regarding the repatriation of funds, as well as their effective implementation. This assessment should be based on sampling and should aim to determine whether, and to what extent, the legality (from a tax and money laundering point of view) of the funds previously repatriated by clients, and currently held by them, should be re-examined.

Based on that, the financial institutions should then formulate an action plan to subject the repatriations in question to re-examination as soon as possible, if deemed appropriate.

As such, the set-up and approach of this internal audit should cover: 

  • the definition of the relevant scope (in terms of timing, clients, transactions, etc.);
  • the collection and evaluation of the past and actual policies, procedures and processes;
  • the collection (and if required reconstruction) of historical data (transactions, repatriation files, etc.); and
  • the evaluation of a sample of concrete files and transactions.

Based on this approach, the following competencies will have to be combined to successfully perform this audit: internal audit methodology, deep (and historical) compliance knowledge and specific data support to identify and structure relevant past data.

Timing

  • Communication to the NBB of audit planning by 31 October 2021
  • Performance of internal audit by 30 June 2022
  • 3 months after finalization of audit, an action plan needs to be drafted.

Both the audit report and action plan need to be communicated to the NBB.

KPMG Advisory has the multidisciplinary competences to assist you with these requirements, specifically with respect to internal audit methodology, compliance & AML expertise, as well as data analysis & structuring. Reach out to our specialists below to discuss your needs and specific approach on this internal audit.

Read the full circular here in Dutch and in French.

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