Financial Services Regulatory & Tax Seminar

The EU's new Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) framework, with different Directives and Regulations published between April and July 2024, introduces the European Anti-Money Laundering Authority (AMLA) and significant regulatory changes that will influence both public and private efforts until 2029. While Belgium's regulatory framework may not be radically impacted due to the National Bank of Belgium's prior AML/CTF efforts, key areas of attention under the Anti-Money Laundering Regulations (AMLR) include outsourcing, due diligence on politically exposed persons (PEPs) and ultimate beneficial owners (UBOs), customer review frequency, and group structures. Compliance officers should closely monitor the expected Supplementing AML-Requirements, mainly due for publication in 2026-2027, to prepare for potential impacts and avoid costly rework in areas like technology updates and client or employee management. 

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• Regulatory driven transformation - KPMG Belgium

Recent regulatory changes and market developments, including the EU Instant Payment Regulation (IPR) and the digital euro, present both challenges and opportunities for financial institutions, with most banks in a recent KPMG survey¹ citing regulatory changes as a driving force for payments modernization. While some changes, such as the digital euro, may seem far off, it’s crucial for organizations to reassess and potentially improve their business models while mitigating risks. The IPR, effective from 8 April 2024, will require compliance starting 9 January 2025, impacting banks, payment institutions, and electronic money institutions, particularly around issues like cross-border interoperability and Verification of Payee (VoP). Additionally, the upcoming Payment Services Package, including revised PSD3, PSR, and FIDA regulations, will push forward open finance initiatives, extending beyond payments to encompass investments, insurance, pensions, and mortgages, with a focus on customer protection and digitization. Financial institutions must navigate these changes to remain competitive and compliant.

While MiFID practitioners may have been hoping to enjoy a moment of relative calm pending further evolutions and clarifications regarding the EU's retail investment strategy, a recent surge of activity in regulatory enforcement by the FSMA and some legal courts has forced Financial Institutions’ Management and Compliance Officers to rethink and adapt some of their MiFID processes, and properly assess the impact on pricing strategies, distribution methods, and value propositions.

These events should remind distributors of financial instruments to remain vigilant and reassess whether their internal processes are equipped to deal with these events and evolutions. In this context, a solid product governance system plays a pivotal role in addressing and overcoming these challenges. This is particularly true if the distributor succeeds in establishing a robust product approval and review process (banking) or product governance and oversight process (insurance). In doing so, the relatively high-level principles set out in MiFID / IDD should be translated into a thorough assessment and (periodical) review of the distributed financial instruments, involving all relevant stakeholders in the decision-making process.

The outcome of such an assessment should be that financial instruments are distributed in line with regulatory requirements, that the products suit the client’s needs, that a target market and a distribution strategy are defined and, most importantly, that the products are offered in the client’s interest. To make this possible, many internal steps need to be taken, and a variety of assessments need to be done by stakeholders, each from their own field of expertise. A sound product governance framework should ensure that all these are done in a timely manner and that the results are well-documented. 

In this session, our expert discussed recent developments, case law, and administrative positions in VAT and their impact on the banking and financial services industry. Unlike most sectors, the banking and financial services industry has always struggled with VAT neutrality due to complex exemptions, deduction methods, and varying interpretations across Member States, directly affecting profitability and operational models. Recently, new data collection requirements for EU and Belgian statistics, such as the CESOP reporting obligations and changes in deduction methodologies, have added further complexity. Although e-invoicing and e-reporting are not aimed specifically at the sector, they will significantly impact finance, tax, and IT teams. Despite these challenges, there is still a call for greater administrative simplicity.

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• Indirect Tax - KPMG Belgium
• Year-end Round Up VAT - KPMG Belgium
• Prepayment system for P2 minimum taxation operational - KPMG Belgium
• B2B e-invoicing mandatory as of 1 January 2026 - KPMG Belgium

With the 17 January 2025 DORA compliance deadline approaching fast, many organizations are mobilizing to meet the regulatory requirements. In this session, we provided a comprehensive overview of the latest benchmark updates gathered from organizations in Belgium and within our broader EMA network and discussed key challenges in areas such as ICT Risk Management, Third-Party Risk Management, and Incident Management, along with tips on how to manage compliance. Finally, we explored the post-DORA landscape, offering guidance on how to maintain operational resilience and compliance.

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• Digital risk management - KPMG Belgium
• Making the financial services sector more cyber resilient – KPMG Belgium
• The DORA journey - KPMG Belgium

In practice, a robust and sustainable AML Risk Management can only be achieved if AML-related tasks and operations are performed in a cost-efficient manner. Over the past few years, KPMG has developed a deep practical understanding of the potential of predictive AI and generative AI in the AML context. In this session, we shared tips and attention points based on two use cases – a Transaction Monitoring Alert Classifier and the use of AI to automate KYC Reviews in a Retail Banking context.

Leveraging AI requires a multidisciplinary approach and senior management support. This session covered compliance, AI modeling techniques, internal stakeholder roles, and communication with external stakeholders, with a focus on the upcoming AI Act.

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• Advanced analytics & machine learning - KPMG Belgium
• Machine learning for Anti-money laundering - KPMG Belgium
• AI Act - KPMG Belgium

The Belgian and international tax landscape is continually evolving, often driven by budgetary and political changes, which can affect the sector through increased contributions to the Treasury or additional reporting requirements. Key topics discussed during this session included the evolving ruling practice on innovation income deduction, non-tax deductibility of annual taxes on credit institutions and insurance companies, and the implementation of Pillar 2.

A broader tax reform, potentially impacting investment income and gains, is also on the horizon, which could require banks to adjust their product offerings and IT systems, depending on political agreements.

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• Corporate Tax and Legal - KPMG Belgium
• Belgian Law on minimum taxation amended - KPMG Belgium
• My Tax Compass - KPMG Belgium