The Belgian government is preparing a law on a basic banking service for companies. It is tailor made to the Antwerp diamond industry.
Minister of Economic Affairs Kris Peeters (CD&V) has prepared a bill that impel the Belgian banks to do business with diamond companies. The proposed measure concerns the introduction of a basic banking service for companies, such as has existed for private individuals since 2003.
Since the closure of Antwerp Diamond Bank by KBC in 2014, diamond companies in Belgium have found it difficult to find a bank for their financial transactions. According to the Antwerp World Diamond Center, the sector federation, this is a major reason why diamond companies leave Antwerp and an obstacle to attracting new companies. The diamond industry has raised the problem with the banks, alas without much result.
Common transactions for the diamond industry
Kris Peeters is now carrying out a forcing. According to the bill, banks are obligated to open euro or dollar accounts for companies that request them and they must execute common transactions for them, such as payments, money transfers and accepting deposits.
They can only refuse doing this if the transaction is in violation of the anti-money laundering law or serves to finance terrorism.
The bankers are clearly not happy with the proposed bill. Many diamond companies are not very transparent. In recent years the industry has repeatedly been in the news with scandals involving fraud and tax fraud.
‘A company must be able to bank‘, says the banking world. ‘But we have to respect the strict rules on fraud and money laundering which, among others, Europe imposes on us. In this case the two concerns are diametrically opposed.‘
Risk related to the diamond industry
The banks want to be able to decide for themselves in which sectors and with which companies they work, and with which not. They are very worried about the risks that diamond companies hold for a bank. The anti-money laundering unit, consulted by Peeters for advice, has reservations about the bill. The Belgian National Bank, that also acts as a supervisor of the banks, will express it’s opinion on the matter.
On its website Belfius mentions that it does not accept customers who are active in the diamond industry or in the domain of weapons of war. KBC announced last year that it no longer wants to do business with casinos. Businesses in the catering industry also often clash with such a refusal.
A mandatory basic banking service for companies exists in few countries. France has such a regulation in place. There, companies must address their request to the Banque de France, which assesses their file and then assigns them a bank.
The Antwerp Diamond industry hopes for a positive outcome as it has been struggling with getting access to basic banking services for quite a while now.
Source: Belgian business newspaper De Tijd dated March 15, 2018