Belgium has recently introduced a right for undertakings to receive certain basic banking services. In case of repeated denial of access to such service, credit institutions may be forced to provide the service. This new piece of legislation will no doubt be welcomed by those sectors which have traditionally faced difficulties accessing basic banking services. However, the legislation has important ramifications for credit institutions in terms of their freedom to choose their customers, notwithstanding that the legislation includes provisions that should help protect banks from certain risk areas (e.g. anti-money laundering). We explain below the key elements of the new legislation.

Objectives. On 1 May 2021, the Act of 8 November 2020 introducing a right to basic banking services for undertakings (the “Act”) entered into force. The Act aims to ensure that undertakings can open a payment account in Belgium, which is a legal requirement for undertakings to establish and pursue their business activities in Belgium. According to the legislator, this might be challenging for undertakings active in, amongst others, the diamond industry, the football and hospitality sector, “second chance” undertakings (following bankruptcy) and certain humanitarian organisations.

A judgment rendered on 16 March 2021 by the President of the Brussels Enterprise Court, i.e. still before the entry into force of the Act, provides a good illustration of how undertakings can encounter difficulties when seeking to make use of basic banking services. In this judgment, the President ordered a payment institution active on the Belgian market to refrain from terminating its business relationship with a diamond trading company. According to the payment institution, the termination of the business relationship (which resulted in the suspension of all outgoing payments) was part of a wider adapted client strategy and was justified on the basis of its freedom to contract and conduct business and its contractual right to terminate the relationship. The President disagreed and held that, since the diamond trader had already been refused twice as a customer by multiple credit institutions and no alternatives were available, the payment institution’s unilateral and immediate termination of the business relationship constituted an abuse of the diamond trader’s economically dependent position vis-à-vis the payment institution (a relatively new concept under Belgian law[2]) and an unfair market practice[3].

Scope. The Act identifies the following services as “basic banking services”:

• the opening of a payment account;
• the deposit and withdrawal of cash on/from a payment account and related services; and
• the execution of payment transactions, including transfers of funds, direct debits, card or similar device payments and wire transfers (including standing orders).

Importantly, the right to a basic banking service does not include the provision of a credit facility, which remains at the discretion of the credit institution providing the basic banking service.

The Act benefits undertakings established in Belgium and registered (or in the process of registering) with the Crossroads Bank for Enterprises. This includes:

• individuals pursuing a professional activity in a self-employed capacity;
• legal persons; and
• certain organisations without legal personality.

Grounds for refusal of basic banking services. A credit institution is only allowed to refuse to provide the basic banking services:

• for anti-money laundering (“AML”) compliance reasons (e.g. if it is unable to comply with its customer due diligence obligations); or
• if the undertaking already has another payment account that it can use in Belgium or in another EU member state (unless the undertaking proves that such account does not suffice to pursue its professional activities).

Designation of a basic banking services provider. If an entitled undertaking is denied a basic banking service by at least three credit institutions, the undertaking may file an application with the Chamber for basic banking services, a specific body to be set up within the Belgian Federal Public Service Economy. Following a favourable confidential opinion from the Belgian Financial Intelligence Unit (or absent any response within 60 days), the Chamber will designate a credit institution that has to offer the basic banking services to the undertaking. The credit institution will be chosen from the list of Belgium-based systemically important institutions.[4]

The designated credit institution can only refuse to provide the basic banking services if:

• a member of the board, executive committee or an effective leader of the undertaking has been convicted of fraud, breach of trust, fraudulent bankruptcy or forgery; or
• the undertaking, after filing its request, has been able to open a payment account that gives access to the payment services in Belgium or in another EU member state.

Termination of the basic banking service. During the lifetime of the basic banking service, the designated credit institution can solely terminate the relationship in one of the following circumstances:

• a member of the governance body of the undertaking has been convicted of fraud, abuse of trust, fraudulent bankruptcy or forgery;
• the undertaking has abused the payment account for illegal purposes;
• no payment transaction has taken place on the relevant payment account for more than 12 consecutive months;
• the undertaking has provided incorrect information in order to benefit from the basic banking services or in response to AML due diligence questions from the credit institution;
• the company has opened another payment account that it can use in Belgium or in another EU member state (the undertaking shall immediately inform the basic banking services provider thereof); or
• the termination complies with the Belgian AML rules.

Reporting obligations and dispute resolution. Credit institutions are obliged to report annually to the Federal Public Service Economy and the Belgian Financial Intelligence Unit about:

• the number of accounts opened in the framework of the basic banking service; and
• the number of denials and terminations and the justifications for these.

Ombudsfin (the Ombudsman for financial services) is the body competent for hearing disputes regarding the basic banking service. Ombudsfin may annul the credit institution’s decision to refuse or terminate the basic banking service. Its ruling is binding on the credit institution.

Matthias Schelkens, associate in Brussels

Anthony Verhees, junior associate in Brussels

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[1] We understand that this judgment has not been appealed.

[2] Article IV.2/1 of the Code of Economic Law.

[3] Article VI.104 of the Code of Economic Law.

[4] The most recent list is available at https://www.nbb.be/en/articles/annual-list-systematically-important-institutions-belgium-1.