The legalization of sex work is a complex issue sparking intense debates in Belgium, where the sector has operated under a unique legal framework since its decriminalization in March 2022. Belgium became the first European country to adopt comprehensive legislation to regulate this activity, allowing sex workers to register as self-employed, pay taxes, and access social protections. However, Belgian banks and insurers remain cautious about integrating this sector into the formal economy. Their reluctance stems from concerns about money laundering, reputational risks, regulatory challenges, and operational constraints. This article explores these barriers in detail and proposes solutions for the successful financial inclusion of sex workers in Belgium. For more insights on this topic and other finance and societal issues, visit our Bunniz blog.

1. Money Laundering: A Major Concern for Belgian Financial Institutions

Money laundering is a central issue for banks and insurers in Belgium, where financial authorities maintain strict oversight. According to the Financial Action Task Force (FATF), between 2 and 5% of global GDP, or approximately 740 billion to 2 trillion euros, is laundered annually through complex financial channels. Although sex work is decriminalized in Belgium, it is still viewed as a high-risk activity due to its historical association with criminal networks, such as human trafficking or organized crime.

Belgian legislation, particularly the law of September 18, 2017, on preventing money laundering, imposes strict obligations on financial institutions regarding anti-money laundering (AML) and counter-terrorism financing (CTF). These obligations include:

- KYC processes (Know Your Customer): verifying clients’ identities and the origin of their funds.

- Transaction monitoring: cash transactions, common in sex work, complicate this task.

According to a report by the Financial Information Processing Unit (CFI), opaque financial flows, especially cash, remain a major source of suspicious activity reports for money laundering. Sex workers, even when registered as self-employed, often face difficulties opening bank accounts or obtaining loans, as their income is perceived as unstable or risky. This caution from banks arises from fears of sanctions from the National Bank of Belgium (NBB) or reports to the CFI, which can trigger costly investigations. For more on regulatory developments in Belgium, visit our Bunniz blog.

2. Reputational Risks: A Strategic Challenge for Banks and Insurers

Reputation is a strategic asset for Belgian financial institutions, which aim to maintain trust with clients, investors, and regulators. Associating with a controversial sector like sex work, even if legal, can pose significant reputational risks. According to a study by ComplyAdvantage, fines for non-compliance with AML-CTF regulations increased by 50% in 2022, with lasting impacts on the image of financial institutions.

Despite decriminalization, stigmatization persists. Sex workers have reported:

- Refusals to open bank accounts or account closures by institutions like KBC or BNP Paribas Fortis, often citing “heightened risks.”

- Difficulties for platforms, such as a Belgian adult content platform in 2023, in obtaining online payment services due to restrictive policies of payment processors.

This stigmatization also affects businesses linked to the sector, such as erotic salons or digital platforms. These practices highlight the reluctance of financial institutions to fully engage with a sector that is nonetheless legalized. For more analyses of social and economic dynamics in Belgium, visit our Bunniz blog.

3. Regulatory and Operational Challenges in Belgium

The decriminalization of sex work in Belgium, effective since March 2022, allows sex workers to register as self-employed, pay taxes, and access social protections. However, this framework imposes new obligations on financial institutions, which must adapt their processes to meet the requirements of the National Bank of Belgium (NBB) and the Financial Services and Markets Authority (FSMA). These authorities demand robust systems to monitor transactions, particularly those from high-risk sectors like sex work.

Banks must invest in:

- Advanced technological tools: such as fraud detection algorithms and transaction analysis systems.

- Compliance processes: according to ComplyAdvantage, AML-CTF compliance costs have risen by an average of 20% in recent years.

Moreover, varying legal frameworks across Europe complicate the handling of cross-border transactions. For instance, a Belgian sex worker operating in France, where the legal framework is stricter, may face obstacles in transferring income. These regulatory differences increase operational costs for Belgian banks, which must navigate diverse jurisdictions. For more on regulatory developments and their impacts, visit our Bunniz blog.

4. Toward Successful Integration: Solutions for Financial Institutions

Despite these challenges, solutions exist to overcome the reluctance of Belgian banks and insurers. The 2022 decriminalization provides a favorable framework by allowing sex workers to declare their income as self-employed, improving the traceability of financial flows. Possible solutions include:

- Limiting cash transactions: often seen as a channel for fraud.

- Drawing inspiration from foreign models: such as the Netherlands, where banks have adapted processes to integrate legalized sex workers.

- Public-private partnerships: to encourage banks to offer tailored services, such as professional accounts for self-employed sex workers.

- Using AI and data analytics: to detect criminal activities without stigmatizing the entire sector.

Finally, awareness is key to breaking down prejudices. Training on AML-CTF obligations and communication campaigns can encourage financial institutions to support decriminalization. For more on inclusion and regulation topics, visit our Bunniz blog.

5. Social and Economic Implications of Incomplete Integration

The hesitation of banks and insurers to fully integrate sex workers has significant social and economic consequences. In Belgium, decriminalization enables sex workers to access social rights, such as health insurance or pensions. However, without full access to financial services, they remain vulnerable. The inability to obtain loans or insurance can limit their capacity to invest in their activities or protect against professional risks.

Economically, successful integration of sex work could generate significant tax revenue. In Germany, where the sector is legalized, it accounts for approximately 15 billion euros annually, part of which is taxed. In Belgium, where the sector is estimated at several hundred million euros, greater financial inclusion could boost the formal economy while reducing parallel financial circuits. For more on the economic impact of decriminalization, visit our Bunniz blog.

Conclusion: Finding a Balance for Successful Financial Inclusion

The reluctance of Belgian banks and insurers to integrate sex workers stems from legitimate concerns: money laundering, reputational risks, regulatory challenges, and operational costs. However, the 2022 decriminalization offers a unique opportunity to overcome these barriers through a clear legal framework, modern technological tools, and increased awareness. By promoting financial inclusion, financial institutions can contribute to a more equitable society while strengthening the formal economy.

For more topics on finance, regulation, and society in Belgium, visit our Bunniz blog.