Romania: Intensified raids to check compliance with anti-money laundering regulations

28.06.2017

Romania’s anti-money laundering regulations were aligned with international standards more than a decade ago and the country has constantly improved its legal framework since then by strengthening law enforcement and judicial procedure.

Until recently, the investigatory activities performed by the Romanian watchdog as a deterrent have focussed mainly on key industry sectors that fall within the scope of the relevant legislation, such as financial institutions, banks, insurers, securities brokers, private pension funds, casinos, real estate agents, public notaries, and accountancy, consulting, audit and law firms.

However, this practice seems to be changing, as the National Office for the Prevention and Control of Money Laundering (“National Office”) has now shifted its focus to service providers.

Law No. 656/ 2002 on the prevention and sanctioning of money laundering and on the establishment of certain measures to prevent and combat terrorism financing, as republished and subsequently amended (“Law”), specifically states that its provisions shall apply to all legal entities that provide professional services to companies or other entities, such as:

i. incorporating companies or other legal persons;

ii. acting as or arranging for another person to act as a director or manager of a company, or acting as an associate in relation with a limited partnership or a similar role in relation to other legal persons;

iii. providing a registered office, administrative address or any other service related to a company, a limited partnership or any other legal person or arrangement;

iv. acting as or arranging for another person to act as a trustee of a specific trust activity or a similar legal operation;

v. acting as or arranging for another person to act as a shareholder for a person other than a company listed on a regulated market that is subject to disclosure requirements in accordance with EU legislation or subject to equivalent international standards.

Generally, the National Office is of the opinion that any service provider or type of business that provides services to other companies, i.e. B2B activities, falls within the scope of the Law and should therefore have in place proper compliance procedures for anti-money laundering (“AML”) and countering the financing of terrorism. However, considering that “providing services to a company” is very widely regulated and implies various business services, the authority tends to assess each activity on a case-by-case basis.

In line with the legal requirements, internal AML procedures should mainly cover the following points:

  1. Appointing an AML Compliance Officer and informing the National Office of the officer’s name, scope and limits of responsibilities;
  2. Assessing risks and applying a risk-based approach;
  3. Implementing “know-your-customer” due diligence and record-keeping;
  4. Reporting suspicious transactions;
  5. Screening global sanctions lists and watchlists for each customer and/or transaction;
  6. Adequate screening procedures to ensure high standards when hiring employees and on-going employee training programmes.

The type and extent of measures to be taken should be appropriate to the risk of money laundering and terrorist financing and the size of the business.

Lack of internal compliance regulations setting out adequate AML preventive measures could be penalised by fines up to RON 50,000 (approx. EUR 11,000). Additionally, during the inspection carried out by the National Office, the authority could also apply sanctions such as suspending the business authorisation or licence for up to 6 months, blocking the bank accounts of the undertaking concerned or even closing down the business unit in question.

In view of the above, it is highly advisable to perform an internal assessment of whether the provisions of the Law are applicable to the business of your company and to what extent appropriate AML procedures have been implemented.