Financial Crime World

Title: MoneyVal’s Mission in Moldova: Assessing Anti-Money Laundering Measures Amid Corruption Allegations

Moldova’s Money Laundering Scandals

Moldova, a developing country in Eastern Europe, has become notorious for its vulnerable institutions and past involvement in high-profile money laundering schemes. Two of the most notable cases are:

  • The Russian Laundromat case, where over $20 billion was laundered between 2010 and 2014
  • The $1 billion banking system heist in late 2014

MoneyVal’s Assessment Mission

MoneyVal, the European Council’s anti-money laundering monitoring body, began a mission in Moldova on October 2, 2018, to evaluate the country’s anti-money laundering (AML) measures. After previous evaluation in 2013, Moldovan parliament adopted a new AML law in December 2017. The findings are expected on October 13, 2018.

Weaknesses Revealed by the Russian Laundromat Case

The Russian Laundromat case exposed weaknesses in immature democracies and corrupt states when it comes to money laundering. Judges played a significant role in the scheme, approving fraudulent debts and issuing court decisions to mask the true nature of the transactions.

Moldova’s AML Reform: Progress and Shortcomings

Despite these revelations, the new law contains several shortcomings:

  • The 2015 risk assessment failed to identify measures to counteract new money laundering schemes
  • It did not address the role of corrupt state institutions, like the judicial system, in facilitating such activities
  • It underperforms in counteracting related crimes, such as human and organ trafficking, drug trafficking, and corruption

International Implications

Weak legal frameworks in one country pose significant risks to the prevention efforts of others. In response, the international community has developed conventions and standards to combat illicit financial flows. However, a lack of enforcement and compliance in high-risk countries could undermine these initiatives.

Moldova as an Example

Moldova serves as a telling example, despite EU efforts to strengthen its anti-money laundering regulations, the reforms have been insufficient in building an effective national AML mechanism due to:

  1. Lack of a holistic approach
  2. Excessive focus on the private sector
  3. Failure to implement structural reforms to address corruption and increase transparency
  4. Inadequate international cooperation

Combating State Institution Involvement in Money Laundering

As MoneyVal assesses Moldova’s new regulatory framework against FATF recommendations, it is crucial to consider the involvement of state institutions in money laundering. Upcoming evaluation report should act as a catalyst for further anti-corruption measures and FATF recommendations to prevent this malpractice.

Collaborative Solution

An expert team should be brought together to devise strategies to regulate state involvement in money laundering and develop targeted proposals to build an efficient regulatory framework. FATF must reconsider and strengthen its recommendations to halt state institutions, especially the judicial system, from participating in money laundering schemes.