Financial Crime World

MoneyVal Assesses Moldova’s Anti-Money Laundering Measures: Weak State Institutions under Scrutiny

Moldova, a Eastern European developing country, has gained notoriety in recent years for its involvement in high-profile financial crimes. This article assesses Moldova’s efforts to improve its anti-money laundering (AML) measures in light of its previous financial scandals and an ongoing evaluation by MoneyVal, the European Council’s anti-money laundering monitoring body.

Background

  • Moldova’s vulnerability to money laundering (ML) due to high corruption rates, weak state institutions, and poor institutional processes (Moldova’s corruption rank)
  • High-profile financial crimes: Russian Laundromat scheme and $1 billion banking system heist

MoneyVal Evaluation and Previous Reforms

  • MoneyVal assessment team began evaluating Moldova’s AML measures on October 2, 2018
  • Previous assessment conducted in 2013; enacted Law on AML/CFT in December 2017
  • European Union (EU) requires alignment with its directives

Russian Laundromat Scandal and Risks of Weak State Institutions

  • Case of more than $20 billion transferred from Russia to Western countries (2010-2014)
  • State institutions turning a blind eye to illicit funds; judicial system involvement in money laundering

Previous Evaluations and Reform Challenges

  • Moldovan Office for AML/CFT evaluation in 2015: superficial and failed to prevent risks
  • New law places emphasis on private sector, ignoring related crimes like human trafficking and corruption
  • Moldova as part of globalised world with financial transactions crossing borders
  • EU adoption of Fifth Anti-Money Laundering Directive and automatic information exchange framework
  • Effectiveness of these measures relies on strong enforcement and compliance in high-risk countries

Addressing State Institution Role in Money Laundering

  • FATF recommendations rely on state officials’ honesty and adherence to the law
  • Mandating specific money-laundering prevention measures for public institutions
  • Independence of state institutions and international cooperation mechanisms

Conclusion

  • MoneyVal’s evaluation of Moldova’s new regulatory framework will determine compliance with FATF recommendations and address emerging ML risks
  • Attention to potential involvement of state institutions in ML activities in high-risk regions
  • AML reform and transparency measures necessary to prevent state complicity in ML

Key Points

  • Moldova’s susceptibility to money laundering due to corruption and weak institutions
  • MoneyVal’s evaluation of Moldova’s new regulations
  • Risks of poor state institutions and their role in ML
  • International consequences of poor legal frameworks and measures to combat this
  • Addressing the role of state institutions in ML and strengthening international cooperation to prevent complicity.