Romania Makes Progress in Combating Terrorist Financing, but Room for Improvement Remains

A recent evaluation by the Financial Action Task Force (FATF) has revealed that Romania has made significant strides in implementing measures to combat terrorist financing. The country’s mutual evaluation report highlights areas of strength and weakness, providing a roadmap for further improvement.

National Cooperation and Coordination Mechanisms

Romania excelled in its national cooperation and coordination mechanisms, earning a “partially compliant” rating (PC). The country’s financial intelligence unit and law enforcement agencies demonstrated effective collaboration in sharing information and coordinating efforts to disrupt terrorist financing networks.

Strengths:

• Effective collaboration between financial intelligence unit and law enforcement agencies
• Sharing of information and coordination of efforts to disrupt terrorist financing networks

Money Laundering Offence Laws

Romania scored well in its money laundering offence laws, receiving a “compliant” rating (C). The country’s legal framework provides for the criminalization of money laundering and terrorist financing, and its authorities have implemented effective measures to prevent and detect these crimes.

Strengths:

• Criminalization of money laundering and terrorist financing
• Effective measures to prevent and detect these crimes

Weaknesses and Areas for Improvement

However, Romania fell short in several areas. Its targeted financial sanctions related to terrorism and terrorist financing, as well as proliferation, received a “partially compliant” rating (PC). The country’s regulatory bodies need to strengthen their powers to impose and enforce targeted sanctions against individuals and entities involved in terrorist financing.

• Strengthen powers of regulatory bodies to impose and enforce targeted sanctions
• Improve coordination between authorities to ensure effective implementation of sanctions

Romania also struggled with its customer due diligence requirements, earning a “largely compliant” rating (LC). While the country’s financial institutions are required to conduct thorough customer due diligence, there is room for improvement in ensuring that this requirement is consistently applied across all sectors.

• Improve consistency in application of customer due diligence requirements
• Enhance transparency and beneficial ownership requirements for legal persons and arrangements

FATF Recommendations

The FATF evaluation also highlighted several areas where Romania needs to improve. The country’s regulatory bodies must:

• Strengthen internal controls and foreign branches and subsidiaries
• Enhance powers of supervision over financial institutions
• Increase transparency and beneficial ownership requirements for legal persons and arrangements

By addressing these weaknesses, Romania can play a more effective role in disrupting global terrorist networks and preventing the misuse of its financial system for illicit purposes.

Conclusion

Romania’s progress in combating terrorist financing is a welcome development, but it is clear that there is still much work to be done. The country must continue to strengthen its regulatory framework, improve cooperation between authorities, and enhance public awareness of the risks posed by terrorist financing. By doing so, Romania can play a more effective role in disrupting global terrorist networks and preventing the misuse of its financial system for illicit purposes.