Financial Crime World

Title: Romania Faces Challenges in Countering Financial Crimes: Insights from the Moneyval Report

Executive Summary

The latest Moneyval report on Romania’s Anti-Money Laundering and Combating Financing of Terrorism (AML/CFT) measures provides an in-depth analysis of Romania’s progress and shortcomings in the fight against financial crimes. This article discusses the key points of the report, highlighting significant challenges that Romania faces in countering money laundering (ML) and terrorist financing (TF).

Key Points

  1. Understanding of ML and TF risks: Improvements in understanding money laundering risks, but development in recognizing terrorist financing risks still needed.

    • Domestic cooperation and coordination is in place for both ML and TF.
    • However, demonstrated effectiveness remains to be shown.

  2. Access to financial intelligence:

    • Financial information is collected and accessible but not effectively used for operational and strategic needs.
    • Lack of technical resources and limited human resources available to the financial intelligence unit affects the quality and quantity of financial intelligence provided to authorities.

  3. Overarching national strategy:

    • Romania lacks a unified national AML/CFT strategy to ensure consistent approaches and methods across all areas.
    • Inadequate communication, cooperation, and coordination between various prosecutors’ offices.
    • Investigation and prosecution of ML and TF is not prioritized.
    • Better results in certain predicate offenses like tax evasion, corruption, and fraud.

  4. Confiscation of proceeds from foreign predicates:

    • Rare successful confiscation of criminal proceeds from foreign predicates due to a lack of practical guidance and training.

  5. Understanding of terrorist financiers’ roles:

    • Need for a fuller understanding of terrorist financiers’ roles in the financial system.
    • Limited effort to address TF due to no significant TF activities in Romania and lack of a specific terrorism financing strategy.

  6. Implementation of targeted financial sanctions:

    • DNFBPs and VASPs need better understanding and compliance with targeted financial sanctions requirements.
    • Banks and larger financial institutions demonstrate good understanding but need more guidance on indirect links and close associations with sanctioned entities and individuals.
    • The non-profit sector is not subject to risk-based regulation and oversight, increasing its vulnerability to TF activities.

  7. Importance of a comprehensive risk assessment:

    • A comprehensive risk assessment of ML and TF risks is essential for addressing vulnerabilities and improving the overall AML/CFT system.

Summary of Key Findings from MONEYVAL On-Site Visit (21 September to 4 October, 2022)

  • While Romania has made progress in ML and TF awareness, there is still a need to address deficiencies in AML/CFT regulations.
  • Inadequate access to financial intelligence and technical resources hinders the support of operational and strategic needs.
  • An overarching national AML/CFT strategy is absent, leading to inconsistent approaches and limited communication, cooperation, and coordination between relevant authorities.
  • Investigations and prosecutions focus primarily on predicate offenses rather than financial crimes themselves.
  • Limited success in detecting, investigating, and prosecuting TF activities.
  • There is a need for better understanding of targeted financial sanctions requirements, especially among DNFBPs and VASPs.

Conclusion and Recommendations

The report concludes that Romania faces significant challenges in countering both ML and TF. To tackle these challenges, the following recommendations are put forward:

  • Increase resources and training for the financial intelligence unit.
  • Develop a comprehensive national AML/CFT strategy.
  • Provide more robust guidance and training for prosecutors and law enforcement agencies.
  • Enhance cooperation and communication between relevant bodies.
  • Implement more stringent penalty structures for non-compliance with AML/CFT regulations.

Effective implementation of these recommendations will play a crucial role in strengthening Romania’s AML/CFT system and mitigating risks of financial crimes.