Financial Crime World

Title: Romania’s New Regulations: A Game Changer in Financial Compliance

Subtitle: Recent Developments in Ecological Financial Instruments, Payment Incidents, and Investment Firms

Amidst the bustling financial scene in Romania, regulatory changes have taken center stage. Here’s a roundup of the most recent and significant developments that will impact financial institutions and businesses alike.

1. Government Sets New Standards for “Ecological” Financial Instruments (December 14, 2023)

Keywords: ecological financial instruments, EU taxonomy criteria, financial support, independent evaluators, environmental impact mitigation

The Romanian Government has unveiled new regulations for “ecological” financial instruments such as loans, guarantees, and counter-guarantees, mezzanine investments, and more. These instruments must comply with the EU’s taxonomy criteria outlined in Regulation (EU) 2020/852.

  • New standards: Financial support will now be restricted to specific economic activities following EU Delegated Regulation 2021/2 technical screening criteria.
  • Compliance verification: Independent evaluators must verify compliance with sustainability principles and assess proposed projects for environmental impact mitigation.
  • Transparency requirements: Pre-issuance information sheets and post-issuance impact reports must be prepared.

Read the text of the Romanian regulation here.

2. National Bank of Romania (NBR): New Regulation for Payment Incidents Registry (PIR) (December 11, 2023)

Keywords: Payment Incidents Registry, FNIP, FNPR, reporting entities, financial institutions, major payment incidents

Effective January 1, 2024, the NBR introduces new regulations for the Payment Incidents Registry (PIR), managing a database comprising the National Payment Incidents File (FNIP) and the National File of Persons at Risk (FNPR).

  • Reporting requirements: Reporting entities will be responsible for providing information on major and minor payment incidents.
  • Notification obligations: Financial institutions must notify payers in case of major check-related incidents leading to banking restrictions.

Read the text of the newly issued regulation here.

3. Financial Supervisory Authority (FSA): ESMA Guidelines Implemented (October 20, 2023)

Keywords: FSA, ESMA guidelines, MiFID II suitability requirements, active and inactive clients, investment firm obligations, business continuity plans

The FSA updates its regulations to reflect and implement the ESMA guidelines on certain aspects of the MiFID II suitability requirements, dated April 3, 2023. Key changes include:

  • Active and inactive clients: The distinction between active and inactive clients is redefined.
  • Investment firm obligations: Clarification of investment firm obligations to review business continuity plans.
  • Regulatory requirements: Removal of prudential requirements in light of Law no. 236/2022.

Additionally, S.S.I.F. reporting, consideration of guarantee letters for funding client accounts, and flexibility in margin transactions are addressed.

Read the regulation text here.

4. NBR Imposes Exchange Monitoring Obligations (August 7, 2023)

Keywords: NBR, exchange control requirements, financial entities, Romanian currency, local currency

The NBR has amended its exchange regulation requiring certain financial entities, including credit institutions, e-money issuers, payment institutions, and non-banking financial institutions, to monitor compliance with exchange control requirements on transactions between Romanian residents.

  • Transaction requirements: Transactions must be performed in the local Romanian currency, leu, subject to applicable exemptions.

Read the text of the recently released regulation here.

Stay tuned for further updates as Romania’s financial regulatory landscape continues to evolve.