Romania’s Fight Against Money Laundering: A Mixed Bag of Progress and Challenges

Introduction

Bucharest, Romania - Romania’s efforts to combat money laundering and terrorist financing have shown mixed results, according to a recent report by [Organization/Agency]. While some sectors have made significant progress in implementing anti-money laundering (AML) and combating the financing of terrorism (CFT) measures, others still lag behind.

Progress and Challenges

Effective AML/CFT Controls

Banks and other financial institutions have generally effective AML/CFT controls in place. However, there are concerns about the identification of politically exposed persons (PEPs) and their associates. Insufficient use is made of public sources and self-declarations in some sectors, which could lead to potential vulnerabilities.

Detection and Reporting of Terrorist Financing

The report notes that only a small number of suspicious transaction reports (STRs) are filed by non-banking sectors, indicating possible under-reporting of suspected ML/TF activity. Additionally, there is a lack of focus on detecting and reporting terrorist financing outside of the banking sector and a few money transfer service operators.

Positive Developments

• Larger financial institutions have developed effective three lines of defense, including an independent audit function that covers AML/CFT compliance.
• Supervisors, such as the National Bank of Romania and the Financial Supervision Authority, apply effective “fit and proper” entry checks.

Gaps and Challenges

Virtual Asset Service Providers (VASPs)

There are gaps in the scope of application of AML/CFT requirements to VASPs. Additionally, there is no authority with a clear responsibility for proactively identifying unlicensed banking or payment services activity.

Market Entry Controls

Supervisors have applied effective “fit and proper” entry checks, but market entry controls elsewhere are less effective.

Recommendations and Next Steps

• The report concludes that while progress has been made in some areas, there are still challenges to be addressed to effectively combat money laundering and terrorist financing in Romania.
• There is a need for a more granular analysis of inherent risk at sectoral and institutional levels.
• Important steps have been taken to prevent misuse of legal persons, including the development and use of public registries.

Conclusion

While Romania has made progress in some areas, there are still challenges to be addressed to effectively combat money laundering and terrorist financing. The report highlights the need for continued efforts to improve AML/CFT controls, detection and reporting of terrorist financing, and market entry controls.