Financial Crime World

Title: Romania’s Struggle against Financial Crimes: A Mixed Picture in Moneyval’s Fifth Round Evaluation Report

Background

  • The latest Moneyval evaluation report was published on July 18, 2023.
  • The report assesses Romania’s progress in preventing financial crimes, including money laundering (ML) and terrorist financing (TF).

Findings

Positive Developments

  • Romania has strengthened its legal and institutional framework since 2014.

Concerns

  • Moderate effectiveness levels in all areas except international cooperation.
  • Limited understanding of TF risks.

Challenges in Investigating ML

  • LEAs infrequently use available information to investigate ML crimes.
  • Lack of technical resources and limited human resources allocated to the FIU.
  • Absence of an overarching AML/CFT strategy.

Areas Requiring Improvement

  • Limited efforts to confiscate criminal proceeds.
  • No specific TF policy and limited focus on TF by intelligence agencies.

Progress in Preventing Tax Predicates and Corruption

  • Robust measures to prevent laundering of tax predicates and proceeds of corruption.

Convictions and Sanctions

  • Convictions for ML remain low.
  • Sanctions appear insufficiently dissuasive.

Confiscation of Criminal Proceeds

  • Romania actively implements measures to confiscate criminal proceeds but often faces challenges in executing orders, particularly in complex cases.

Romanian Intelligence Service and Directorate for the Investigation of Organized Crime and Terrorism

  • Focus is on the prevention and disruption of terrorism rather than detecting, investigating, and prosecuting TF.

Supervision of Banks, Financial Institutions, and New Players

  • The National Bank of Romania applies the most robust AML/CFT risk-based approach.
  • DNFBPs and VASPs need improvement in implementing TFS requirements.
  • Greater understanding of the risk of abuse of legal persons but higher risk level than recognized.
  • Romania has a sound legal framework for international cooperation but lacks reliable data and statistics, hampering its ability to demonstrate effectiveness.

Recommendations

  • Adopt a comprehensive AML/CFT strategy.
  • Improve communication, cooperation, and systematic coordination between various prosecutors’ offices.
  • Enhance the pursuit of confiscation of criminal proceeds, particularly in complex cases and those involving proceeds located abroad.
  • Develop a specific policy for TF and expand the focus of intelligence agencies on detecting, investigating, and prosecuting TF.
  • Implement targeted measures to strengthen the understanding and implementation of TFS requirements by DNFBPs and VASPs.
  • Improve the use of financial information for investigating ML crimes.
  • Enhance the sharing of financial intelligence among LEAs.
  • Provide constructive and timely assistance in international cooperation cases and establish a central case management system and formalized guidelines for request prioritization.

Expected Next Steps

  • Romania is expected to report back to MONEYVAL under the enhanced follow-up reporting process in May 2025.