Financial Crime World

Title: Money Laundering and Terrorist Financing Risk Assessment: Romania’s Progress and Challenges

Romania: Progress and Challenges in AML/CFT

Executive Summary

Romania demonstrates progress in some areas of anti-money laundering (AML) and countering financing of terrorism (CFT), but continues to face challenges. This report summarizes key findings from a recent on-site visit evaluating Romania’s adherence to the Financial Action Task Force (FATF) recommendations in combating money laundering (ML) and terrorist financing (TF).

Key Findings

Understanding of ML and TF risks

  1. ML risks: Romania has a fair understanding of ML risks.
  2. TF risks: Understanding of TF risks remains underdeveloped.
  3. Cooperation: Necessary arrangements for domestic cooperation are in place.

Access to and usage of financial intelligence

  1. Information availability: A comprehensive framework for information gathering and access exists.
  2. Intelligence usage: Limited financial investigators and technical resources hinder efficient intelligence usage.

AML/CFT policy, coordination, and prioritization

  1. Strategic framework: Romania lacks an overarching AML/CFT strategy
  2. Communication and cooperation: Insufficient communication, cooperation, and systematic coordination between authorities hinder their efforts.
  3. Resource allocation: AML/CFT resources are not consistently prioritized.

Confiscation of criminal proceeds

  1. Domestic predicates: Romania effectively confiscates proceeds from domestic predicates.
  2. Foreign sources: Proceeds from foreign sources and standalone cases pose a challenge.

Countering terrorism financing

  1. Resources and focus: Romania faces challenges in devoting adequate resources and focus to TF prevention and investigation.

Romania: Progress and Challenges in AML/CFT

Understanding of ML and TF risks

ML risks

Romania has a fair understanding of money laundering risks, as evidenced by progress in applying measures to combat ML. However, this understanding is not yet fully reflected in measures taken against terrorist financing.

TF risks

Understanding of TF risks remains underdeveloped in Romania. While authorities such as the Romanian Intelligence Service (RIS) and the Directorate for the Investigation of Organized Crime and Terrorism (DIOCT) have some insight into TF risks, their focus remain predominantly on terrorism prevention.

Cooperation and coordination

Domestic cooperation

Necessary arrangements for domestic cooperation and coordination are in place in Romania. However, the effectiveness of these arrangements has yet to be demonstrated.

Access to and usage of financial intelligence

Romania has put in place a comprehensive framework for gathering and accessing financial intelligence. However, limited financial investigators and technical resources hinder the efficient use of this intelligence.

AML/CFT policy

Strategy development

Romania lacks an overarching AML/CFT strategy, leading to inconsistencies and inefficiencies.

Communication and cooperation

Cooperation between various prosecutors’ offices was insufficient, and investigation and prosecution of ML is not a priority overall.

Financing of Proliferation of Weapons of Mass Destruction (PF)

Romania has started a process aimed at effective risk mitigation for financing of PF, although these efforts are still new.

Confiscation of criminal proceeds

Romania effectively confiscates proceeds from domestic predicates. However, extending this to foreign predicates, located abroad, in third-party, and standalone cases remains a challenge. The need for additional resources to conduct financial investigations and guidance for prosecutors is crucial to address these gaps.

Counter-terrorism financing

resources and focus

Romania faces challenges in devoting adequate resources and focus to terrorism financing prevention and investigation. The successful investigation and prosecution of one TF case demonstrates the ability to enforce existing regulations, but more investment is needed in this area.

Conclusion

The future of Romania’s financial sector and AML/CFT regime is closely tied to its ability to effectively address the identified challenges. By investing resources and expertise in intelligence usage, policy coordination, and terrorism financing, Romania can improve its standing in the international community and create a more robust financial system.

References

  • Financial Action Task Force (FATF) reports and recommendations
  • Various reports from international organizations, such as the European Commission and the European Bank for Reconstruction and Development, on Romania’s AML/CFT measures.