Money laundering is a severe problem in Romania. Some of the main sources of illegal income are the illegal drug trade, financial crimes, fraud, customs and tax crimes, and goods smuggling. In addition, illegal immigration and human trafficking have increased among profit-making activities in recent years.
Anti-Money Laundering Regulations
Romanian Parliament, regarding primary legislation, NOPCML, Romanian National Bank, and other institutions such as Financial Supervisory Authority for secondary legislation are regulatory bodies in Romania.
Regulatory authorities have a number of obligations to prevent money laundering in Romanian. These obligations are basically as follows; Know Your Customer (KYC) procedures that must be carried out during the first participation of customers, obtaining information about real beneficiaries, the appointment of Anti-Money Laundering Officer, reporting suspicious transactions to NOPCML, freezing transactions pending NOPCML permission; preservation of all relevant evidence of suspicious transactions; and not informing customers of any AML investigation.
Institutions subject to AML requirements
- Credit institutions and branches of foreign credit institutions in Romania;
- Romanian branches of foreign financial institutions as well as financial institutions;
- Private pension fund managers and authorized marketing agents for the private pension system;
- Auditors and real and legal persons providing tax and accounting consultancy;
- Notaries, lawyers, bailiffs, and others practicing the independent legal profession, etc.
- Other natural or legal persons trading in goods and services, with a minimum value representing the equivalent of EUR 10,000, based on cash transactions in foreign currency, regardless of whether the transaction is carried out over a single network.
Romania FATF Status
According to the FATF reports, Romania is one of the FATF member states, and Romania is not on the list of countries identified as having strategic AML deficiencies. The FATF undertook the final Mutual Final Assessment Report on the implementation of anti-money laundering and counter-terrorist financing standards in Romania in 2014. Based on this Assessment, Romania has deemed compliant with 7 of the FATF 40 + 9 Recommendations and largely compliant for 18.
US Department of State Money Laundering Assessment (INCSR)
Romania was designated as an Authority of Concern in the US State Department's 2016 International Narcotics Control Strategy Report (INCSR). Key Findings in the report are as follows;
Romania's geographical location makes it a natural transit country for trafficking in narcotics, weapons, stolen vehicles, and human trafficking by transnational organized crime groups. In addition, Romania is vulnerable to financial activities linked to such crimes. Romania's economy is largely cash-based, and the size of the informal economy is about 22 percent of GDP. The financial smuggling and crime revenues generated in Romania are estimated to be around 15 percent of GDP.
Although Romania is not a major financial center, there are still indications that organized crime groups from neighboring countries and Italy are investing in Romanian assets. Romanian organized crime groups participate in various criminal activities in Europe, including prostitution, cigarette trafficking, extortion, and narcotics trafficking. In addition, Romania has some of the highest rates of online credit card fraud and cybercrime globally. Research has revealed that Romanian servers are the second-largest source of cybercrime transactions worldwide.
AML Compliance Solutions for Romania
Through Sanction Scanner's artificial intelligence-supported AML compliance solutions, any organization in Romania can easily comply with AML regulations. Sanction Scanner has more than 3000 PEPs and sanction data from 220 countries; organizations can check their customers, affiliates, partners, and even employees on these data. In this way, they comply with Know Your Customer procedures, and at the same time, they can report each query, including historical records, and present it to the regulators.
Apart from that, through the AML Transaction Monitoring solution, institutions such as banks can instantly monitor their customers' financial transactions. If the compliance team detects that the alarms belong to a suspicious transaction, they can report it from the system and submit it to the regulatory authority. So, if you are a business operating in Romania and want to comply with regulations easily, avoid penalties, protect your reputation, and make compliance processes effortless and effective, meet Sanction Scanner today.