Moneyval Report Highlights the Need for Improved Sanction Implementation and Supervision in Romania

Romania's banks and financial services sector need to enhance their ability to impose sanctions, according to a money laundering report released by the Council of Europe's AML body, Moneyval.

While Romania has a solid legal framework for implementing targeted financial sanctions, concerns have been raised about the private sector's implementation of these measures and the adequacy of supervisory compliance. Moneyval's report emphasizes the need for a more sophisticated calibration of the National Bank's supervisory actions with risk and a stronger focus on money laundering and terrorist financing risks by the Financial Supervisory Authority. The report also suggests increasing the resources of the National Office for Preventing and Combating Money Laundering to align with statutory responsibilities, particularly regarding the supervision of virtual asset service providers and legal professionals.

The report assesses Romania's compliance with the standards set by the Financial Action Task Force (FATF) and highlights progress made since the previous evaluation in 2014. Romania has taken several actions to strengthen its legal and institutional framework against money laundering and the financing of terrorism (AML/CTF), achieving moderate levels of effectiveness in most areas assessed. However, the country needs to address the highest risks it faces by implementing appropriate mitigating actions.

The evaluation reveals that authorities in Romania have not yet prioritized the investigation and prosecution of money laundering, necessitating additional measures to ensure consistency in investigations and prosecutions. While Romania effectively investigates and prosecutes domestic tax crimes and corruption, the focus on trafficking of human beings and drugs tends to be on the predicate offenses rather than money laundering. The country has improved its ability to freeze, seize, and confiscate proceeds and instrumentalities of domestic crime but needs to enhance the capacity of financial investigators for parallel financial investigations, asset tracing, and recovery.

To counter terrorist financing, Moneyval recommends that Romania develops a comprehensive national strategy and action plan, provides relevant training, and assesses the risk of abuse of the non-profit sector for terrorist financing. The report acknowledges Romania's efforts to prevent the misuse of legal entities by establishing public registers of beneficial ownership and bank accounts, but calls for stronger controls to ensure the accuracy and timeliness of information in these registers.

Romania is expected to report back to Moneyval in May 2025 as part of the enhanced follow-up reporting process. The report also recognizes Romania's substantial level of effectiveness in international cooperation, which has earned the country commendations from other nations for its constructive assistance in combating money laundering and terrorist financing.

By fLEXI tEAM