The imperative to address the deficiencies identified by the Moneyval Committee in May 2023 and to align national legislation with international and European standards are the key drivers behind the recent initiation of significant amendments to the legal framework governing the prevention and combating of money laundering and terrorist financing. Consequently, to safeguard the economy and strengthen international cooperation, it is crucial for Romania to eliminate the vulnerabilities identified for the period 2017-2021 and reinforce both its legal framework and supervisory mechanisms.

In this regard, the draft law amending and supplementing Law No. 129/2019, initiated by the Romanian Government and submitted to the Senate on December 19, 2024, proposes concrete solutions. Among these measures are the strengthening of the role of the National Office for the Prevention and Combating of Money Laundering (ONPCSB), which will be granted extended powers in coordinating the national assessment and management of risks, the establishment of clear operational procedures, and the expansion of national and international cooperation mechanisms, with a particular focus on the obligation to inform European institutions, all contributing to the consolidation of a safer and more efficient system.

Furthermore, an enhanced mechanism for disseminating information on identified risks is being established. In its revised form ONPCSB will be required to publish summaries of national assessments on its official website, ensuring greater transparency and increased access for reporting entities without self-regulatory bodies. Additionally, sharing this information with relevant authorities and self-regulatory bodies ensures a more effective framework for risk management at the national level.

The amendments also include clarifications regarding the treatment of politically exposed persons (PEPs), limiting this classification duration to one year after the termination of their official functions, except in cases where risks persist. Furthermore, reporting entities will be required to submit a suspicious transaction report whenever a politically exposed person is the beneficiary of a life insurance policy and grounds for suspicion are identified. These changes aim to further specify the applicable requirements for PEPs, ensuring stricter monitoring in line with international standards.

Another key element is the introduction of an explicit prohibition on providing financial products to individuals using false names. While the previous legislation targeted only anonymous accounts, anonymous savings books, anonymous safe deposit boxes, and the acceptance of anonymous prepaid cards, the new text adds an essential clarification to ensure stricter customer identification and prevent the use of financial products for illicit purposes.

The new legal framework also introduces amendments in two key economic sectors essential for preventing money laundering and terrorist financing: real estate and gambling services.

• In the real estate sector, real estate agents are now required to apply customer due diligence (CDD) measures for both the prospective seller and prospective buyer. This requirement introduces an additional layer of transparency and security in real estate transactions, aiming for better traceability of financial flows associated with these operations.
• In the gambling sector, casino service providers will be required to identify each transaction conducted by their clients and correlate it with their established customer profile, based on the CDD measures. This obligation enhances control over financial operations within casinos, aiming to reduce the risks associated with such activities.

This legislative changes also introduce additional requirements for currency exchange offices and financial service providers operating with virtual currencies. Thus, currency exchange offices will be required to apply standard customer due diligence (CDD) measures for transactions reaching or exceeding the equivalent of a minimum of EUR 2,000, regardless of whether they are conducted as a single transaction or multiple linked transactions.

Additionally, providers of exchange services between virtual currencies and fiat currencies, as well as those offering digital wallets, will be required to apply the same measures for transactions with a minimum value of EUR 1,000, including interconnected operations. Furthermore, credit institutions and financial institutions will be required to identify and assess the risks associated with new products and technologies, as well as to implement appropriate measures for managing and mitigating such risks prior to their launch or use. These regulations expand compliance requirements by integrating risk prevention into processes related to technological innovation and digital transactions.

Other legislative amendments proposed in the draft law introduce additional requirements for the application of customer due diligence measures by reporting entities, which will be required to identify and verify the identity of both the client and the beneficial owner in all cases, ensuring a documented and formalized monitoring of transactions and business relationships. Thus, in addition to applying these measures for new clients, the draft also outlines the obligation to reassess existing clients, considering the materiality of the relationship and the relevance of previously implemented measures. Reassessment becomes mandatory when the client’s circumstances change or when there are legal obligations to update data, including information regarding the beneficial owner, in accordance with tax legislation. Furthermore, an explicit prohibition is introduced on applying simplified customer due diligence measures in cases where there are suspicions of money laundering or terrorist financing.

For legal entities, reporting entities must obtain additional information about the actual place of business if it differs from the registered office. This requirement adds an additional layer of transparency to the identification and verification process for legal entity clients, aligning with both international and national standards on preventing risks associated with money laundering and terrorist financing.

Associations and foundations will also become subject to increased scrutiny as ONPCSB will monitor their activities based on a risk assessment, identifying types of organizations vulnerable to misuse for terrorist financing purposes. Accordingly, associations and foundations will be required to submit the necessary information to the ONPCSB to fulfill its legal obligations within the established deadlines.

To prevent the misuse of resources, these organizations will be required to implement adequate internal controls, ensure the full accounting of funds, and confirm their use in accordance with the declared objectives. Furthermore, they will need to verify information regarding beneficiaries and associated organizations, thereby reducing vulnerabilities that could facilitate illegal activities.

In cooperation with the Ministry of Justice and other relevant authorities, ONPCSB will develop education and awareness programs aimed at associations, foundations, and the donor community, with the objective of highlighting the associated risks and the measures that can be adopted to prevent terrorist financing. Throughout its supervisory activities, the information obtained will be communicated to the competent authorities, and any suspicions of terrorist financing will be handled in accordance with the legal provisions. The supervisory mechanism will be detailed in an order issued by the President of the ONPCSB, which will be published within 60 days from the date the new law enters into force, ensuring the practical implementation of the new requirements.

The draft law further imposes an obligation on reporting entities to carry out verification during the hiring process, specifically for individuals responsible for enforcing legislation on the prevention and combating of money laundering and terrorist financing. Moreover, these measures must be applied in line with the regulations and sector-specific guidelines issued by the relevant authorities or self-regulatory bodies.

Other amendments introduced by the draft law concern the authorities with licensing responsibilities and self-regulatory bodies, which will be expressly required to adopt measures preventing individuals with final convictions for money laundering or terrorist financing offenses from holding management positions or acting as beneficial owners of regulated entities. Regarding professional and banking secrecy, it will no longer be enforceable against the Office, both in the context of analytical activities and international information exchange, thereby expanding the institution’s access to relevant data.

The provisions concerning exceptions applicable to lawyers under Article 33, paragraph 5 of the Law No. 129/2019 are repealed, thereby eliminating interpretations that could limit the applicability of the legislation. Additionally, criminal investigation bodies will be required to provide ONPCSB with detailed information regarding the handling of reports received that indicate potential money laundering or terrorist financing activities. These reports must include details such as the internal distribution of the notifications within the institutions, the resolutions adopted (e.g., case dismissals, separations of proceedings), and instances where cases are referred to court through indictments. Furthermore, criminal investigation bodies will be required to offer feedback on the quality of the reports received, contributing to the enhancement of cooperation and overall efficiency in preventing and combating these offenses.

With respect to the sanctioning framework established by Law No. 129/2019, the draft law introduces new administrative offenses, and failure to comply with the legal obligations imposed on associations and foundations will be subject to penalties, with ONPCSB representatives authorized to identify and enforce these sanctions.

These amendments reflect the authorities' commitment to strengthening the legal framework and enhancing measures for the prevention of money laundering and terrorist financing. Although the draft law has not yet entered into force, its implementation will place greater responsibility on reporting entities and other involved parties, who will need to comply with the new requirements to avoid legal sanctions. The proper and proactive enforcement of these measures will be crucial for their effectiveness, ensuring alignment with international standards and contributing, in the long run, to the development of a safer and more transparent economic and social environment.