Amendments to the anti-money laundering and counter terrorist financing legal framework
On 15 July 2020, Government Emergency Ordinance No. 111/2020 (the “AML Amending Ordinance”) on the amendment and supplementation of Law No. 129/2019 for prevention and countering of money laundering and terrorist financing, as well as for the amendment and supplementation of certain normative acts, for the supplementation of Article 218 of Government Emergency Ordinance No. 99/2006 on credit institutions and capital adequacy, for the amendment and supplementation of Law No. 207/2015 on the Fiscal Procedure Code, as well as for the supplementation of Article 12, Para. (5) of Law No. 237/2015 on the authorisation and supervision of the insurance and reinsurance activity was published in the Official Gazette of Romania, Part I, No. 620.
Amongst the most important amendments, the following are of note:
1. Extending the scope of the obliged entities and slightly clarifying the criteria for qualifying a person as an obliged entity.
The following have been added as obliged entities:
(i) providers engaged in exchange services between virtual currencies and fiat currencies;
(ii) custodian wallet providers;
(iii) persons trading in and/or depositing works of art or acting as intermediaries in the trade of works of art; and
(iv) real estate developers.
For clarification, the persons referred to in Point (iii) above shall only be qualified as obliged entities where the value of a transaction, or a series of linked transactions, is equivalent in RON to 10,000 EUR or more. Also, real estate agents and real estate developers (including when acting as intermediaries in the letting of immovable property) shall only be qualified as obliged entities in relation to transactions for which the monthly rent is equivalent in RON to EUR 10,000 or more.
2. Introducing direct and indirect identification criteria for beneficial owners.
The following direct and indirect criteria are introduced for qualifying a person as a beneficial owner:
(i) the holding of more than 25% of a company’s share capital by a natural person is an indication of a direct exercise of ownership; and
(ii) the holding of more than 25% of a company’s share capital by one or more foreign corporate entities which are under the control of a sole natural person is an indication of an indirect exercise of ownership.
Furthermore, where it is not possible to identify the beneficial owner or there is doubt over the identity of the beneficial owner, the AML Amending Ordinance expressly states that natural persons holding positions of senior managing officials in the respective company shall be identified as the beneficial owners, i.e. directors, managers, members of the board of directors/supervisory board and/or members of the management board.
3. Supplementing the customer due diligence obligations imposed on obliged entities.
Amongst others, the following obligations have been added:
(i) the obligation to obtain proof of registration of the beneficial owners, or information from the central registries of beneficial owners, whenever they enter into a new business relationship with persons who are obliged to register beneficial ownership information;
(ii) the obligation to submit a suspicious transaction report if it appears from certain circumstances that a business relationship, or an occasional transaction, falls within the notion of "suspicious transaction" pursuant to the relevant legal provisions;
(iii) the obligation to report any suspicious linked transactions;
(iv) the obligation to keep records of the actions taken in order to identify the beneficial owners, as well as any difficulties encountered in the process of verifying their identity; and
(v) the obligation to only identify customers based on information obtained from reliable and independent sources rather than only from credible sources, as provided for in the previous regulation.
In addition, concerning institutions authorised in other Member States to provide certain money remittance and electronic money issuance services in the Romanian territory, through agencies or distributors, the AML Amending Ordinance introduces an obligation on them to appoint a central contact point in Romania and to communicate the contact details of this contact point to the National Bank of Romania within 5 days.
4. Reduction of the minimum reporting threshold in cases of external transfers.
The AML Amending Ordinance reduces the minimum reporting threshold on external transfers provided by credit institutions and financial institutions from the equivalent in RON of EUR 15,000 to EUR 10,000 (including in cases of linked transactions as well).
5. Defining linked transactions
Linked transactions have been defined as transactions whose value is fragmented into smaller tranches (considering the imposed thresholds), but which have common elements such as: the parties to the transaction (including the beneficial owners), the nature of or the category in which the transactions may be included and the amounts involved.
6. Obligation of financial institutions to report certain information to the central tax authority.
The obligation to communicate, when requested by the central tax authority, for each holder subject to such request, all the turnover and/or balances of the accounts held by them, as well as information and documents concerning transactions performed through such accounts has been extended to include payment institutions and electronic money institutions.
At the same time, such financial institutions together with credit institutions are obliged to communicate to the central tax authority, on a daily basis, the following information:
(i) a list of:
- the individual (or legal or other entities without legal personality) holders of accounts who open or close bank or payment accounts;
- the persons holding the right to sign accounts opened with them;
- the persons purporting to act on behalf of the customer; and
- the beneficial owners of the account holders.
(ii) a list of the persons who have leased safe-deposit boxes, together with the identification details, or unique identification numbers assigned to each person/entity, as appropriate, together with the data relating to the termination of the leases.
The above-mentioned information shall be kept for a period of 10 years either from the date of termination of the business relationship with those clients or from the date of any occasional transaction.
Payment institutions and electronic money institutions are obliged to submit to the central tax authority the above-mentioned information within 90 days of the date of entry into force of the AML Amending Ordinance.
7. Regulation of enhanced customer due diligence measures in cases of transactions involving high-risk third countries.
In such cases, obliged entities shall carry out, amongst other things, the following enhanced customer due diligence measures:
(i) obtaining additional information on the customer and on the beneficial owner;
(ii) obtaining additional information on the intended nature of the business relationship;
(iii) obtaining information on the source of funds and the source of wealth of the customer and of the beneficial owner;
(iv) obtaining information on the reasons for the intended or performed transactions;
(v) obtaining the approval of senior management for the establishment or continuation of the business relationship; and
(vi) conducting enhanced monitoring of the business relationship by increasing the number, and timing, of controls applied and selecting patterns of transactions that need further examination.
CONTEXT AND ENTRY INTO FORCE
The AML Amending Ordinance transposes EU Directive 2018/843 (i.e. 5th AMLD) of the European Parliament and of the Council of 30 May 2018 which amends EU Directive 2015/849 on the prevention of the use of the financial system for the purpose of money laundering or terrorist financing, as published in the Official Journal of the European Union, L series, No. 156 of 19 June 2018.
The AML Amending Ordinance entered into force on 15 July 2020 by virtue of its publication in the Official Gazette of Romania