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The fight against money laundering in Romania through the spectrum of implementation of Directive (EU) 2015/849

The chronological evolution of the Romanian legislation on the fight against money laundering in the light of European regulations

Law no. 656/2002 is the normative act that regulates the fight against money laundering and was published in the Official Gazette of Romania, Part I. no. 904 of 12 December 2002 and subsequently amended and supplemented by numerous laws and Government Ordinances.

Consolidated form of Law no. 656/2002 in its current form in March 2018 is composed by including the amendments and completions brought by Law no. 187 of 24 October 2012, Rectification no. 187 of October 24, 2012, Law no. 255 of July 19, 2013, Ordinance no. 40 of June 28, 2016 and Law no. 125 of 30 May 2017.

Although on the 20th May 2015 was adopted Directive (EU) 2015/849 of the European Parliament and of the Council, the fourth and most comprehensive European Anti-Money Laundering Directive, with implementation deadline 26 June 2017, this Directive did not has been implementated into Romanian legislation until now.

This directive is the fourth one to address the money-laundering threat and the risk-based approach has as a starting point the need for EU Member States and the EU to identify, understand and combat the risks of money laundering and financing the terrorism they are facing.

Money laundering and terrorist financing in the context of current globalization occur in most cases in a transnational context, for which reason any measure adopted only at national or even Community level, without regard to international co-ordination and cooperation, will not have the desired effects , not being effective.

The transposition deadline for this directive was for Romania set on June 26, 2017, and by the end of 2018 Romania had not notified any transposition measures. Thus, in December 2017, the European Commission, after giving the Romanian State the opportunity to present its observations on the letters of formal notice transmitted in July 2017, urged "to insist" that the necessary measures be taken to comply the Directive as a whole. Bulgaria, Cyprus, Greece, Luxembourg, Malta, Poland and the Netherlands, states that have not notified any transposition measures, and draft laws are still in the national legislative process in most cases, are also in the same situation.

The European Commission on the same occasion drew attention to the fact that if these Member States do not align their national legislation with EU law within two months, the Commission may decide to refer the cases to the Court of Justice of the EU.

Considering the above mentioned aspects, the Ministry of Justice launched a public debate on 28 February on the draft Directive / (EU) 2015/849 of the European Parliament and of the Council on the prevention of the use of the financial system for the purpose of money laundering or terrorist financing. This law seeks to harmonize Romanian legislation with the EU legislation on combating money laundering and terrorist financing.

Changes brought into Romanian legislation by transposing Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing

The new legislative proposal to amend legislation in this area will have a major impact in several areas. What is meant by both EU Directive 2015/849 and its harmonization in Romanian law is the transparency of financial transactions and business organization structures. In this sense, it is desired to create mechanisms for knowing at any moment the structure of the company's ownership. All this would be implementated by creating a centralized register of real beneficiaries.

Knowing the shareholder structure may be lacking in transparency for certain types of companies recognized by law, such as joint-stock companies in which shares issued by the company are bearer shares.

A bearer share is an equity security wholly owned by whoever holds the physical stock certificate. The issuing firm neither registers the owner of the stock nor tracks transfers of ownership, the company disperses dividends to bearer shares when a physical coupon is presented to the firm. Because the share is not registered to any authority, transferring the ownership of the stock involves only delivering the physical document.

It can easily be noticed that bearer shares create transparency issues with regard to the shareholder structure of such a joint stock company. It is proposed by the new draft law to eliminate the possibility of joint stock companies to issue bearer shares and the companies are allowed a period of 18 months to convert the bearer shares in nominative shares. As a sanction of non-observance of this conversion by the companies concerned within the term established by law, it is proposed to dissolve the legal entity.

Depending on the type of organization of the company, the data referring to the identity of the shareholder are either registered with the Trade Registry or kept within the company in some shareholder registers. It is desirable to centralize all information about all types of companies in Romania. The importance of this is apparent from recital 14 of the preamble to Directive 2015/849 / EU: "Keeping accurate and up-to-date information on the real beneficiary of a company is a key factor in detecting offenders who might otherwise hide their identity behind a society structures ". The Directive thus obliges states to create a register of real beneficiaries.

According to the Directive, the notion of real beneficiary refers to any individual who ultimately owns or controls a legal entity or an individual on behalf of or in the interest of which a transaction or transaction is made, directly or indirectly. The notion includes individuals who ultimately own or control a legal entity either directly or indirectly through another company.

As a benchmark for controlling a company, the Directive provides that the holding of 25% plus one share of the legal entity's capital constitutes an indication of the direct exercise of control and the holding of the same percentage by one or more legal entities under the control of some or the same individual is an indication of indirect exercise of control.

In addition, the new law introduces new definitions and others are revised, extending the sphere of liberal juridical persons, by introducing into the category of reporting entities and the category of bailiffs.

Conclusion

In conclusion, we note that the proposal for a Romanian legislative amendment finally endorsing Directive 2015/849 attempts to increase the fight against the money laundering phenomenon and the financing of terrorism. These changes, as stated, seem to lead to the transparency of the organization of commercial companies and commercial transactions. But it remains to be seen how these legislative changes will be implemented and whether the amendments to the law will have the impact of the Directive.

Although they seem to be legislative changes that would contribute to the fight against money laundering, these changes need to be put into practice through effective institutions to achieve the goal pursued by law. It is the responsibility of the National Office for the Prevention and Control of Money Laundering (Administrative Financial Unit of the Financial Intelligence Unit (FIU), with a leading role in the elaboration, coordination and implementation of the national anti-money laundering and terrorist financing system) to coordinate the harmonization of the Romanian legislation with the European legislation in this field and to ensure the fulfillment of the purpose for which these measures have been put in place, namely to streamline and increase the fight against money laundering and terrorist financing.