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July 29, 2019

Law on the prevention and combating of money laundering in Romania

Law 129/2019 on the prevention and combating of money laundering and terrorist financing, amending and supplementing certain legal acts (the “AML Law” or “Law 129/2019”) was published in Official Journal no. 589 / 18 July 2019. 

Law 129/2019 sets out the national framework for the prevention and combating of money laundering and terrorist financing and implements the requirements of Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (“AML4”) and Council Directive (EU) 2016/2258 of 6 December 2016 amending Directive 2011/16/EU as regards access to anti-money-laundering information by tax authorities. 

The new AML Law brings several new elements to existing legal regulations, including the following significant issues: 

  • Extension of the scope of “beneficial owner” 

The AML Law brings new clarifications with respect to the term “beneficial owner” and extends the applicability of this concept, when the beneficial owner is not the natural person who ultimately owns or controls a legal entity (a shareholding or an ownership interest of at least 25% of such legal person), to natural persons providing management of such legal person. Therefore, if the company has exhausted all possible means to identify the natural person who controls the legal person (actions that need to be documented by the company), and such a natural person cannot be identified, the beneficial owner shall be deemed the natural person who manages the company.

  • Declaration and registration of the beneficial owner’s data with the Trade Register

A novelty brought by the AML Law is the companies’ obligation to register with the Trade Register: (i) upon incorporation, or (ii) on a yearly basis (i.e. within 15 days from the approval of the annual financial statements), or whenever an amendment occurs (i.e. within 15 days after the occurrence of such amendment), a statement regarding the beneficial owner of the legal entity, for registration with the Registry of beneficial owners of companies (to be kept by the Trade Register). 

The affidavit shall be submitted by the legal representative of the company and shall include: first name, last name, date of birth, personal numeric code, identity card series and number, nationality, domicile or residence. 

Non-compliance with this obligation to submit the statement concerning the identification data of the beneficial owner constitutes an offence and is sanctioned by a fine ranging from RON 5,000 to 10,000. If, within 30 days from the date of application of the fine, the company’s representative fails to submit the statement regarding the identification data of the beneficial owner, the court (or, as the case may be, the specialized court) may, at the request of the National Trade Register Office, pronounce the dissolution of the company. 

Transitional rule: the companies already registered with the Trade Register shall submit this statement, through the care of their legal representative – within 12 months after the entry into force of this law.

  • Accurate keeping of records regarding the beneficial owner 

Companies are required to obtain and maintain adequate, accurate and up-to-date information about the beneficial owner, including how this capacity is achieved, and make them available to control bodies and supervising authorities (e.g. NBR, ANAF, ONJN, the National Office for Prevention and Control of Money Laundering), at their request. 

  • Extension of the scope of reporting entities 

The new AML Law extends the scope of reporting entities under the requirements of this special law. Therefore, the following entities shall also fall under the requirements set out by the AML Law: 

    • gambling service providers (only casinos were targeted by the former law) 
    • chartered accountants, certified accountants, internal auditors 
    • persons providing financial and business consultancy 
    • bailiffs 
    • notaries public, lawyers and other persons exercising independent profession, when they assist in planning or executing transactions for their clients concerning any operations or transactions involving a sum of money or a transfer of ownership  
    • other natural and legal persons trading, as professionals, goods or providing services, if the transaction exceeds the RON equivalent of EUR 10,000, regardless if the transaction is performed through one or several linked operations.  

 

  • Reporting suspicious transactions before performing them

The new AML Law sets out the rule of reporting to the National Office for the Prevention and Control of Money Laundering of suspicious transactions before performing any customer transaction related to the reported suspicion. The transaction shall not be performed until the expiry of a 24-hour period since the reporting was recorded. If the Office does not order the suspension of the transaction within the above mentioned period, the reporting entity may perform the transaction.

By way of exception, reporting entities shall be able to perform a transaction that is related to the suspicious transaction, without prior reporting, if the non-performance of the transaction is impossible or if failure to do so would frustrate the tracking efforts of the beneficiaries of the suspicious transaction – with the obligation to send a report of suspicious transactions exclusively to the Office in a prompt manner, but no later than 24 hours after the transaction was performed.

  • Internal policies and rules, internal control mechanisms 

Depending on the nature and volume of the business carried out, and taking into account the prudential regulations / requirements and sectorial instructions issued by competent authorities, reporting entities must have internal policies and rules, internal control mechanisms and procedures for the management of money laundering and terrorist financing risks, including at least:

    • Know your client procedure
    • Policies on reporting suspicious transactions, keeping records and documents as required by the AML Law and promptly providing data at the request of competent authorities
    • Policies on internal control, risk assessment and management
    • Procedures for the protection of the personnel involved in the implementation of the above policies against any hostile or discriminatory threats or actions.
    • Training and periodic assessment of employees

 

  •  Prohibition of the issuance of bearer shares

Since the entry into force of the AML Law, the issuance of new bearer shares and the carrying out of operations with existing bearer shares is prohibited. Previously issued bearer shares shall be converted into nominative shares by submitting them at the headquarters of the issuing companies within 18 months after the entry into force of the AML Law, and the updated articles of incorporation shall be submitted with the Trade Register. The company’s board of directors shall also record on the shares and in the Shareholder Registry: the first name, last name, personal numeric code and domicile of the shareholder – natural person or the name, registered office, registration number and unique registration code of the shareholder – legal person.

Any bearer shares not submitted at the headquarters of the issuing company shall be dully cancelled upon expiration of the aforementioned 18 month-period, with the consequent decrease of the share capital. 

  • ANAF’s access to the information held by the National Office for the Prevention and Control of Money Laundering

The AML Law amends and supplements the provisions of the Tax Procedure Code (Law 207/2017), thus establishing:

    • the Office’s obligation to transmit the reports on cash transactions, the reports on external transfers to and from accounts, and the reports on money transfer activities received from the reporting entities that are required to transmit such information to the National Office for the Prevention and Control of Money Laundering, and
    • the reporting entities’ obligation to make available at ANAF’s request (and implicitly ANAF’s right of access to information on the control of money laundering – for implementation of Directive (EU) 2016/2258), within the retention period prescribed by law, of information and documents relating to: (i) the mechanisms and procedures under which client due diligence applies; (ii) the identification of the client and of the beneficial owner; (iii) the assessment of the purpose and the intended nature of the business relationship; (iv) the supervision of the business relationship; (v) the records of transactions.

 

  • Substantial fines – applied to total reported revenues  

Non-compliance with the new obligations and requirements imposed by the new AML Law might result in large fines, e.g. up to the maximum amount of RON 150,000, plus 10% of the total revenues in relation to the fiscal period concluded before the date of the sanctioning report. These sanctions may be also applied to members of the governing body and other individuals who are responsible for breaking the AML Law.   

Transitional rule: The reporting entities shall comply with the obligations incumbent upon them under the AML Law within 18 days after the entry into force.  

The new AML Law no. 129/2019 shall come into force within 3 days after the publication into the Official Journal, i.e. on 21 July 2019. 

For further details, please contact the lawyers of CEE Attorneys Romania, Boanta, Gidei si Asociatii SCP.