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October 24, 2021

CoE: Romania improved ability to seize illegal wealth, but structural deficiencies still not fixed

Romania has taken several important steps to improve its legal framework and its ability to freeze and seize illegal wealth, but the competent authorities need to proactively conduct financial investigations in parallel with the investigation of proceeds-generating crimes, reveals the report the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) of the Council of Europe (CoE) released on Tuesday in Strasbourg.
The 400-page document analyzing the major anti-money laundering and counter-terrorist financing measures that were in place in Romania at the time of the 4th on-site visit paid by the MONEYVAL experts over May 27 – June 1, 2013, shows that the number of investigations, indictments and convictions of money laundering offences has positively increased in Romania.
Romania has improved its legal framework and its ability to freeze, seize and confiscate proceeds of crime. However, law enforcement authorities need to conduct parallel financial investigations proactively alongside the investigation of proceeds-generating crimes.
Romanian authorities need to strengthen the independence of the financial intelligence unit by divesting the government-appointed Board of its decision-making powers on core operational functions.
The system for the detection of physical cross-border transportation of currency raises serious concerns given the significant vulnerability of the Romanian financial system to cash-based money laundering.
The framework providing for customer due diligence requirements, reporting of suspicious transactions, and record-keeping is not yet fully in line with the Financial Action Task Force (FATF) Recommendations. Most financial institutions appeared to implement the required standards adequately. Implementation appeared weaker by non-financial institutions.
MONEYVAL has several concerns regarding the effectiveness and consistency of the anti-money laundering and terrorist financing supervision, and of the application of sanctions for non-compliance with the relevant requirements by the relevant supervisory authorities. Further efforts are required to ensure that the national coordination mechanism in place reviews the Romanian anti-money laundering and terrorist financing system and its effectiveness on a regular basis.
According to an estimate of the European Commission, the size of the shadow economy in Romania in 2011 was about 30 percent of GDP (2013 estimate decreased at 28.4 percent), corresponding to approx. 40 billion euros in damages generated by tax fraud and tax evasion. In 2012, the number of economic frauds was 41,820, compared to 39,124 in 2011 and 34,730 in 2008; the number of tax evasion crimes plunged to 25,586 in 2012, from 29,077 in 2011, but it was double compared to 2008 (12,579). The number of forgery cases in Romania recorded a slight increase in 2012 compared to 2011, from 13,829 up to 13,829, but it went lower compared to 2008 (14,979).
The number of indicted persons for tax evasion crimes in 2012 has increased by more than 50 percent since 2007, to 1,620, though most of this trend is determined by the increased detection and prosecution rate, rather than a shift in crime patterns.
The estimated damage produced each year in Romania by the smuggling of cigarettes alone is estimated at nearly 400 million euros.
As for corruption crimes, the report mentions 6,390 cases in 2012, up compared to 6,136 cases in 2011 and 4,891 cases in 2008. According to the same report, the number of persons indicted for corruption crimes in 2012 was 926, while the number of persons indicted for organised criminal activity was 3,906.

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