In this issue:
1. Law No. 129/2019 for the prevention and combating of money laundering and terrorist financing
Novelties regarding the prevention and combating of money laundering and terrorist financing
Law No. 129/2019 for the prevention and combating of money laundering and terrorist financing, and for the amendment and supplementation of certain legislative acts, was published in the Official Gazette of Romania No. 589 dated 18 July 2019 and became effective on 21 July 2019, except for the cases for which it is otherwise provided (“Law No. 129/2019”).
This legislative act seeks to transpose in the national law the 4th Anti-Money Laundering Directive of the European Parliament and of the Council and it repeals Law No. 656/2002 for the prevention and combating of money laundering (“Law No. 656/2002”).
The amendments brought by Law No. 129/2019 have an impact on several industries (credit and payment institutions, liberal professions, providers of gambling services, etc.), providing for additional obligations on the relevant entities and harsher penalties for misdemeanours.
Law No. 129/2019 will be followed in the next period by subsequent and sectoral legislation, which must be adopted for the enforcement of Law No. 129/2019 by the National Office for Prevention and Control of Money Laundering (“Office”), as well as by the supervisory authorities and self-regulatory bodies (e.g., the National Bank of Romania, the Financial Supervisory Authority).
It will also be followed by new legislative amendments, as Romania must transpose the European Union’s 5th Anti-Money Laundering Directive by 10 January 2020.
The main amendments / novelties brought by Law No. 129/2019 are as follows:
1. Extension of reporting entities’ categories and obligations
Reporting entities (credit institutions, auditors, chartered accountants, certified accountants, notaries, lawyers, judicial enforcement officers, real estate agents, etc.) have, under the law, obligations to report suspicious transactions to the Office and know your customer (“KYC”) obligations.
Compared to Law No. 656/2002, the scope of reporting entities has been extended to the following categories:
– all providers of gambling services must apply standard KYC measures upon collecting gains, upon buying or exchanging chips when transactions are performed, the minimum limit of which is the equivalent in RON of at least EUR 2,000, through a single operation;
– any financial and business advisors (not just auditors, censors and fiscal advisors);
– other entities and natural persons, selling goods as professionals or providing services, insofar as they perform cash transactions, the minimum limit of which is the RON equivalent of EUR 10,000, regardless of whether the transaction is performed through one or several interlinked operations;
– the category of liberal legal professionals was also broadened by extending the types of legal assistance activities falling under the scope of the law.
As a novelty, even if the transaction does not seem suspicious, reporting entities must report to the Office the transactions in cash, whether in RON or in foreign currency, the minimum limit of which is the RON equivalent of EUR 10,000.
Depending on the risk assessment for each customer, the reporting entity must apply standard, simplified or enhanced KYC measures both to new and to existing customers, even for occasional transactions. Law No. 129/2019 provides for several cases when enhanced KYC measures should be applied (e.g., obtaining additional information on the circumstances and purpose of customers’ transactions). Such measures shall also be taken for transactions made with persons from non-EU countries which have been identified by the European Commission as high-risk third countries (as regards money laundering or terrorist financing). On the other hand, small-value transactions with electronic money may fall outside the scope of KYC measures, provided that express legal requirements are met (e.g., the issuer carries out sufficient monitoring of the transactions or business relationship to enable the detection of unusual or suspicious transactions).
Also, Law No. 129/2019 details the obligations of reporting entities to keep the supporting information and documents and to provide, in their internal policies, for compliance with legal obligations (i.e., appointment and training of a person responsible, etc.).
2. Information concerning the beneficial owner
The legal entities of private law and the trusts registered in Romania must obtain and hold information on their beneficial owner (i.e., the natural person controlling a legal entity, directly or indirectly, through another legal entity). Such information must be disclosed to the authorities (i.e., the Trade Registry, the Ministry of Justice for associations and foundations, the National Agency for Fiscal Administration) and to the reporting entities.
Within 12 months as of the effective date of Law No. 129/2019, the companies registered with the Trade Registry – except for national companies and enterprises and for companies fully or majority owned by the State – must submit, by care of their legal representative, for registration in the Register of Beneficial Owners of Companies, kept by the National Trade Register Office, a statement on the identification details of beneficial owners. If the director representing the company fails to comply with this obligation, such failure shall be deemed to be a misdemeanour and shall be penalized by a fine from RON 5,000 to RON 10,000.
3. Amendments to Company Law No. 31/1990 in relation to bearer shares
As of the effective date of Law No. 129/2019, it is forbidden to issue new bearer shares and to perform operations with the existing bearer shares. Bearer shares issued prior to the effective date of Law No. 129/2019 shall be converted into nominative shares, and the updated articles of association must be submitted to the Trade Register Office within 18 months as of the effective date of Law No. 129/2019, otherwise the company is dissolved. All holders of bearer shares shall submit such shares to the headquarters of the issuing company, otherwise they shall be annulled de jure having as consequence an appropriate decrease of the share capital.