Back to the future. Key changes in the anti-money laundering and terrorist financing legislation

Law no. 129/2020 on preventing and fighting money laundering and the financing of terrorism was amended on 15 July 2020 by Government Emergency Ordinance no. 111/2020 (“GEO 111/2020”). GEO 111/2020 amends several other pieces of legislation including the Fiscal Code. The most important amendments include:

  1. Changes to the definition of “beneficial ownership”

GEO 111/2020 brings changes and clarifications to the definition of beneficial ownership. As regards companies, the definition of beneficial ownership shall apply for companies governed by Romanian law as well as for entities which are governed by a law other than Romanian law and shall be determined by using the ownership criterion, the control criterion or the control exercised by other means criterion. Provided that no natural person is identified as beneficial owner after using these criteria, the company shall declare the senior management members as beneficial owners, as opposed to the previous regulation which only referred to management. Further changes are brought to the definition of beneficial ownership for trusts, non-lucrative legal persons and other entities.

Furthermore, the new regime provides a greater degree of transparency by allowing access to public registers regarding beneficial ownership to any person without imposing the condition on such person to justify an interest.

  1. New regimen for electronic and virtual currency

As a result of the European framework increasing the scrutiny over virtual currencies, GEO 111/2020 introduces the definition of virtual currency in the Romanian legislation, as well as definitions for the participants in the virtual currencies trading business. Virtual currencies are defined as a digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency and does not possess a legal status of currency or money, but is accepted by natural or legal persons as a means of exchange and which can be transferred, stored and traded electronically.

Furthermore, GEO no. 111/2020 introduces the authorization framework for the custodian wallet providers and the providers engaged in exchange services between virtual currencies and fiat currencies. Such service providers shall be authorized by the Ministry of Public Finance through the Foreign Currency Exchange Commission and a separate technical approval shall be obtained from the Authority for the Digitalization of Romania.

  1. Changes in the obligations for the obliged entities

GEO 111/2020 provides a higher standard as regards the measures which should be taken by the obliged entities. Furthermore, GEO 111/2020 comes with additional obligations and interdictions for credit institutions and financial institutions, such as the prohibition from keeping anonymous accounts, anonymous passbooks or anonymous safe-deposit boxes or the obligation to send daily information to the fiscal authorities.

  1. Creation of a register for the payment accounts and bank accounts

A new register for the payment accounts and bank accounts shall be held by the National Authority for Fiscal Administration. The information included in the new register shall be received from the credit institutions or other financial institutions and shall be available for the authorities in the field of prevention of money laundering and fighting terrorism.

We will revert with an in-depth analysis on the main changes brought by GEO 111/2020, as well as its impact on the existing legal framework.

This information is not legal assistance. For further details, please contact us.

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