On 9 March 2021, Order 37/2021 came into force, approving the new enforcement methodology for Law 129/2019 on the prevention and combating of money-laundering and the financing of terrorism, as well as on the amendment and supplementation of some legislative acts (the “Methodology”) and repealing the 2020 enforcement methodology for the afore-mentioned legislative act.
The Methodology, similar to the repealed one, concerns exclusively reporting entities that are under the competence of the National Office for Prevention and Control of Money Laundering (the “Office”) and has no impact on the existing methodology that is applicable to reporting entities that are under the competence of the Financial Supervisory Authority and the National Bank of Romania.
While the architecture of the obligations of reporting entities under the new enforcement Methodology remains the same (i.e., the obligation to appoint a person in charge/compliance officer with respect to money-laundering, the drafting of internal procedures, the training of employees, the carrying out of risk assessment, KYC measures, and the obligation of keeping documents), some of the main novelties introduced by the new Methodology are:
a) The exhaustive list of reporting entities supervised and controlled by the Office is regulated. Such list reflects the latest changes, adopted in 2020, to Law 129/2019 on the prevention and combating of money-laundering and the financing of terrorism, as well as on the amendment and supplementation of some legislative acts (“Law 129/2019”), by including, inter alia, the following categories:
- providers of exchange services between virtual currencies and fiat currencies authorized/registered by the Ministry of Finance;
- digital wallet providers, authorized/registered by the Ministry of Finance;
- real estate agents and developers, including when providing intermediary services in the rental of real estate, but only in respect of transactions for which the value of the monthly rent represents the equivalent in lei of EUR 10,000 or more, including entities that actually carry out the activities mentioned under the NACE Codes 6831 CAEN 4110;
- persons that perform trade in works of art or that act as intermediaries in the trade of works of art, including the situation when such activity is performed by art galleries or auction houses, if the value of a transaction or of a series of inter-connected transactions represent the RON equivalent of EUR 10,000 or more. This category also includes entities that actually carry out the activities under the NACE Codes 4778, 4779, 4791 and 9003;
- persons that deposit or trade works of art or act as intermediaries in the trade in works of art, when such activity is carried out in free zones, if the value of a transaction or of a series of inter-connected transactions represent the RON equivalent of EUR 10,000 or more. This category also includes entities that actually carry out the activities under the NACE codes 4778, 4779, 4791, 4799 and 9003, in free zones.
b) The values of the criteria based on which it is assessed whether the reporting entities must provide an independent audit function in order to test the policies, internal regulations, mechanisms and procedures provided by the law, have been increased. Thus, under the new Methodology, the reporting entities are required to provide an independent audit function if, for the latest financial year, they exceeded at least two of the following criteria:
- total assets: RON 16,000,000
- total net turnover: RON 32,000,000
- average number of employees: 50
c) Supplementary provisions regarding the obligation of reporting entities to provide mechanisms for the protection of persons with duties in the application of Law 129/2019 were introduced.
d) Newly regulated is the obligation of the reporting entities to ensure the legal protection of employees and their representatives who report, either internally or to the Office, suspicions of money laundering or the financing of terrorism, from exposure to threats, reprisals or hostile actions, in particular from unfavourable or discriminatory actions at work, including ensuring confidentiality regarding their identity.
e) The new Methodology further regulates the formalities and procedures based on which the Office carries out its inspection activities. In connection thereto, it is worth mentioning that the Methodology stipulates the right of the reporting entity to request, only once and for justified reasons (e.g., the absence of the legal representative/proxy of the inspected entity, for duly justified health issues or special family situations, death, marriage, etc.), the adjournment of the starting date of the inspection activity.
Should you need any legal advice related to this topic, please do not hesitate to contact us at: savan@peterkapartners.ro
An article by:
Ioana Catalina Savan – Senior Associate, Leader of Compliance and Regulatory
PETERKA & PARTNERS Romania