IBA Anti- Money Laundering Forum - Romania. Last Updated 0. 8/0. CENTRAL AUTHORITY FOR REPORTING. The National Office for the Prevention and Control of Money Laundering (NOPCML), (Romanian Financial Intelligence Unit), which is a governmental agency.
- Money laundering is the process of transforming the proceeds of crime into ostensibly legitimate money or other assets. [1] However, in a number of legal and.
- Interpretive Notices 9045 - NFA COMPLIANCE RULE 2-9: FCM AND IB ANTI-MONEY LAUNDERING PROGRAM (Board of Directors, April 23, 2002; revised November 16, 2006; January.
ANTI- MONEY LAUNDERING REGULATOR(S). HAS THE THIRD EU MONEY LAUNDERING DIRECTIVE BEEN IMPLEMENTED? IF NOT, WHEN IS IT EXPECTED TO BE IMPLEMENTED? The Third EU Directive was fully implemented by the Government Emergency Ordinance no. Official Monitor no.
Money Laundering refers to any act or attempted act conducted to conceal or disguise the identity of illegally obtained funds so that they appear to have originated. 2.1 The AMLO2 defines “money laundering” as “an act that is intended to have the effect of making the proceeds of an indictable offence not to. Combating trade-based money laundering - Hong Kong banks bolster their artillery.
Government Decision no. Official Monitor no. Relevant legislation can be found at here.
ARE LAWYERS COVERED BY ANTI- MONEY LAUNDERING LEGISLATION? LIST THE LAWS REGARDING ANTI- MONEY LAUNDERING, INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS.
Law no. 6. 56/2. 00. December 2. 00. 2, as republished in the Official Monitor no.
Law. No. 2. 55/2. Official Monitor no. Law”). Governmental Decision no. Regulation for application of the provisions of Law no.
Regulation”). The Law and (the Regulation) apply to. Romania of foreign credit institutions; b) financial institutions and branches in Romania of foreign financial institutions; c) managers of private pension funds and foreign private pension funds, marketing agents authorized in the private pension systems; d) casinos; e) auditors, natural and legal persons, providing fiscal or accounting consultancy; f) public notaries, lawyers and other persons exercising liberal legal professions, when they. Provide assistance in the planning or execution of transactions for a client concerning the. RON or foreign currency) of minimum 1. RON equivalent), whether or not the transaction is executed in a single or in several operations which appear to be linked. ARE VISITING LAWYERS SUBJECT TO LOCAL LAWS REGARDING ANTI- MONEY LAUNDERING, AND, IF SO, TO WHAT EXTENT? Visiting lawyers must comply with the Law to the same extent as Romanian lawyers.
LIST ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE. In 2. 01. 0 NOPCLM has issued special guidelines dedicated to all Romanian reporting entitles (www.
IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI- MONEY LAUNDERING REGULATIONS? According to the Law, NUBR is the supervisory authority for lawyers. Lawyers must report any issues in this matter to the persons specially appointed by the bars (their list is communicated to NOPCLM). These persons keep contact with NOPCLM. The NUBR cooperates with NOPCLM in organizing special trainings for lawyers in anti- money laundering. DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY LAWYERS.
Client due diligence standard measures are mentioned in the Law and are more detailed in the Regulation. They shall consist of. Identifying the client and verifying the client's identity based on documents, data or information obtained from a reliable and independent source. Identifying, where applicable, the beneficial owner and taking risk- based and adequate measures to verify his identity so that the institution or person subject to the Law is satisfied that it knows who the beneficial owner is and as regards legal persons, trusts and similar legal arrangements, taking risk- based and adequate measures to understand the ownership and control structure of the client. Obtaining information on the purpose and intended nature of the business relationship. Conducting ongoing monitoring of the business relationship including scrutiny of transactions undertaken throughout the course of that relationship to ensure that the transactions being conducted are consistent with existing knowledge about the client, the business and risk profile and, where necessary, the source of funds and also, ensuring that the documents, data or information held are kept up- to- date. Client due diligence standard measures must be applied in the following circumstances.
When establishing a business relationship. When carrying out occasional transactions amounting to EUR 1.
When there are suspicions of money laundering or terrorist financing, regardless of any derogation, exemption or threshold; and. When there are doubts about the veracity or adequacy of previously obtained client identification data. When purchasing or exchanging chips in casinos of minimum EUR 2,0. RON equivalent. DOES YOUR COUNTRY FOLLOW A RISK- BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS? As a general rule, during the performance of their activities, lawyers are obliged to adopt adequate measures to prevent money laundering and terrorist financing and in this respect, on a risked based approach, to apply standard measures, simplified or additional client due diligence, in order to be able to identify the client and also, as the case may be, the real beneficiary. Persons who are subject to the Law can modify the standard due diligence measures depending on risk, client, business relationship, product or transaction, in which case such persons must be able to demonstrate to the competent authorities that such measures are adequate in connection with the risk of money laundering or terrorist financing. ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?
Besides the client due diligence standard measures, enhanced measures must be undertaken in the following cases, as by their nature they can pose an increased risk of money laundering or terrorist financing. Persons who are not physically present during the transaction. Correspondent relationships with credit institutions from states which are not members of the European Union or of the European Economic Area. Transactions or business relationships with politically exposed persons, who are residents of a different member state of the European Union or of the European Economic Area or of a third country. As a general rule, extended measures must be applied in all cases which, by their nature, present an increased risk of money laundering or terrorist financing.
For occasional transactions and for business relationships with politically exposed persons, lawyers must apply the following measures. Have appropriate risk- based procedures in place to determine whether the client fits into this category. Have senior management approval for establishing business relationships with such clients.
Take adequate measures to establish the source of incomes and source of funds that are involved in such business relationships or occasional transactions; and. Conduct enhanced ongoing monitoring of the business relationship.
Special attention must be paid to occasional transactions and products which, by their nature, might favour anonymity or money laundering and terrorist financing. ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES? Simplified due diligence measures can be applied in the following circumstances.
In the case of life insurance policies where the annual premium is no more than EUR 1. EUR 2. 50. 0. In the case of adherence to pensions funds. In the case of electronic money, as defined by the law, where, if the device cannot be recharged and the maximum amount stored in the device is not more than EUR 2.
EUR 2. 50. 0 is imposed on the total amount transacted in a calendar year, except when an amount of EUR 1. Where the client is a credit or financial institution, as defined by the Law, from a Member State or European Economic Area or, as the case may be, a credit or financial institution from a third country that has similar requirements as those provided by the present Law and where such requirements are supervised by the relevant authorities; and.
In other cases and conditions where the type of client, operations or products mentioned in the Regulation present a low risk of money laundering and terrorist financing. As an exception from the application of standard measures, simplified measures can be applied for the following clients. Listed companies whose securities are admitted to trading on a regulated market within the meaning of the applicable law in one or more Member States and listed companies from third countries which are subject to reporting and disclosure requirements consistent with Community legislation. Beneficial owners of pooled accounts held by notaries and other independent legal professionals from the Member States, or from third countries provided that they are subject to requirements to combat money laundering or terrorist financing consistent with international standards and are supervised for compliance with those requirements and provided that the information on the identity of the beneficial owner is available, on request, to the institutions that act as depository institutions for the pooled accounts. Domestic public authorities. Clients representing a low risk of money laundering or terrorist financing which cumulatively meet the following criteria: i) They are authorities or public bodies invested with their competences by the Community legislation; ii) Their identity is publicly available, transparent and certain; iii) Their activity and accounting records are transparent; iv) That client has a responsibility to a Community institution or an authority of a Member State or the activity of the client can be controlled through adequate procedures.
As an exception to the standard rule, simplified measures can be applied for products and operations that cumulatively meet the following criteria. The product is offered based on a written contract. Related product operation is performed through a client’s account opened with a credit institution from Member States which impose similar requirements to those provided by the Law and the Regulation. The product or related operation is nominative and by its nature allows the application of standard measures if suspicion arises.
Combating trade- based money laundering - Hong Kong banks bolster their artillery. The Hong Kong Association of Banks (HKAB) has just issued its much anticipated Guidance Paper on Combating Trade- based Money Laundering (Guidance Paper).
The Guidance Paper is a valuable resource for the Hong Kong banking industry in combating one of the oldest forms of money laundering. This article summarises the key themes and content of the Guidance Paper. Status of the Guidance Paper.
As an industry- led paper, the practices in the Guidance Paper do not form part of the Guideline on Anti- Money Laundering and Counter- Terrorist Financing (for Authorized Institutions) (AMLO Guideline). However, the Guidance Paper was prepared in collaboration with the Hong Kong Monetary Authority (HKMA) and the HKMA considers that adopting the Guidance Paper’s practices will assist authorized institutions (AIs) to meet their obligations under the Anti- Money Laundering and Counter- Terrorist Financing (Financial Institutions) Ordinance (AMLO) and the AMLO Guideline, and mitigate their money laundering and terrorist financing (ML/TF) risks. AIs should take note. There is no “grace period” as such.
Why this paper is needed. The Basic Law enshrines Hong Kong’s status as an international financial centre.
Trade and the financial system are two critical component of any financial centre and it is therefore imperative that Hong Kong’s banking system is well equipped to combat the risks of trade- based money laundering (TBML). Key themes. The Guidance Paper covers the full gamut of components of an effective anti- money laundering and counter- terrorist financing (AML/CTF) regime. Click here to view the table.
A snapshot of the Guidance Paper. Defining TBMLThe keys concepts used throughout the Guidance Paper are as follows: TBML, which captures TBML and terrorist financing through trade transactions consistent with current Financial Action Task Force (FATF) Guidance*, but also sanctions violations and weapons of mass destruction proliferation. Trade transactions, which captures transactions in respect of good or services between a buyer and seller. Trade- related activities, which captures activities carried out by AIs involving trade transactions.* The most recent FATF Guidance was the “Best Practices on Trade Based Money Laundering” on 2. June 2. 00. 8. The Guidance Paper recognises that there is no exhaustive list of trade- related products and services, instead providing examples of typical products or services.
These include: Click here to view the table. The key AMLO concept of “Who is the customer” is outlined with Annex A, illustrating two key parts of a typical letter of credit (“L/C”) structure and providing guidance of who would typically constitute the “customer”. Importantly, one size does not fit all. Trade Controls. The Guidance Paper reminds AIs of the importance of developing written policies and procedures to assess and mitigate ML/TF risks arising from trade- related activities (“Trade Controls”). Key principles relating to Trade Controls are as follows: Click here to view the table.
None of these Trade Controls should be a surprise to AIs, but the Guidance Paper applies a direct “trade based” flavour to each of these principles. The Guidance Paper also highlights the importance of good transaction review processes. Helpfully, a sample review process is outlined demonstrating best practice and the expertise required at each level of review. However, this is a sample only, so AIs should not panic if their internal review process does not match exactly; AIs should tailor their review processes according to their needs (as with all AML processes). Risk assessment and the risk- based approach. Ask any regulator what is an effective way to combat ML/TF, and they will tell you the risk based approach (RBA). We expect the HKMA is likely to say that based on the AMLO Guidelines (paragraph 3.
It is no different for TBML – AIs should adopt an RBA to their customer due diligence (CDD) obligations in accordance with Chapter 3 of the AMLO Guidelines and any other factors related to trade activities. Part 1 of Annex B of the Guidance Paper helpfully sets out typical TBML typologies to steer AIs in the right direction of what to look for and information to obtain. Expensive toothbrushes? For example, over- invoicing, is where there is a mismatch in the invoice value and the fair market price of a good or service. Part 1 of Annex B advises AIs of information that might be relevant to assessing the ML/TF risk of over- invoicing: product category, product description, unit price and units. Armed with this information, an AI, for example, that receives an invoice for 1. USD1. 0/unit is placed to assess the ML/TF risk in respect of this transaction and whether this is usual (for the record, we expect it is not).
Trade- related CDD requirements. CDD is vital for recognising ML/TF and a fundamental requirement of the AMLO. In addition to the general CDD obligations under the AMLO and AMLO Guideline, the Trade Control specific CDD tips set out in the Guidance Paper include: collect the information that matters: collect customer information related to trade- based activities, for example, business nature, major suppliers and buyers, delivery / transportation mode for goods and services; keep up with your changing customers: update CDD information regularly given the dynamic nature of the trade cycle and the changing nature of customers’ trade- related activities; if in doubt, ask - there might be legitimate reasons: consider obtaining further information where anomalies are identified. Not all anomalies necessarily mean TBML but you won’t know, or be in a position to assess, until you ask; anddocument everything: document every step along the way, including the initial CDD process, updates, explanations, customer information and decisions (including the reasons for).
Transaction screening. Policies and procedures for screening and alert handling for trade- related activities are essential Trade Controls. The key screening recommendations in the Guidance Paper include: applying methodologies to detect trade- based red flags, typologies, scenarios and sanctions; keeping sanctions, terror and high risk jurisdiction lists updated; performing “voyage check” and “port checks” using an RBA; looking out for “dual- use goods”** – a particularly complex issue; using manual screening to supplement automated systems; andhandling and managing alerts appropriately.** The Guidance Paper defines “dual- use goods” as items that have both commercial and military or proliferation applications, making them challenging to identify and deal with in practice. While not exhaustive, the Import and Export (Strategic Commodities) Regulations (Cap.
G) provide some measure of assistance in relation to addressing this complex issue. Transaction monitoring. All the best AML/CTF measures are of no use if an AI does not monitor its transactions exposed to ML/TF. It is like buying an umbrella, but not checking whether it is raining. In the same vein, AIs should establish transaction monitoring mechanisms to identify unusual or suspicious trade- based activities. This should be done with an RBA, in light of the individual AI’s trade- related products and services, and with senior management oversight.
Importantly, automated systems can only do so much and should be a compliment to human effort and judgment. AIs cannot solely rely on, or outsource to, an AML/CTF “robo- cop”. Suspicious transaction reporting. The Guidance Paper re- iterates the importance of reporting knowledge or suspicions in a timely manner, balancing the risk of “tipping off”. Helpful guidance is provided in respect of (ideally short) internal reporting lines and processes in order to escalate suspicion to the AI’s money laundering reporting officer. The key points are to consult with the relevant internal staff, assess the available information on hand and then re- assess the customer risk and adjust if appropriate.
Risk awareness and trade specific ML/TF training. Finally, none of the Guidance Paper’s recommendations matter if the AI’s staff are not aware of trade- related ML/TF risks and the AML/CTF program to combat such risks.
Key issues specific to trade- related activities and which should be communicated to staff are outlined. These include transactions and structures, typologies, emerging risks, case studies and red flags. The appropriate staff to be trained and to act as trainers should be identified in order to direct resources as appropriately. Role- based training, in particular, is highlighted as an effective training methods for staff involved in day- to- day trade processes.
Where to from now? The HKMA expects AIs to give full consideration to the adoption of the practices in the Guidance Paper and make improvements where needed in relation to trade- related activities. There is no “grace period” as such. We expect to see the HKMA to continue its increasing focus on AMLO compliance and to take an increasing tougher stance. The AMLO is coming up to its 4- year anniversary in April 2.
We have been at the core of AMLO developments since the initial drafting consultation in 2. AML/CTF regime evolves.