Legal Flash Legislation – Law 129/2019 on the prevention and combating of money laundering and terrorism financing

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Changes brought by the entry into force of the new Law 129/2019 on the prevention and combating of money laundering and terrorism financing, as well as for amending and supplementing certain normative acts

Among the main changes brought about by the entry into force of Law no. 129/2019, we note the following :

1. Art. 3 para. (2) of the Law expands the sphere of important public functions to cover the members of the governing bodies of the political parties and Art. 17 para. (9) sets forth the obligation on reporting entities to apply, in addition to standard measures, additional know-your-customer measures about occasional transactions or business relationships with public persons or for the ultimate benefit of public persons.

2. According to Art. 7 para. (1) of the Law, “[t]he reporting entities have the obligation to report to the Office transactions in cash, in lei or in foreign currency that exceed the lei equivalent of EUR 10,000“, unlike the old legal text which provided for this obligation only in the case of transactions that exceeded EUR 15,000.

3. According to Art. 7 para. (7) of the Law, the report for the transactions referred to in Art. 7 par. (1), (3) and (5) shall be transmitted to the Office within maximum 3 business days after the transaction, whereas in the old regulation this obligation was to be enforced within 10 business days.

4. According to Art. 8 para. (12) of the Law, the reporting entities have the obligation to transmit the reports  to the Office only by electronic means.

5. According to Art. 9 para. (3) of Law 129/2019, the persons referred to in Art. 5 para. (1) letters e) and f) have the right to observe professional secrecy (such as auditors, accountants, lawyers, public notaries, bailiffs, and other liberal legal professionals). Also, pursuant to Art. 33 para. (4) of the same regulation, the professional secrecy and banking secrecy to which the reporting entities are held shall not be binding upon the Office, with the exception of the lawyer’s duty to maintain professional secrecy.

6. According to Art. 10 para. (7) of the Law: “[w]here reporting entities have  majority-owned branches or subsidiaries in third countries where the minimum requirements for combating money laundering and terrorism financing are less stringent than those laid down in this Law,  majority-owned branches and subsidiaries located in that third country shall implement the provisions of this law, including those governing data protection, to the extent permitted by the law of the third country.

7. According to Art. 13 para. (1) letter c) of Law 129/2019: “reporting entities have the obligation to apply standard know-your-customer measures in the case of persons who trade goods as professionals when making occasional cash transactions of at least EUR 10,000, irrespective of whether the transaction is carried out through a single operation or through several interconnected operations”, reducing the cap from the previously regulated amount of EUR 15,000.

8. According to Art. 19 para. (1) of the Law, “[p]rivate legal entities and fiduciaries registered in Romania are required to obtain and have adequate, accurate and up-to-date information about their real beneficiary, including the manner in which this quality is achieved, and to provide them for review to authorities and supervisory authorities upon their request. ” In order to fulfill the obligation to identify the real beneficiary, the reporting entities will rely on the central registry provided in paragraph (5) according to which: “[t]he information provided in para. (1) is recorded:

  • in a central registry organized at the National Trade Registry Office for legal entities that have the obligation to register in the trade registry, except for the “regies autonomes”, national companies and enterprises;
  • in a central registry organized at the level of the Ministry of Justice for associations and foundations ;
  • in a central registry organized at the level of the National Agency for Fiscal Administration, in case of fiduciaries.”

9. The new Law establishes that personal use by employees of the Reporting Entities of confidential information received under Law 129/2019 constitutes a criminal offense and is punished by imprisonment from 6 months to 3 years or by a fine if the action does not constitute a more severe crime. The same penalty also applies to the reporting entities, management, administration and control bodies of the company, managers and employees of their entities who fail to comply with the obligation to not transmit, unless provided by the law, the information held in connection with money laundering and terrorism financing and to not disclose to the targeted customers or to third parties that the information is being, has been or will be transmitted in accordance with Art. 6 and Art. 9 para. (1) or that an analysis of money laundering or terrorism financing is in progress or could be carried out.

10. Legal entities subject to registration with the trade registry, except for regies autonomes, national companies and enterprises and companies wholly owned or majority owned by the state, will file for registration on a yearly basis or in case of any amendment, a statement regarding the real beneficiary of the legal entity, in order to be registered with the Registry of the Companies’ Real Beneficiaries.

11. Within 120 days from the entry into force of Law 129/2019, the real beneficiaries’ registries become operational and within 12 months from the entry into force of Law 129/2019, companies registered  with the trade registry until the date of entry into force of this law, except for national companies and enterprises, as well as companies wholly owned or majority owned by the state, will submit, through their legal representative, for registration with the Register of the companies’ real beneficiaries, kept by the National Trade Registry Office, a statement regarding the identification data of the real beneficiaries, an obligation set forth by Art. 62 para. (1) of the Law, whose breach constitutes a contravention and is sanctioned with a fine between Lei 5,000 and Lei 10,000.

12. According to Art. 61 of the Law: “(1) [o]n the date of entry into force of this law, it is prohibited to issue new shares to the bearer and to carry out operations with the existing bearer shares“; (2) Bearer shares issued prior to the entry into force of this law shall be converted into nominative shares in accordance with paragraph (3) and (4) and the updated articles of incorporation shall be filed with the Trade Registry Office.” Failure to meet the conversion obligation by joint stock companies and limited partnerships results in their dissolution upon request from any interested person.

Holders with any title of bearer shares will deposit them at the registered office of the issuing company within 18 months of the entry into force of Law 129/2019 under the sanction of the legal cancellation of the shares and the corresponding decrease of the share capital.

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