The money laundering phenomenon has reached worrying levels worldwide and in order to prevent this phenomenon and ensure a legal framework, the European Union has extended its regulatory scope to cryptocurrency service providers and digital wallet providers.
The EU based its decision on the ease and speed with which anonymous accounts can be opened, the conversion of money illegally, and the existence of the means of trading illicit income.
Thus, based on the amendments to the European Union Directive 2018/843 on virtual currency trading, as well as the increasing use of cryptocurrencies for the purpose of money laundering and terrorist financing, the Romanian Government has adopted GEO no. 111/2020 regarding the amendment and completion of Law no. 129/2019 for preventing and combating money laundering and terrorist financing.
The most important change brought about by the ordinance is the inclusion of providers involved in exchange services between virtual currencies and fiat currencies in the category of entities that will henceforth have new obligations related to the identification of suspicious activities.
Billions of dollars laundered through Bitcoin transactions
According to an international report, criminal organizations transferred in 2019 no less than 2.8 billion dollars to Bitcoin through exchange offices.
The analysis of 45 million cryptocurrency transactions made through 20 exchange offices in the top globally, between September 2018 and January 2009, shows that 97% of Bitcoin cryptocurrencies laundered through exchanges reach countries with regulations on preventing and combating money laundering and terrorist financing. About 380,000 Bitcoin coins (the equivalent of $ 2.5 billion) were laundered, and 97% of transactions were made through exchange offices that are not subject to the law.
New obligations for cryptocurrency issuers
According to Law no. 129/2019 as amended by GEO no. 111/2020, providers of virtual currencies and digital wallets, electronic money institutions and payment institutions from other Member States that provide services in Romania have the obligation to ensure compliance with legal provisions on preventing and combating money laundering and terrorist financing for the activities performed.
These new measures include:
• measures regarding the knowledge of the clientele, in order to identify the risk associated with these services and their use for criminal purposes;
• identification of the real beneficiary;
• monitoring and reporting to the authorities of certain transactions.
Also, providers of exchange services between virtual and fiduciary currencies and providers of digital wallets will have to follow an authorization and registration process, which will be coordinated by the Ministry of Public Finance.
Moreover, the electronic money issuing institutions and the payment institutions have the obligation to impose contractually on the agents and distributors through which they provide services on the Romanian territory the compliance framework to the provisions of Law no. 129/2019 and the regulations issued in its application and to ensure that the necessary procedures and systems are implemented and their obligations are complied with, including by performing checks.
