079809/EU XXIV. GP Eingelangt am 25/04/12

COUNCIL OF Brussels, 25 April 2012 THE

9012/12

GENVAL 24

NOTE from: Romanian delegation to: Delegations No. prev. doc.: 17640/2/09 REV 2 CRIMORG 188 Subject: Evaluation report on the fifth round of Mutual Evaluations "Financial and financial investigations" - Follow-up to Report on

The actual progress report follows the recommendations issued during evaluation report on the fifth round of mutual evaluations "financial crime and financial investigations” – GENVAL.

1. A coherent, overarching policy on financial crime and financial investigations should be elaborated. It could be reflected in a long-term national strategy. Such a strategic document could also cover protection of financial interests of the EU, as the previous PFI strategy is no longer in force. Its execution should be regularly evaluated and reviewed.

Since the GENVAL report in 2010, 3 strategic documents were adopted, after internal debates between relevant authorities. 2 strategies were adopted through decisions of CSAT: one is dedicated to prevent and combat tax evasion, the other refers to prevention and combating money laundering and financing. The last one is the recent National Anticorruption Strategy (SNA) 2012 – 2015, adopted on the 20th of March 2012, covering also some aspects regarding the protection of financial interests of the EU.

9012/12 GS/ec 1 DG D 2B EN a. The National Strategy for Preventing and Combating Money Laundering and Terrorism Financing was adopted by the CSAT, through its Decision no. 72 of 28 June 2010.

This document was drafted within the Twinning Project 2007/19343.01.14 „Fight against money laundering and terrorism financing”, implemented by the Office in 2010, in cooperation with Ministry of Finance from – General Inspector of Financial Information (Financial Intelligence Unit of Poland). The general objective of this project focused on strengthening the capacity of the institutional system of combating money laundering, in accordance with the international standards, through the improvement of the ONPCSB capacity. One of the most important objectives was the initiation of the National Strategy for Preventing and Combating Money Laundering and Terrorism Financing, which was accomplished in June 2010. b. National Strategy on preventing and combating tax evasion, adopted through CSAT Decision no. 69/2010. Based on the strategy, an efficient platform for mutual cooperation was set up for identifying the main characteristics of the tax evasion phenomenon, establishing the priorities, organizing the operations and assessing the performances. Practically, the model through which the decision’s provisions were put into practice was similar to the European Model for Operative Information (M.E.I.O.), promoted by EUROPOL and Belgian Presidency within the Harmony Project on the agenda of the Council for Justice and Home Affairs (J.A.I.).

CSAT Decision provides the possibility for the Romanian enforcement law institutions to put in practice and fall in the provisions of the followings: - Internal Security Strategy of the European Union; - Stockholm Program and the correspondent Action Plan; - Governing Program 2010-2012; - Romanian National Defense Strategy 2010; - National Public Order Strategy 2010-2013. c. Regarding the protection of financial interests of the EU, since the GENVAL report in 2010, significant progress have been made in the field of the protection of the European Union financial interests in Romania, due to the new legal base for DLAF which was enacted to strengthen the Department’s role as national coordinator of the fight against fraud and as contact institution for European Anti-Fraud Office - OLAF in Romania. Thus, all the legal provisions regarding DLAF and mentioned by the Report are no longer in force (see Annex no. 1 for further details).

9012/12 GS/ec 2 DG D 2B EN Whereas: ¾ On the 20th of March 2012, the Romanian Government adopted the National Anticorruption Strategy (SNA) 2012 – 2015, by the Government Decision no. 215/2012.

It is to be underlined that DLAF has assumed to implement certain measures through the SNA: - achievement of two actions: 1) increasing transparency on beneficiaries of the EU funds as well as on the operational activity for protecting the EU financial interests in Romania, respectively, 2) the protection of EU financial interests through specific means of legislative and judicial power and familiarize their representatives with the European initiatives in the field; - development of two preventive measures: 1) a register for violations of conduct of officials, civil servants, contract staff with responsibilities in the protection of EU financial interests and 2) a code of conduct for investigators involved in the protection the EU financial interests.

¾ By the end of June 2011, the European Commission adopted the new Anti-fraud Strategy1.

The New Strategy aims to improve and update fraud prevention, detection and investigation techniques, recover a higher proportion of funds lost due to fraud and to deter future fraud through appropriate penalties.

The New Strategy strengthens the necessity, identified in the process of preparation of the new multiannual financial framework post - 2013, of inclusion of adequate antifraud measures in the various EU policies and also represents an part of EU’s integrated approach to combat fraud and corruption, together with: European Commission’s proposal to reform the European Antifraud Office – OLAF, Commission’s Communication regarding the protection of EU’s financial interests by measures of criminal law and administrative investigations and Commission’s Communication regarding the fight against corruption in EU.

¾ In 2011, a new legal framework was enacted for DLAF (Law no. 61/2011 regarding the organization and functioning of DLAF and Government Decision no. 738/2011 for the approval of the Regulation of organization and functioning of Fight Against Fraud Department – DLAF).

Based on art. 10 let. d from GD no 738/2011, DLAF is entitled to draw up and to coordinate the implementation of the National Fight Against Fraud Strategy.

1 COM(2011) 376 final - Communication from the Commission to the , the Council, the European Economic and Social Committee, and the Committee of the regions and the Court of auditors on the Commission Anti-Fraud Strategy.

9012/12 GS/ec 3 DG D 2B EN Given the recent fulfillment of the conditions for a new strategy to be issued, DLAF is set to draw up a new National Antifraud Strategy based on the above mentioned documents and in close cooperation with all institutional actors involved in the protection of EU’s financial interests in Romania.

This is one of the DLAF’s priorities for the year 2012, as it is settled in the 2011 Annual Activity Report1 of the Department.

2. A coordination mechanism, such as a high-level committee, should be established in order to foster dialogue and cooperation between the ministries, law-enforcement agencies and prosecuting services involved, as well as identifying shortcomings in legislation and practical obstacles relevant for financial investigations. If necessary, legislative or organisational proposals should be drafted and presented to the ministers concerned. Reporting mechanisms should be introduced in order to make specialised services accountable for their actions.

Regarding the strategic documents presented at Recommendation 1, all of them are providing also for coordination and monitoring mechanisms, as follows: a. The Action Plan for the implementation of the National Strategy for Prevention and Combating Money Laundering and Terrorism Financing, was approved by all Romanian authorities in September 2010.

This document comprises the necessary measures for implementation of the objectives and measures established within the strategy, with terms, responsible institutions and evaluation indicators for the measures which will be adopted. For its implementation an Inter-institutional Council was established and it is formed by the representatives of MJ, PICCJ, MAI - IGPR, SRI, SIE, ANAF, GF, BNR, CNVM, CSSPP, CSA and ONPCSB.

ONPCSB ensures the Secretariat, which coordinates the performance of the activities under the Action Plan, assures direct communication between the partners, and elaborates periodical reports on the status of the activities.

1 http://www.antifrauda.gov.ro/docs/ro/raport_dlaf/DLAF_Raport%20activitate%202011_engl.pdf

9012/12 GS/ec 4 DG D 2B EN In order to ensure an unitary concept on the anti-money laundering policies implementation, at the level of the Inter-institutional Council established for the application of the National Strategy for Prevention and Combating Money Laundering and Terrorism Financing, regular specialized working meetings take place to initiate steering directions in the anti money laundering operative investigations, risk assessment, updating the risk indicators and specific risk profiles and exchange of best practices in the field.

On the same time, Task Forces were established, consisting of prosecutors, police officers and ONPCSB financial analysts, in order to enhance the efficiency in special cases of money laundering and terrorism financing.

The National Strategy and the Action Plan were drafted and adopted in order to interact and establish joint objectives, a mechanism of coordination and enhancement of dialogue and cooperation between the law enforcement, fiscal-control and prudential supervision authorities. One of the main tasks is also the identification of possible legislative deficiencies and practical obstacles relevant for financial investigations.

Implementing the above mentioned working tools lead to the improvement of the action capacity of the national cooperation mechanism in the field of anti-money laundering and terrorism financing, valuing the gained expertise, the best practices and the implementation of new available tools at domestic and international level. (As regards the results of joint activities of the ONPCSB and PICCJ in the context of implementing the National Strategy and the Action Plan, please see the comments for Recommendation 14).

Nowadays, the Module for Dissemination of Information is being tested (developed within the Case Management System from the PHARE Project RO 2006/018-147.03.17 “Developing the institutional system for preventing and combating money laundering and terrorism financing”), and it allows the secured submission of data and information regarding the financial operations in which serious grounds for money laundering and/or suspicions for the financing of terrorism have emerged, from the ONPCSB to the competent authorities (PICCJ, DNA and SRI).

9012/12 GS/ec 5 DG D 2B EN Also, on March 2010, the on-line reporting system was launched for the reporting entities provided for in the AML Law no. 656/2002 and following the testing phase, it became fully operational in September 2010. This on-line reporting system developed within the PHARE Project RO2006/018- 147.03.17 ”Developing the institutional system for preventing and combating money laundering and terrorism financing” ensures a real support for the non-financial entities and also for the financial ones.

The on-line reporting system allows the automatic data acquisition and validation and provides simplification and speed for collection of reports submitted in accordance with AML Law no. 656/2002, as amended and supplemented. In order to spread the information about the application and to determine its use by many reporting entities, during 2010 and 2011 training sessions have been organized in several regions of the country, attended by all categories of reporting entities, namely, credit institutions, public notaries, lawyers, insurance companies, financial investment companies, non-banking financial institutions, financial auditors, accountants, casinos, real estate agencies, foreign currency exchange offices etc. (54 training sessions and 2470 individuals trained).

As regards the strengthening of the investigation/prosecution capacity of the law enforcement bodies regarding the money laundering and terrorism financing cases, within the Project 2007/19343.01.14 „Fight against money laundering and terrorism financing”, 6 two-weeks internships have been organized in several Member States of the European Union, focusing on the training of the prosecutors, the commissioners from the GF and police officers from IGPR. Thus, as measurable result of these activities, we mention the training of 16 prosecutors (to the law enforcement authorities in - 2 internships, - 1 internship and - 1 internship), 4 commissioners of GF and 4 police officers (internships organized by the Polish law enforcement authorities). b. Based on the Strategy on preventing and combating tax evasion, a platform for mutual collaboration and cooperation was constituted for identifying the main characteristics of the tax evasion phenomenon, establishing the priorities, organizing the operations and assessing the performances, providing the followings: - setting up, at strategic level, the Inter-institutional Working Group for preventing and combating the tax evasion (GLI), coordinated by MAI and MFP, in which the implied institutions are represented at the secretary of state level, respectively by the nominated public prosecutors from the Public Ministry;

9012/12 GS/ec 6 DG D 2B EN - setting up, at territorial level, the Operational Working Groups (GLO) coordinated by GLI. At the level of every county and Bucharest city, Operational Working Groups were made operational, having the possibility to create – when some operative targets are identified - Joint Operative Teams.

Until now, the legal framework that regulates combating of the financial criminality, which endorses, generally, the authority’s growth of the law enforcement agencies and the limitation of the possibility to prejudice the state budget, was modified and significant progress was achieved, accomplishing a good collaboration with the law enforcement institutions for diminishing the illegal activities in the field of tax evasion.

Hereby, the strengthening of the judicial police capacity was pursued, for interfering and acting, in case of criminal groups or economical and criminal activity aspect, through adequate modification of the legislation on the discovering and combating tax evasion.

The legislative framework modifications led to the intensification of combating tax evasion through attributing enhanced competences to the criminal investigation bodies, facilitating the pursuit and identification of the goods from offences, through institutional and legislative changes. c. The new National Anticorruption Strategy shall be implemented under the authority and coordination of the Minister of Justice, by reporting it to the Government. For this purpose, the Minister of Justice shall organize coordination reunions at least every six months. At the coordination reunions the representativeness of the three powers – the legislative, judiciary and executive power, as well as of the public local administration, business environment and civil society shall be ensured.

3. Fragmentation of law-enforcement and prosecution powers should be reduced.

In 2010, Criminal Procedure Code was amended through Law no. 202/2010. A special provision was introduced, according to which “In case of indivisible or connected offences for which the competency belongs to DNA and to DIICOT, the criminal investigation in the reunited case belongs to the specialized criminal investigation body initially noticed. The provision is not applicable to the situation in which it has been ordered the dissociation which draws in the competence of the other structure”. Through this provision, the possibility for declining a case between specialized prosecution bodies, DNA and DIICOT, does not exist anymore.

9012/12 GS/ec 7 DG D 2B EN 4. More importance should be attached by law-enforcement agencies and, above all, by prosecuting services to asset tracing, seizure and confiscation. These should become more prominent elements of investigations.

In order to increase the efficiency in prosecuting money laundering cases, PICCJ implemented a model aimed toward achieving a proactive approach towards this type of criminality. This approach was based on the need to have specialized prosecutors who can identify patterns and develop specific investigative strategies, by identifying and monitoring areas with high risk of money laundering, in order to obtain relevant information.

In 2010 the General Prosecutor of Romania adopted an order, deciding that all prosecutor’s offices should designate prosecutors specialized in investigating money laundering cases, tax fraud and smuggling, who were to be included in dedicated training programs, and should draw up local strategies to fight corruption . These strategies represented a reflection of the concept of intelligence-led policing, requesting a strategic approach in order to induce a significant decline of the phenomenon.

According to the order, the strategy would necessarily include a risk analysis, a definition of the priority sectors, an indication of the methods used to monitor such sectors and the expected results following the implementation of the strategy.

The risk analysis took into account the predictability of the economic related crimes by examining the risk factors and the specific problems, taking into account the particularity of the area determined, for instance, by its location near the border or the prevailing economic activities in the respective county.

The assessment was based on the data gathered by the prosecutor’s office following the analysis of the statistic information, of the information communicated by the structures specialized in gathering and processing intelligence, of the local and national studies regarding this criminal phenomenon and of the information provided by the mass media, nonexclusively.

9012/12 GS/ec 8 DG D 2B EN Based on the risk analysis, each prosecutor’s office determined the priority sectors, in order to direct the available resources mainly to them.

Each prosecutor’s office determined and implemented methods enabling the monitoring of priority sectors, by systematically using open information sources such as articles in the media, Internet, data provided by public institutions, databases accessible to the public, as well as closed sources of information such as wiretapping or human sources, so as to obtain relevant information regarding the possible perpetration of crimes. Monitoring focused on identifying both patterns related to the priority sectors, as well as actual crimes.

The expected result was an increase of the number of investigations regarding the perpetration of money laundering cases within the priority sectors, and thus an increased number of indictments and convictions. The assessment benchmarks for the results obtained included the number of indictments prepared, the complexity of the cases, the preventive measures decided in the respective case and the amount of money frozen.

This order was complemented by the establishment of a complex reporting system for the prosecutor’s offices in order to ensure the accuracy of the statistical data and a review is done every three months by specially designated prosecutors within the Prosecutor’s Office attached to the High Court of Cassation and Justice.

A common order of the General Prosecutor and the MAI established a standardized procedure to be applied in all criminal cases in order to identify assets that could be frozen through a checklist questionnaire covering the main steps of a financial investigation. As a consequence, the prosecutors imposed in 2011 interim measures over one billion lei (data retrieved from the Annual report of activity performed by the Public Ministry in 2011). This value is even more relevant considering the fact that in 2010 the total value of the seized goods was of approximately 371 million lei.

9012/12 GS/ec 9 DG D 2B EN The possibility of prosecuting money laundering as an autonomous crime is still controversial among practitioners, due to a restrictive interpretation of the legal provisions, in the light of recent jurisprudence of the Constitutional Court regarding the assumption of the origin of someone’s wealth, which was reflected in the courts’ interpretation of the legal provisions concerning money laundering. This is the main reason why this type of prosecution was avoided by the law enforcement.

In order to change this approach, the General Prosecutor issued a legal opinion, to be distributed among prosecutors, concluding that the Romanian legislation allows for the conviction for the offence of money laundering as an autonomous crime, without a prior or simultaneous conviction for the predicate offence and without a precise determination of the predicate offence or of its author. Its recommendation was that in these cases, the criminal origin of goods subjected to money laundering should be established based on indirect evidence demonstrating that the accused was involved in criminal activity or had connections with people involved in such activities, had done economic operations concerning assets which significantly exceeded his legal income, that these operations were of atypical nature, aiming to the distortion of their origin and that there was no legal justification of the amounts used in the transactions.

In respect to the case of autonomous offence, as an example, there is the Penal Sentence no. 1024/F/2009 of the Bucharest Tribunal (with final decision of the High Court of Cassation and Justice in the penal disposition 1020/16.03.2011), in which the accused person was caught into act while selling to his accomplice the quantity of 1,5 kg heroine. In the same period, this person purchased a land in Bucharest and an auto. From the evidence presented in front of the court, it resulted that the legal incomings were not enough to allow the person to procure such goods, and the declarations of the accused person related to the modality in which he obtained the funding for acquisitions were eliminated. It was noted that the goods were purchased from the amounts of money obtained from other sells of heroine, non-individualized, and the transactions constitute the money laundering offence, for which he was convicted. The court disposed the confiscation of the goods.

9012/12 GS/ec 10 DG D 2B EN In 2010 one case concerning money laundering as an autonomous crime was prosecuted, yet the case is still pending in court. The case concerned the members of an organized criminal group, consisting of a network of thieves who operated abroad and transferred the proceeds to the group leaders in Romania. Besides the acts of theft that had been established, other similar money transfers were identified, made by the same persons, in the same period. The prosecutors noted that the additional transfers are acts of money laundering, for which the group members were indicted.

The main objectives of the Public Ministry in the period of 2007 – 2011 were increasing the pro- activity, the efficiency and the firmness, especially in the areas of corruption, organized crime, tax evasion, smuggling and asset recovery, while insuring a higher transparency and improving the public perception of the institution.

In order to achieve this, the key measures implemented were:

- New evaluation criteria for the activity of prosecutor’s offices were adopted, based mainly on the outcome of the investigations. More emphasis was given in the analysis to the number of indictments and persons put in preventive arrest, especially in the priority areas.

- The investigative resources were prioritized and channelled towards important files related to the priority domains. Staffing the specialized units and ensuring their budget needs was a priority, as well as providing logistical support. Funds were made available to all prosecutors’ offices to carry out activities aimed at uncovering flagrant offences. Non investigative resources, such as statistical reporting, have been simplified.

- The prosecution units were reorganized and the vacant positions were redistributed to the units confronted with a large workload. 115 positions were cut from the structure of PICCJ and further 12 from several prosecutors’ offices attached to courts of appeal. Those were redistributed to the local offices confronted with the highest deficit of personnel in relation to their workload.

9012/12 GS/ec 11 DG D 2B EN - Networks of specially assigned prosecutors were created to work only on particular categories of offenses. Those prosecutors were trained by several EU funded programmes in the area of using undercover investigators in corruption crimes, financial investigations and asset recovery. Regular regional meetings attended by specially appointed prosecutor to investigate corruption crimes and tax evasion with the judicial police officers and the county inspectorates corruption services were organized to identify ways to streamline the criminal activity in the priority areas.

- Strategies to combat the criminal phenomenon adapted to the regional specificity were adopted and implemented by the local prosecutor’s offices in the area of corruption and financial crimes. Each local strategy comprised a risk analysis, the definition of the priority domains within the competence area of each unit, the methods to allow the monitoring of these fields and the performance indicators, referring mainly to the number of cases and indictments and the types of offences committed for trial.

- The methods of investigation were standardized by the publishing of good practice guidelines in the areas of corruption, financial investigations, the use of undercover investigators or forensic activities. The decisions made by prosecutors across the country with regard to the priority areas were monitored in order to identify the problems that generated conflicting solutions and to unify the practices of prosecutors' offices. In all these cases PICCJ expressed its opinion in memoranda sent to the local units or in the messages conveyed by the General Prosecutor.

- A common order signed with the Ministry of Administration and Interior was implemented and provided both prosecutors and police officers with a standardized mandatory procedure for the identification of the assets that can be seized.

- The computerization of the Public Ministry was completed. A secure communication network for access to confidential information, electronic mail and electronic transfer of information has been created. Prosecutors have direct access to over 15 databases providing information support. Public Ministry’s own tracking system was created to enable identification of any file docketed at any prosecutor’s office throughout the country as well as the real time checking of statistics concerning priority fields. A virtual library contains best practices guides and case law which can be consulted by all prosecutors. A videoconference system was implemented to provide an efficient, rapid and secure way to convey information, and was also used for certain types of professional training.

9012/12 GS/ec 12 DG D 2B EN - Concluding protocols with the main institutional partners aiming to streamline the exchange of information, to achieve common priorities and a common evaluation based on the judicial outcome of the cases. Such protocols were signed with IGPR, DGA, ANI, the Court of Audit, the Anti-Fraud Department and the Romanian Intelligence Service.

- A new procedure and rigorous criteria with regard to the appointment, promotion or dismissal of judicial police officers were established.

9012/12 GS/ec 13 DG D 2B EN

5. In order to comply with Council Decision 2007/845/JHA, a national Asset Recovery Office should be established. Dedicated multidisciplinary asset-tracing teams should be created in order to support investigations into serious or organised crime.

Through the Government Decision no. 32/2011, the Unit for Crime Prevention and Cooperation with EU Assets Recovery Offices within the MJ was designated as the national asset recovery office. Thus, Romania ensures the implementation of the Council Decision 2007/845/JHA of 6 December 2007, concerning cooperation between Asset Recovery Offices of the Member States in the field of tracing and identification of proceeds from, or other property related to, crime. The MJ intention was that the designation of this structure will represent the signal of a fundamental change of approach on fighting organised crime and corruption, by giving a special attention to the process of confiscation and recovery of proceeds of crime.

The new structure covers 3 very importantly levels: 1. The operative exchange of data and information with other asset recovery offices or authorities with similar responsibilities from other EU and CARIN Member States; 2. The identification and dissemination of best practices in the field of tracing and identification of proceeds from, or other property related to, crime; 3. The promotion of public policies in the criminal field with accent on the strategic measures which shall lead to a strong riposte against organized crime and corruption.

The Office within MJ is built as a centre for excellence and resources in crime prevention and assets recovery field. Thus, besides the specific functions related to the implementation of the European standards in the area of asset recovery cooperation, the Office carries out MJ’s attributions regarding strategic analysis and development of public policy on preventing corruption and serious crime.

The Office has a multidisciplinary structure. At present, it has 7 employees including also the CARIN contact point. Parallel to the direct or indirect access to databases relevant for the exchange of data and information, the Office currently develops its own database of judiciary statistic relevant in the field of confiscation and sale of proceeds of crime. Starting with 2012, the Office will also be the Secretariat of the new National Anticorruption Strategy.

9012/12 GS/ec 14 DG D 2B EN In order to fulfil its specific duties, the Office has signed collaboration protocols with the following institutions: MAI - IGPR and ANCPI, ANAF (including GF and the National Customs Authority), PICCJ, Ministry of Transport and Infrastructure – The Romanian Naval Authority and The Romanian Civil Aeronautical Authority, the National Trade Register. The office is being operational and notified therefore to the Council’s Secretariat and to the European Commission since May 2011.

Exchange of information:

The new structure has managed to position itself internationally through their prompt response to requests of data and information, thus gaining the trust of similar structures, as well as of the national agencies such as DNA and DIICOT. This is reflected by the number of requests solved – 84 cases in 2011 (out of which 57 external requests from the corresponding EU offices, respectively 27 files where the Office, upon the request of the Romanian criminal investigation bodies, issued 29 requests to EU AROs).

The inquiries in the 57 external requests envisaged 256 natural individuals (108 Romanian citizens and 157 foreign citizens) and 80 legal individuals (41 from Romania and 39 from abroad). According to the information from the database query the Office has direct access to, as well as those provided by the institutions required under cooperation protocols, the following items were identified: 12 vehicles, 6 buildings, 16 apartments, 17 land properties, 75 bank accounts, 17 companies in which the investigated individuals are associates or/and managers and 3 authorised natural individuals. The inquiries in the 27 external requests envisaged 139 natural individuals (29 Romanian citizens and 118 foreign citizens) and 59 legal individuals (9 from Romania and 50 from abroad). According to the answers of the required states, 14 vehicles, 1 house, 1 apartment, 6 land properties, 37 bank accounts and 47 trade companies were identified.

During the first 2 months of 2012, 17 files were registered: 10 external (7 ongoing and 3 dealt with) and 7 internal (5 ongoing, 2 dealt with). The external requests were received from Austria, France, Germany, , , Spain and envisaged verifications of real estate, bank accounts or vehicles.

9012/12 GS/ec 15 DG D 2B EN It is essential for ARO structures to have direct or indirect access to the database on movable and immovable property or other assets. In its activity, the Office is required to provide similar structures in the EU data and information in very short periods ranging from 8 hours to 14 days. Requests are submitted within criminal judicial proceedings in the preliminary phase of formulation of requests for international judicial assistance, freezing and confiscation orders.

The most frequent exchanges of information took place with France, Hungary, Poland, and the Netherlands. These exchanges are backed by a good communication at management and expert level. Besides, the Netherlands, France and Hungary accepted to apply with Romania for a European program on professional training regarding asset recovery. The cases in which these requests were sent are generally those on deeds committed by Romanian citizens - most often in association with foreign nationals. The most frequent offences: skimming and participation in an organized crime group, theft, trafficking in human beings, money laundering, falsifying means of payment.

In 2012, RO ARO will take part in the informal review mechanism supported by EU and EUROPOL.

CARIN contact point is also part of the Office. Thus, the RO ARO can exchange data and information with non EU member states, such as: , Australia, Canada, , Gibraltar, Guernsey, Island, Man Island, Israel, Jersey, FYROM, Mexico, , Monaco, , Norway, Russia, , South Africa, USA.

Besides CARIN, Romania is represented by the Office in the focal point network established at global level under the aegis of the UN Convention against Corruption. The network is not yet operational. Moreover, the Office has access to the informal contact point’s network under Star INTERPOL.

9012/12 GS/ec 16 DG D 2B EN The identification and dissemination of best practices:

For setting up the Office, MJ benefited from the expertise of the US Department of Justice that performed a system analysis and issued a series of recommendations for enhancing the national recovery framework of the legislative and institutional system. With the support of the US and UK Embassies in Bucharest, the Office initiated, in March 2011, an internal professional training plan for police officers, prosecutors and judges. In addition, in December 2011, with the support of the German Embassy in Bucharest, the German Ministry of Justice and in cooperation with the Development Program, the Office organized a seminar on corruption in public procurement and asset recovery.

Trainings carried out by the Office put emphasise on European and international best practices in asset recovery. In addition specific topics are addressed: extended confiscation, confiscation from third parties, criminal liability of legal persons, reversal of burden of proof, money laundering as standing alone crime, financial investigations, pre MLA cooperation, assets management. The trainings organised by the Office bring together investigators, prosecutors, judges as well as experts and specialists from various agencies and institutions in charge with management of relevant data bases or registers.

At present, MJ carries out an European professional training program, having as main beneficiaries prosecutors, judges and police officers. The project’s budget is 264.532 Euro (80% from ISEC). The partners are from Germany, France and Spain.

Three new international projects are being finalized, aimed at strengthening the capacity of the Romanian authorities to recover assets from crime. 1. “Enhancing the capacity of the EU Asset Recovery Offices and judicial bodies in the fight against economic crime and asset recovery” - project proposal submitted to the European Commission with a view to obtaining funding within „Prevention and Fight against Crime” 2011 (part of the general Programme „Security and Safeguarding Liberties”). Partners: National School of Magistracy from France, Ministry of Justice from France, the National Bureau of Investigations from Hungary, Asset Recovery Office from the Netherlands. Budget: 344.266 Euro out of which 309.839 (90%) is the grant given by the EC and 34.427 Euro (10%) contributions from partners.

9012/12 GS/ec 17 DG D 2B EN 2. “Developing the investigative capacities of Romanian judicial authorities by improving the fight against corruption and the competences in asset recovery” – project is approved. Partners: Basel Institute Switzerland Estimated budget: 803.613,30 lei out of which 683.073,31 (85%) represents the grant from the Swiss Government and 120.542 (15%) is MJ co-financing.

3. “Enhancing the cooperation between agencies and bodies specialized in trafficking, confiscation and asset recovery in South Eastern Europe” – project is approved. Partners: Konrad-Adenauer Program “Rule of Law South Eastern Europe” Estimated budget: 14.684 euro out of which 14.074 euro represents the grant from KAS and 610 euro is MJ co-financing.

In addition, MJ initiated discussions with STAR Initiative for developing a training program for police, prosecutors and judges in matters of asset recovery. The project will be implemented in partnership with the National Institute of Magistracy. A fact finding mission of STAR took place in Bucharest during 14 – 16 February 2012.

The Office for Crime Prevention and for the Cooperation with EU Member States Asset Recovery Offices issued in 2011 more than 40 announcements, press releases and briefings and it organized 5 press conferences on the main activities carried out.

6. The amount of assets traced and seized should be taken into account every time when the performance of units or individual officials is assessed by their superiors. Incentives could be provided for those successful in asset tracing and seizure.

At the level of the Public Ministry, a system of records for the financial criminality cases was established, in which the precautionary measures ordered (micro-statistics) are emphasized, based on which an analysis of the activity of the units and prosecutors according to this criteria may be achieved.

9012/12 GS/ec 18 DG D 2B EN Starting from this data there were awarded to the prosecutors diplomas according to the professional efficiency demonstrated, and with the occasion of the submission of the annual activity reports there were emphasized the units with positive results in this area (for example, within the presentation of the Annual report of activity performed by the Public Ministry in 2011, the General Prosecutor highlighted the activity performed by the prosecutors within the Criminal Investigation and Forensic Section at the PICCJ, which were engaged in the most difficult cases and were active in assets recovery, in a single case there were seized over 135 immovables, as well as other goods for the recovery of a prejudice of approximately 80 million euro).

At the same time, there were organized sessions of debates regarding innovative solutions which were used for the investigation of the corruption cases and economical-financial criminality cases, concluded with the awarding of prizes to the prosecutor’s offices units inside which were instrumented successful cases.

7. Existing legal possibilities of confiscation in cases of serious or organized crime should be applied extensively. The legal possibilities of "extended confiscation" need to be made more effective within the framework of Romanian criminal law. Wide application of confiscation of high-value goods that have been instrumental, in any way, in committing an offence should be encouraged in cases relating to organised crime.

MJ promoted in Parliament two important legislative initiatives covering extended confiscation and assets management.

1. Draft Law for amending and completing some normative acts with a view to improving the recovery activity of seized assets or, as the case may be, entered, according to the law, in the state’s property. The draft Law was approved by the Chamber of Deputies, decisional chamber, on February 21, 2012 and sent to Romanian President on February 29 for promulgation. The draft became Law no. 28/2012, published in the Official Gazette on 22nd of March, 2012.

9012/12 GS/ec 19 DG D 2B EN 2. Draft Law for amending and completing the Criminal Code and law no. 286/2009 on the Criminal Code, which will regulate in the internal law the extended confiscation, aims at transposing in the Romanian law art. 3 of the Council Framework Decision 2005/212/JHA of 24 February 2005 on Confiscation of Crime-Related Proceeds, Instrumentalities and Property, published in the Official Journal of the European Union L 68 from March 15, 2005. The draft Law was adopted by the Senate, as first notified chamber, and also by the Chamber of Deputies, decisional chamber, on 27th of March, 2012. On 4th of April, the draft Law was sent to Romanian President for promulgation.

Please also see answer at Recommendation 4.

8. Pecuniary penalties should be made more available within the framework of criminal law, especially in cases where confiscation cannot be applied effectively. It should be made possible to impose them jointly with imprisonment. Their worth should be proportionate and dissuasive in order to address high-value crimes.

According to basic principles of the Romanian Criminal Code and Criminal Procedure Code, two main sanctions cannot be applied to a perpetrator at the same time for the same offence committed. A criminal fine may be imposed to a perpetrator, but not combined with imprisonment.

In 2006, Romania introduced in the Criminal Code the criminal liability for legal persons and the main penalty is fine between 2.500 RON to 2.000.000 RON. This kind of liability is “all crimes approach” based; it may be applied for all the offences.

The Romanian Criminal Code provides in art. 191: (1) Legal persons, excepting the state, public authorities and public institutions which carry out an activity that cannot form the object of private sector, are criminally responsible for the crimes committed in achieving the aim of their activity, or for the crimes committed in the interest or on behalf of that legal person, if the crime was committed with the guilty form requested by the criminal law. (2) The criminal liability of a legal person shall not exclude the criminal liability of the natural person which contributed, in every way, in committing the same crime.

9012/12 GS/ec 20 DG D 2B EN By interpreting the legal provisions mentioned, it results that for engaging the criminal liability of a legal person, two conditions have to be met: 1. the crime was committed by a natural person who has certain factual relations with the legal person, being a representative or employee of the latter, 2. the crime was committed in achieving the aim of the activity, on behalf or in the interest of that legal person.

In conclusion, the criminal liability of a legal person may be established, in the cases in which the crime was committed in that person’s interest, by a natural person who occupies a leading position within that legal person.

There is no limitation for applying the criminal liability of legal person, it can be applied for all the crimes provided by the Criminal Code and all special laws with criminal provisions, so also regarding ML offense.

The penalties applicable for legal persons are provided by art. 531 of the Criminal Code.

Art. 531 Categories of the penalties applicable to the legal person. The penalties are main and complementary. The main penalty is fine from 2.500 RON to 2.000.000 RON. The complementary penalties are: a) dissolving of the legal person; b) suspending activity of the legal person for a period of 3 months to a year or suspending of one of the activity of the legal person, related to the offence committed for a period of 3 months to 3 years; c) closing of certain working points of the legal person for a period of 3 months to 3 years; d) interdiction of the participation to the public purchasing procedures for a period of 1 to 3 years; e) displaying or disseminating of the conviction decision.

AML Law provides that in the case of ML offences committed by legal persons, the application of one or more complementary penalties referred to in article 53 index 1, para (3) (a) –(c) of the Criminal Code is mandatory.

9012/12 GS/ec 21 DG D 2B EN Art. 23 para 4: If the deed was committed by a legal person, one or more of the complementary penalties referred to in article 53 index 1, para (3) (a) –(c) of the Criminal Code is applied, by case, in addition to the fine penalty.

9. Human-resources policy should be thoroughly reviewed and redeveloped in order to fill remaining vacancies, prevent experienced officers and prosecutors from leaving the service, and, if possible, provide the units involved with additional manpower. Stability and continuity of employment should be considered key factors of HR policy.

The prosecution units were reorganized and the vacant positions were redistributed to the units confronted with a large workload. 115 positions were cut from the structure of the PICCJ and further 12 from several prosecutors’ offices attached to courts of appeal. Those were redistributed to the local offices confronted with the highest deficit of personnel in relation to their workload.

Regarding the police forces, the Directorate General for Management and Human Resources within MAI had as main objective the drafting of a new strategy for developing the human resources of the ministry, on short and long term, and also a detailed plan for the strategy’s employment, that comprise principles, inclusively the stability of the staff and the future action directions. In this way, it gets an insight to the enforcement of the principle related on the staff’s stability, and also the reform of the initial and continues professional training programs for the public order and safety field managed by MAI.

During 2010 – 2011, because of the economic crisis, there was a decrease of number of positions within MAI. In these conditions, the high qualified personnel tend to retire from the system.

The human resources policies, argued in the CSAT meeting from 29th of March 2012, among others, looked on identifying the optimal solutions for the employment of the staff in positions adequate to their specialization, qualifications and competences necessary for each function, in concordance with the specific missions of the MAI departments.

Moreover, it looked on the implementation of a new concept for the career evolution, in which the accent to be put on the obtained professional competences, but also on the running over some compulsory passing points in the career, constituted from the graduation of some specialty courses, career exams, the achievement of the minimal lengths of service in functions category, work profiles or specialties.

9012/12 GS/ec 22 DG D 2B EN In compliance with art. 66 para. 1 from Law no. 360/2002 related on the Policeman Statute, the stability of the policeman at his workplace is guaranteed, the human resources policy of the Romanian Police being in concordance with the above mentioned disposals.

In this context, at the level of the Romanian Police, analyses related to the vacant positions from the fraud’s investigation structures as well as from the structures for combating the financing of terrorism and money laundering are accomplished. Furthermore, the eventuality of functions supplementation will be taken into account in an analysis that will be made at the level of IGPR.

It could be mentioned that a supplementation of the personnel records functions of the structures for combating the financing of the terrorism and money laundering occurred at the Brigade for Combating the Organized Crime Galati.

In the view of achieving the objective of combating the financial criminality, the human resources structures within the Romanian Police will priory employ the vacant functions within the specialty structures with the graduates of the Police Academy `Alexandru Ioan Cuza` and through personnel’s selection from internal source.

10. In the legal framework of the DLAF, its role as a body assisting OLAF in its Community-law based on-the-spot checks should be taken into account.

Based on the recent legal framework of DLAF (Law no. 61/2011 regarding the organization and functioning of Fight Against Fraud Department and Government Decision no. 738/2011 for the approval of the Regulation of organization and functioning of Fight Against Fraud Department – DLAF), its role as a body assisting OLAF in its Community-law based on-the-spot checks is accomplished.

It is to be outlined that an entire chapter from Government Decision no. 738/2011 regulates, for the first time in the Member States, the way of cooperation with OLAF, which proves Romania’s determination in the proper fulfilling of the obligations foreseen by art. 325 from the Treaty on the Functioning of the European Union, but also DLAF’s opening to a structured, qualitative collaboration with OLAF.

9012/12 GS/ec 23 DG D 2B EN Thus, in order to render efficiency and predictability to the actions of the Department in applying the provisions of art. 9 para (2) from Regulation (EC) no. 1073/1999 of European Parliament and Council dated 25 May 1999 concerning the investigations conducted by European Antifraud Office, there was regulated the attitude which the Department should adopt within the cooperation with OLAF, so that the final control reports of the European institution should benefit the same legal value as those of the national institution.

According to art. 23 - 31 of GD no. 738/2011, DLAF cooperates with OLAF, as national Contact Point and national Coordinating Service of Fight against Fraud, as it follows:

1 Cooperation by administrative actions 1.1. DLAF attends the OLAF’s reunions: The Annual Meeting of the Heads of Anti-Fraud Services from EU Member States, OLAF Anti-Fraud Communicator's Network - OAFCN, the Advisory Committee for the Coordination of Fraud Prevention – COCOLAF, as well as sub-groups or other workshops as such. 1.2. DLAF, together with OLAF, carries out professional training programmes and sessions related to the protection of EU’s financial interests.

2. Cooperation by operational means 2.1. DLAF’s and OLAF’s representatives carry out joint on-the-spot controls in Romania, provide mutual operational support/technical assistance during the investigations. 2.2. DLAF can assist OLAF’s investigations abroad. 2.3. If OLAF forwards to DLAF information gathered during external investigations not finalized by a Final Case Report, as the case may be, the Department initiates its own investigations. 2.4. If OLAF forwards to DLAF the Final Case Report, which has suspicion of fraud, the Department notifies the prosecutor’s office in charge, based on OLAF’s report.

3. Cooperation by technical assistance 3.1. OLAF notifies DLAF as regards potential irregularities, frauds or other activities which can affect financial interests of the European Union.

9012/12 GS/ec 24 DG D 2B EN 3.2. DLAF places at OLAF’s disposal all relevant pieces of information and documents regarding any suspicions of irregularities, frauds or other activities which can affect financial interests of the European Union, economic operators and natural entities related to obtaining, carrying out and utilization of European funds, financial programmes and projects, the follow-up of DLAF’s cases or any other information requested, according to the law. 3.3. By OLAF’s request, DLAF forwards all the data regarding the stage of the criminal investigations with suspicions of fraud against EU’s financial interests, and places at OLAF’s disposal copies of indictments issued by prosecutor’s offices and of the decisions issued by courts. 3.4. DLAF manages the requests of technical assistance addressed to OLAF by national authorities and institutions. 3.5. DLAF provides OLAF with all the necessary pieces of information and clarifications as regards the national law to be abided by in protecting the EU’s financial interests in Romania.

4. Cooperation in irregularity reporting DLAF ensures, coordinates and monitors irregularity reporting process between the national institutions and OLAF, providing with the necessary data and clarifications related to this matter and also ensures the forwarding of the information received from OLAF to the entities involved in irregularity reporting.

11. Knowledge of relevant EU legal frameworks, relevant European authorities, such as Europol, Eurojust and OLAF, and available tools, such as AWF, should be promoted among judges, prosecutors and high-ranking law-enforcement officers. These topics should be duly reflected in the curricula of relevant training institutions, such as the National Institute of Magistracy or the Police Academy.

9012/12 GS/ec 25 DG D 2B EN Beginning with 2004 and even more, after 2007, when Romania became member of the European Union, INM has been duly aware of the increasing need of training in the financial crime, investigating economic crimes and international judicial cooperation in criminal matters. For this reason, INM had tried to take supplementary measures in order to insure a proper training of the practitioners (judges and prosecutors) that manage complex financial crime cases. The centralized and decentralized training curricula of both 2010 and 2011 paid a special attention to the three main topics mentioned above. a. At centralized level the topics of the seminars in the field of financial crimes and anticorruption included: a.1. In 2010 in the field of financial crimes, anticorruption and cybercrime, 25 seminars were organized, as follows: - Anticorruption: 15 seminars, attended by 250 participants (114 judges, 134 prosecutors and 2 experts - assimilated to judges and prosecutors); - Financial crime - 9 seminars attended by 146 participants (42 judges, 104 prosecutors); 2 of these seminars were focused on investigating techniques in financial crimes cases;

- Cybercrime - 1 seminar attended by 22 participants (8 judges, 13 prosecutors and 1 expert - assimilated to judges and prosecutors).

Also, in 2010, in the field of judicial cooperation in criminal matters, 5 seminars were organized, attended by 92 participants (35 judges and 57 prosecutors). a.2. In 2011, in economic and financial crime field, there were 4 activities, attended by 80 participants (14 judges and 66 prosecutors); 2 of these seminars were focused on investigating techniques of financial crimes cases; In 2011 in the field of judicial cooperation in criminal matters 5 seminars took place, being attended by 108 participants (48 judges and 60 prosecutors). a.3. In the 2012, responding to requests from magistrates, INM included in the Centralized Continuous Training Programme 17 seminars in the field of financial crime and cybercrime and 5 seminars in the field of judicial cooperation in criminal matters.

9012/12 GS/ec 26 DG D 2B EN b. At decentralized level, the training sessions are organized by the courts of appeal and prosecutor's offices according to their training plans, within the framework of the decentralized programme established by the INM for each year. INM insures the quality of the training sessions by encouraging the contact points from the level of the appeal courts to have the sessions moderated by INM trainers in the mandatory fields of each year's programme; the INM puts at the disposal of magistrates in charge of decentralized training at the courts of appeal and prosecutor's offices the list of INM trainers in the mandatory fields and covers all the costs related to the INM trainers that attend a decentralized training session. b.1. For 2010, within the minimum number of 10 seminars for each court of appeal and each prosecutor's office, the mandatory fields included: - Courts of appeal: 1 seminar in the field of financial crime and anticorruption; 2 seminars in the field of international judicial cooperation; - Prosecutor's offices: 1 seminar in the field of financial crime and anticorruption; 1 seminar in the field of international judicial cooperation and EU Law. In 2010 in the field of financial crime and anticorruption there were 52 training sessions (16 by the courts of appeal and 36 by the prosecutor's offices). In the field of international judicial cooperation were organized 39 training sessions (21 by the courts of appeal and 18 by the prosecutor's offices), with an average of 20 participants/training session. b.2. For 2011, within the minimum number of 10 seminars for each court of appeal and each prosecutor's office, the mandatory fields included: - Courts of appeal: 1 seminar in the field of financial crime and anticorruption; 2 seminars in the field of international judicial cooperation; - Prosecutor's offices: 1 seminar in the field of financial crime and anticorruption; 1 seminar in the field of international judicial cooperation and EU Law; 5 seminars in the field of specialized training, including crimes regulated by special laws. In 2011 in the field of financial crime and anticorruption and international judicial cooperation were organized all the mandatory seminars with an average of 20 participants/training session. b.3. For 2012, within the minimum number of 10 seminars for each court of appeal and each prosecutor's office, the mandatory fields include: - Courts of appeal: 1 seminar in the field of financial crime and anticorruption; 1 seminar in the field of international judicial cooperation;

9012/12 GS/ec 27 DG D 2B EN - Prosecutor's offices: 2 seminars in the field of financial crime, anticorruption and cybercrime; 1 seminar in the field of international judicial cooperation and EU Law; 6 seminars in the field of specialized training, including crimes regulated by special laws and investigating techniques.

Regarding the professional training of police officers, combating the financial criminality and knowing the legal instruments of the EU relevant authorities (EUROPOL, EUROJUST, OLAF) are part of curricula plan of the Police Faculty within the Police Academy `Alexandru Ioan Cuza`, as follows:

a. Licentiate’s university studies Analytical programs of the specialty studies: - Investigation of the Economical-Financial Criminality (2nd year); - Investigation of Frauds (3rd year); - International Police Cooperation (2nd year).

The mentioned analytical programs were conceived according to the joint curriculum adopted by CEPOL (European Police College) - the join curriculum in the field of money laundering, the joint curriculum in the field of EUROPOL, the joint curriculum in the field of European Police Cooperation.

b. Master’s university studies (studies programs):

- Management of Frauds` Investigation; - Management of International Police Cooperation.

Moreover, in the analytical programs of the courses for career initiation, addressed to the officers employed from an external source, that are deployed within the Institute for Public Order Studies, are provided 6 hours, from which 6 - teaching hours and 4 - practical work hours, related on the `Money Laundering` theme. During this theme, the EU relevant authorities, as EUROPOL, EUROJUST and OLAF, are presented to the course attendees. Furthermore, the police officers within the Directorate for Frauds` Investigation attended at three analysis briefs, at the level of EUROPOL, AWF MTIC AWF COPY and AWF SMOKE.

9012/12 GS/ec 28 DG D 2B EN According to the new National Anticorruption Strategy (SNA) 2012 – 20151, DLAF is responsible for the implementation of the Measure 3.3.2 “Sharing the recent European approach to the protection of EU financial interests through legislative or judicial means, with the representatives of the Judicial Authority and of the Parliament”.

This measure is necessary to accomplish the SNA Specific Objective no 4.3 - Ensuring effective protection of the EU financial interests in Romania by legislative, operational or informational means (BM 4) – which is part of the General Objective 4 - Fight against corruption by administrative or criminal measures.

In order to fulfill its obligations, during the 2nd semester of the 2013, DLAF will organize a number of two training sessions/round table for the representatives of the Judicial Authority and of the Parliament.

12. Mechanisms for management of seized goods should be made more flexible and allow for the items to be cashed.

Please see answer to Recommendation 7.

13. A central real-estate register should be established, providing relevant law-enforcement and prosecuting authorities with easy access to necessary data.

ANCPI is a public institution subordinated to the Romanian Ministry of Regional Development and Tourism, set up in 2004 by reorganising the National Office of Cadastre, Geodesy and Cartography and by taking over the land registration activity from the Ministry of Justice.

In each county, there is a cadastre and real estate publicity office, subordinated to ANCPI. Within each office one or more bureaus of cadastre and real estate publicity are set up. Several administrative units (commune, town, city) are assigned to each one of the last.

1 The Romanian Government adopted the National Anticorruption Strategy (SNA) 2012 – 2015, through Government Decision no. 215/2012.

9012/12 GS/ec 29 DG D 2B EN Integrated Informatic Cadastre and Land Book System, centralized at national level (process started in 2006 and finished in December 2011), provides information on registered real estate nationwide. The database is centralised at national level and contains information relating to real estate that is the property of natural individuals and corporate bodies, the date when such property was obtained, the date when such properly was transferred, the existence of special mentions on goods (sequestration, mortgage).

According to legal provisions, ANCPI may collaborate with Romanian or foreign individual and legal specialty personnel, under the law, to achieve objectives of common interest, according to its activity.

By applying these provisions, ANCPI has concluded cooperation agreements with other public institutions (MJ – Romanian ARO, National Integrity Agency, ANAF, ONPCSB, IGPR), allowing them on-line access to informatic integrated system of cadastre and land book.

Information on the national geodetic network, official maps, cadastre and land registration are public information, representing public property of the state, and are administered by ANCPI and by subordinated units. These data are available and accessible to any natural or legal person for a fee, except for information relating to national security. Certain products are provided for free to specific institutions.

In accordance with new regulations of the Civil Code, entered in force at 1st of October 2011, any person, without being held to justify an interest, can investigate any land book and other documents with which it completes, by law. By exception, the map of documents which formed the basis of performing entries in the land book may be consulted by any interested person, under the law on personal data processing and free movement of such data.

Approximately 30% of the land books are present into electronic form (generated or converted). Thus, the search by specific criteria is simply and faster to use. ANCPI is trying to input data from the paper land books into digital form. This conversion is actually made also by the employees of the local county offices.

9012/12 GS/ec 30 DG D 2B EN We state that the number of immovables registered in the land books represents a percentage of the total number of the existing immovables. This is a consequence of the fact that registration of property rights in the land book is carried out at owner's request.

Identification and location of the immovable located within the city limits is difficult, due mainly to faulty application of property laws.

Furthermore, the information from the old registries keeping record of the properties (transcription and inscription registries), were scanned and converted into digital form, and will be available on- line for consulting purpose, in the near future.

Also, all issued property titles have been scanned and included in a database, which was made available for consulting to the local land commissions.

ANCPI completed in 2008-2010 projects for converting traditional archives. A number of approximately 2 million land books were scanned and converted into digital form.

ANCPI completed also in 2010 a project on the conversion of the cadastral documentation, from analog to digital formal, and the achievement of database and a digital archive at a national level.

Out of 35 local counties offices included in the project, 2,8 billion cadastral documentation were taken and scanned.

The funding for these projects was provided from self-financing resources. Due to the international economic crisis which affected the national economy, the changing of the funding - from self-financing to state budget, ANCPI can barely maintain the functioning of the system.

The repercussions of underfunding is reflected in the loss of the specialized personal, the put back of the commitments, the inability of the institution to provide land and estate services to operational standards (increasing of the time necessary for solving the requests and making it more difficult to respond into the proper time to the request addressed by the National Integrity Agency, ANAF, ONPCSB, IGPR, Romanian ARO).

9012/12 GS/ec 31 DG D 2B EN Trying to facilitate the access to the information registered into the cadastre and land registry, specific legislation has been amended for the purposes of mentioning the personal identification number in the documents related to ownership. However, there are, even now, court decisions that do not contain this information.

Facing all this facts ANCPI needs additional funds from the state budget or other sources in order to continue the process of scanning and indexing land books and cadastral documentation.

14. The ONPCSB should enhance possibilities of data sharing in order to foster proactive, intelligence-led policing. The time limit of 30 days for responding to inquires by the ONPCSB should be shortened. Reporting authorities should be able to communicate electronically with the office.

Starting from August 2010, at the operative directorate level – the Analysis and Processing Information Directorate, the Compartment for Preliminary Analysis was established. This department has as one of its tasks, the immediate sending of data and information obtained according to the AML Law to PICCJ or to the relevant structures of the Public Ministry.

On the same period a new Methodology for Analysis and Processing Information was elaborated (entered into force by the Office’s Board Decision no. 675/20.08.2010). This decision provides that the data and information which have to be submitted to the prosecutor’s units, by their request, to be forwarded in a standardised form, in order to systematically approach the information available to the Romanian FIU.

In the second half of 2010, within the Analysis and Processing Information Directorate analysis software was tested, in order to verify its usefulness within the analysis and processing information process. In this sense, the available information of the Romanian FIU was systematized, so that it can electronically create charts and relational maps, being submitted to the General Prosecutor’s Office by the High Court of Cassation and Justice along with the notifications on solid grounds of money laundering.

9012/12 GS/ec 32 DG D 2B EN Starting with 2011, several meetings between the representatives of the Romanian FIU and of the Romanian Banks Association took place, focusing on the identification of the best solution for sending the information requested by the Office to the banking institutions, in accordance with the art. 5 para 1 of AML Law, in a structured form that allows their informatics processing in a short period of time, at ONPCSB level.

To properly implement this new methodology, which reflects the agreement of the Romanian Banks Association and ONPCSB, supported also by the credit institutions, a new Protocol is to be concluded, having as main objective the transposition of the article 5 para (2) of the Law no. 656/2002, with subsequent modifications and completions, into the secondary legislation, stipulating the contact persons of the involved parties, as well as how to address the particular issues that may arise in practice.

It is estimated that in approximately three months, the banking entities will start to submit the information in this manner.

From the financial analysis performed by the Analysis and Processing Information Directorate in the year 2011, typologies of money laundering identified during in-depth financial analysis were extracted, as segment representative for the evolution of the money laundering phenomenon. They revealed the operating modes and the types of financial flows used. These typologies were published in the 2011 Activity Report of ONPCSB and were sent to the prosecution authorities (police and prosecutor's office) and also to the fiscal authorities (GF and ANAF), for information.

This document provides information on trends and patterns used in money laundering, in order to combat them effectively.

During 2010-2011, the enhancement of the exchange of information between ONPCSB and the law enforcement authorities and the financial control agencies in the field of combating tax evasion, especially the implementation of normative acts issued by the Government of Romania represented a priority for the members of the ONPCSB Board. The meetings organized in this context, attended by the representatives of the MJ, PICCJ and the Romanian Court of Accounts in the ONPCSB Board, together with the Office’s President generated specific analysis performed by these law enforcement authorities, focusing mainly on the criminal areas with a risk for the economy. This initiative was intended to lead to measures for seizure/freezing of funds which represent proceeds of crime.

9012/12 GS/ec 33 DG D 2B EN In the beginning of 2012, the access to the Integrated Information System became operational at the Romanian FIU level; the financial analysts will retrieve and analyze the available information and in the cases provided by the law this will be submitted, also, to the PICCJ or to the relevant prosecutor’s units.

Regarding the time limit of 30 days for responding to inquires by the ONPCSB, it is to be mentioned that the AML Law was subject to legislative amendments, which were finalised at the end of 2011, by adoption of the Law no. 238/2011. The text of the amendment related to the time limit of 30 days, submitted to the Chamber of Deputies, as decisional chamber, in accordance with the Constitution of Romania provisions, is as follows: „The paragraph (2) of the article 5 is amending and shall have the following content: (2) The persons provided for in the art.8 shall submit to the Office the requested data and information, taking into consideration the urgency character of the request, but not later than 30 days after receipt, in a format established by decision of the Office’s Board.”

In respect to this amendment, we mention that this was discussed by all relevant specialty commissions of the Chamber of Deputies, appointed for that purpose on the draft of the normative act regarding the Law for approval of the GEO no. 53/2008, but this was finally rejected by the Legal Commission of the Chamber of Deputies. In fact, ONPCSB has no practical problems as regards obtaining such data and the new format established by ONPCSB and the Romanian Banks Association for sending data according to the AML Law, by credit institutions, fully ensures the efficiency in the context of informatics processing of this data.

Regarding the reporting system, the On-line Reporting System for electronically reporting and communication with the reporting entities became operational on the 1st of September 2010. The information is sent in a structured and encrypted form.

By now, accounts for 288 entities have been created, out of which 95 have sent reports, replies to requests or other information and data. The reports are originated from the following categories of entities: credit institutions, Romanian branches of foreign banks, financial service institutions, non- banking financial institutions, consulting companies, casinos, public notaries, natural and legal persons who sell goods and services, associations and foundations, car dealer.

9012/12 GS/ec 34 DG D 2B EN Considering the dynamics of the legislative framework and the variety of the reporting entities categories, the system requires a continuous adaptation, performed so far by extending the maintenance contract, which needs to be prolonged, also, in the future (sustainability measure ensured by ONPCSB).

In order to spread the information about the application and to determine its use by many reporting entities, during 2010 and 2011, training sessions have been organized in several regions of the country, attended by all categories of reporting entities, namely, credit institutions, public notaries, lawyers, insurance companies, financial investment companies, non-banking financial institutions, financial auditors, accountants, casinos, real estate agencies, foreign currency exchange offices, etc. (54 training sessions and 2470 persons trained). The training sessions in this field continue also during 2012, a new professional training plan being approved by ONPCSB.

9012/12 GS/ec 35 DG D 2B EN 15. In light of the future practice procedural changes should be considered in order to guarantee that "immediate execution" of a foreign order provided for in Article 5 of Framework Decision 2003/577/JHA takes place.

The recommendation aims at the provisions stipulated by Article 5 para 1 of the FD which recites that “the competent authorities of the executing State […] shall forthwith take the necessary measures for its immediate execution in the same way as for a freezing order made by an authority of the executing State”. Therefore, the FD does not provide for a definition of the term immediate, moreover the procedure must take place in accordance with the domestic provisions.

The relevant provisions of the Romanian law, namely art. 225 of Law 302/2004 on international judicial cooperation in criminal matters, republished, states that at any stage of the proceedings, the Romanian judicial authorities are obliged by law to recognize any freezing order without any further formality and to take forthwith the measures required for its immediate execution. In our opinion these provisions are in line with the FD. There is also established a maximum term of 5 days within which the competent Romanian judicial authority (prosecutor’s office or court) must take the decision. This deadline must be read though in conjunction with the provisions of Art. 225 mentioned above.

In the evaluation report it was stated that “As there are no practical cases to be analyzed it is hard to assess whether the 5 day period guarantees the immediate execution foreseen in art. 5 of the FD”.

In order to have a concrete overview of the application of the Freezing Orders compared with the old letters rogatory issued based on the Convention from 20.04.1959 on mutual assistance in criminal matters, and also to have an assessment of the relevant provisions in the field, the Romanian MJ has solicited from the courts and prosecutor’s offices throughout the country.

9012/12 GS/ec 36 DG D 2B EN From the preliminary analysis of the collected data it emerged that the majority of the freezing requests received from the UE Member-States are still based on the 1959 Convention (MLA requests) and not on the FD, consequently there is still too early to assess the effectiveness of the application of the relevant provisions related to the FD when executing a foreign order coming from a UE Member-States.

From preliminary information collected, it seems that no major difficulties were encountered in executing freezing orders based on FD and no time issues have been invoked. After the final examination of the current situation, should the necessity of procedural changes be drawn from the main conclusions of this evaluation, actions will be taken accordingly.

16. Specialised panels in medium and higher level courts should be established in order to reflect specialised prosecuting services (DNA and DIICOT). The judges involved should undergo specific training which covers financial issues.

At national level, there is no need to establish specialized panels following the competence of DNA and DIICOT. The number of criminal files initiated by the 2 specialized prosecution services is relatively low in comparison with total number of criminal files. Establishing such specialized panels, the principle of random distribution of files between panels dealing with criminal files cannot be applied anymore. For example, there are courts of appeal which have only 2 criminal panels; having one dedicated only to corruption and organized crime cases, the other one will have to deal with all other criminal files. Such an outcome is not acceptable.

On the other hand, MJ, INM, PICCJ and others developed in the last 2-3 years a range of programs and seminars for judges, prosecutors and police officers, dedicated to improve their skills in countering corruption and organized crime. For details, please see answers at Recommendation 5 and 11. Handbooks for investigators specialized in countering corruption and financial crimes were drafted and disseminated and are being used in day to day work.

9012/12 GS/ec 37 DG D 2B EN 17. A national case-management system should be established in order to avoid overlaps and parallel investigations.

At the Public Ministry level, currently, a data basis containing all the registered files at the level of the entire country (ECRIS 3) is being developed, database allowing the interrogation by several criteria, making possible the avoidance of overlapping or parallel investigations. An application called Global Person Search it is completed, which allows the identification of all the files where a certain person is being investigated, at national level.

At the Romanian Police level, the implementation of the National System for Incidents Reporting is in progress and it is a complex informatics system that allows the registration of all the incidents/events pointed out to the Romanian Police, inclusively criminal complaints that subsequently are registered as criminal files, are solved and automatically allocated to the policemen for resolving them.

18. The national desk at Europol should be strengthened. Participation in AWF SUSTRANS should be considered.

The adoption of the Law no. 55/19.03.2012 regarding the cooperation of Romania with the European Police Office (Europol) set up the legal framework for enforcing the Council Decision 2009/371/JAI establishing this European law enforcement agency.

The Chapter III of the above mentioned law provides the main channels of cooperation between Romania and Europol, through the National Unit that ensures the single point of contact with this organization, or directly, in certain situations especially determined.

Also, the Chapter IV of the law refers to the information exchange procedure with Europol and to the direct consultation of the Europol informatics system by the relevant authorities, namely: MFP, SRI, Public Ministry, courts, ONPCSB, Ministry of Environment and Forests and MJ – Romanian ARO.

9012/12 GS/ec 38 DG D 2B EN Regarding the cooperation between ONPCSB with Europol, we would like to mention the following: - The representatives of the Romanian FIU and Europol attend the joint meetings of the EU FIU Platform, regularly organized by the European Commission services; - Following the invitation sent by the FIU.NET Bureau in August 2011, ONPCSB became Partner, with voting and decisional rights, in the new project „FIU.NET Unlimited HOME/2011/ISEC/MO/FIU.NET”, funded by the European Commission and conducted during the period 1st November 2011 – 1st January 2014, thus being regained the Partner status previously held by the FIU in the project "FIU.NET Development Action 2007-2009". The new project primarily aims to ensure an uniform transition of the FIU.NET network, through which it exchanges information on suspected cases of money laundering and terrorist financing at EU level, for its integration into the structure of Europol, starting with January 2014, according to the EU FIU’s decision adopted by consent at the meeting organized by the European Commission services, on June 14, 2010, and in accordance with the "Action Plan for transition of FIU.NET to Europol".

During the transition phase decisions on the topics covered by this process will be adopted, including issues related to the exchange of information performed by the FIUs, the coordination of the EU FIU’s activities and the establishment of a secured framework that respects laws on personal data protection.

On this occasion, we would like to mention that ONPCSB is member of the FIU.NET network, since 2004, following the Regional PHARE Project 2003-2005, FIU Romania being one of the active FIU’s as regards the exchange of information and cooperation with the foreign similar institutions, within this platform.

As regards the Romanian attendance at the SUSTRANS analysis brief, the International Police Cooperation Center manifests its entire opening related to the support of this type demarche, but this direction initiative belongs to the units and institutions having attributions in the field of preventing and combating the money laundering. Directorate General for Combating the Organized Criminality benefited from the SUSTRANS AWF analyzes through the Interpol National Office, but it did not provide data and information to SUSTRANS AWF.

9012/12 GS/ec 39 DG D 2B EN The present progress report contains 2 annexes, as follows: 1. Annex 1 – DLAF’s new legal framework 2. Annex 2 – Progress presented by ONPCSB – Romanian FIU

Acronyms used:

AML – Anti Money Laundering ANAF – National Agency for Fiscal Administration ANCPI - National Agency for Cadastre and Land Registration BNR – National Bank of Romania CNVM - National Securities Commission CSA - Insurance Supervision Commission CSAT – Supreme Council for National Defence CSSPP - Private Pension System Supervisory Commission DIICOT - Directorate for Investigating Organized Crime and Terrorism DLAF – Department for the Fight against Fraud DNA – National Anticorruption Directorate FD – Framework Decision FG – Financial Guard INM – National Institute of Magistracy MAI – Ministry of Administration and Interior MAI – IGPR – Ministry of Administration and Interior, General Inspectorate of Romanian Police MFP – Ministry of Public Finance MJ – Ministry of Justice ONPCSB – National Office for Preventing and Countering Money Laundering (Romanian FIU) PICCJ – General Prosecutor’s Office attached to the High Court of Cassation and Justice SRI – Romanian Intelligence Service

9012/12 GS/ec 40 DG D 2B EN Annex I

DLAF’s new legal framework

The years 2009 and 2010 were characterized by legal changes in DLAF organization and functioning which led to difficulties in the proper fulfillment of national and European obligations. The two Government Emergency Ordinances mentioned by the Report (no. 3/20091 and no. 94/20092), which replaced the initial legal act of DLAF (G.E.O. no. 49/20053), were successively ruled unconstitutional by the Romanian Constitutional Court.

Since May 2011, DLAF’s legal framework was restored by the Law no. 61/2011 regarding the organization and functioning of the Fight against Fraud Department – DLAF and Government Decision no. 738/2011 for the approval of the Regulation for the organization and the functioning of the Fight against Fraud Department – DLAF. 2011 was decisive for DLAF’s history (started in 2005), by the added value to the institutional construction: The Department acquired the recognition of its importance in the picture of the national administration reported to its European role, on the basis of its new solid and predictable legislative framework, of organization and functioning. These two normative acts ensure the decisional independence and institutional stability, by granting the legal personality to the institution; they also regulate, in detail, the structure, the attributions of each part of the administrative body of the Department and DLAF staff acquired the quality of public servant, with a special statute conferred by the attributions and responsibilities, derived from the necessity that Romania fulfills the obligation foreseen by art. 325 TFEU.

Another set of modifications refers to the operational competences of the Department, including a series of terminological clarifications, the extension of the control tasks upon possible irregularities, frauds or other activities which affect the Union’s financial within the funds management process, the appropriate completion of the provisions regarding the manner of administrative and judicial follow-up of the control acts.

1 Government Emergency Ordinance no. 3/2009 for the modification and completion of normative acts regarding the organization and functioning of structures within the Government’s working apparatus 2 Government Emergency Ordinance 94/2009 for assuring the continuity of the activity of structures within the Government’s working apparatus 3 Government Emergency Ordinance no. 49/2005 regarding the establishment of reorganization measures in the central public administration

9012/12 GS/ec 41 ANNEX I DG D 2B EN The specificity of DLAF activity was explained in detail and the competences of the Department were extended, being regulated the possibility of carrying out administrative investigations with regard to possible illegal activities which affect the European Union’s financial interests on the level of management of European funds or forming own resources of the European budget, according to art. 8 lett. c from Law no. 61/2011.

In line with the European tendencies (reflected in OLAF’s reform which is under debating by EU Council and European Parliament), taking into consideration the Chart of Fundamental Rights of the European Union, but also the national legal rigors, for the first time are established the rights and obligations of DLAF investigators, for the purpose of assuring the guarantee of the observance of the rights and freedoms of the controlled entities.

It should be stressed that the DLAF control actions are carried out in compliance with the standards of criminal proceedings according to art. 10 and art. 11 para 3 from the Law no. 61/2011, respectively, art. 14 and art. 17 from the Government Decision no. 738/2011.

The legal framework was also completed by introducing some contraventional sanctions for failure to comply with a specific obligation in exercising the control function in the field of protecting the financial interests of the European Union.

In its essence, the Department is the contact institution of European Antifraud Office– OLAF within the European Commission and, at the same time, ensures, supports and coordinates, as the case may be, the fulfillment of Romania’s obligations with regard to the protection of European Union’s financial interests, as per article art. 325 of the Treaty on the Functioning of the European Union, as follows: - coordinates, on national level, the adoption of legislative, administrative and operational measures, for combating fraud and any other illegal activity affecting the European Union’s financial interests. These measures should be similar to the ones adopted for combating the fraud affecting the national financial interests; - cooperates with the authorities of the Member States, with the European institutions or with other European financial entities, for the purpose of protecting the European Union’s financial interests; - draws up, in cooperation with other national institutions and transmits Romania’s contribution to European Commission’s Annual Report regarding the measures adopted for the application of the provisions of art. 325 from the Treaty on the Functioning of the European Union.

9012/12 GS/ec 42 ANNEX I DG D 2B EN In this regard, the Department fulfills the following functions: a) the function of coordination of the fight against fraud in order to assure effective and equivalent protection of the European Union’s financial interests in Romania; b) the function of control, in order to identify irregularities, frauds and any other illegal activities that affect the European Union’s financial interests in Romania; c) the regulatory function, which ensures the drawing up of the legal and institutional framework necessary to the protection of the European Union’s financial interests in Romania; d) the function of representation, which ensures Romania’s participation in advisory committees, working groups and also in communication and information exchange networks, regarding the protection of the European Union’s financial interests.

Cooperation Protocols During the year 2010, the following cooperation agreements were concluded: - with the General Directorate for Intelligence and Internal Protection within the Ministry of Administration and Interior, that aims at the cooperation and mutual assistance in preventing and combating illicit acts and deeds affecting the financial interests of the European Union in Romania; - with the Ministry of Agriculture and Rural Development, for the purpose of establishing a procedure for interinstitutional cooperation regarding the control of operations financed through the European Agricultural Guarantee Fund system; - with the National Trade Register Office, that targets at the access to the national database of economic operators.

Given the need to develop some partnerships with other institutions involved in the protection of the EU’s financial interests in Romania, during the year 2011, 2 cooperation agreements were concluded, in addition to the bilateral cooperation forms, already reached: - with the National Authority for Regulating and Monitoring of Public Procurement and Competition Council, in order to provide mutual operational support for the activities developed concerning fraud or irregularities in the field of public procurement or regarding collusive biddings in the public procurement procedures of EU funds, organized in Romania; - with the Certifying and Payment Authority, with the aim to improve the exchange of infromation about suspicions of fraud/irregularities deterred during the implementation of the programmes funded by the European Union;

9012/12 GS/ec 43 ANNEX I DG D 2B EN In the same time, DLAF concluded a cooperation agreement with the Special Tellecommunications Service, for the optimal management of the informatic and communications system and of DLAF’s web page www.antifrauda.gov.ro.

Training Activities

• International conference on "Protecting EC’s financial interests in the Western Balkans – means and challenges", 22 - 23 March 2010, Timisoara, Romania, organised under HERCULE II Programme

Under HERCULE II Programme, DLAF, in cooperation with OLAF and the Academy of European Law in Trier (ERA), organised in Timisoara, during 22 - 23 March 2010, an international conference on „Protecting EC’s financial interests in the Western Balkans – means and challenges”. The conference aimed to be a regional forum on exchange of good practice between law enforcement and judicial representatives from countries in the Western Balkans and from EU member states which are bordering the Western Balkans, given the latter’s special responsibilities with regard to protecting EU’s own resources at the South Eastern border of the Union. This international event brought together 56 representatives from management level within the judicial and law enforcement authorities with expertise in protecting the financial interests of the European Union (customs authorities, prosecutors, police, and ministries of finance) from the following countries: Albania, Croatia, Macedonia, Serbia, Bosnia-Herzegovina, , Hungary, Italy, , Montenegro and Romania.

• The Twinning Light Project “Strengthening Croatian AFCOS System with the aim of protection of EU financial interests”, financed under EU IPA 2007 Programme for Croatia, October 2010 – June 2011

The project was implemented between 7 October 2010 - 7 June 2011 and consisted in granting technical assistance by a team of 4 DLAF experts. The objective of this project was the enhancement of Croatian AFCOS System (Anti-Fraud Coordination Structure) for efficient coordination of legislative, administrative and operational activities with the aim of protecting the EU’s financial interests and cooperation with the European Anti-Fraud Office (OLAF). Furthermore the project aimed to strengthening the coordinative role of the Ministry of Finance of the Republic of Croatia, Independent Department for Combating Irregularities and Fraud.

9012/12 GS/ec 44 ANNEX I DG D 2B EN Through the implementation of this project, the Croatian AFCOS system strengthened and further developed in the field of prevention, detection, reporting and follow-up of irregularities and fighting fraud, corruption and other type of irregularities with regard to the protection of the EU financial interests.

This contract represents the first contract of granting technical assistance, implemented entirely by Romania, the involvement of DLAF team of experts being appreciated both by the Croatian partners and on European plan.

• HERCULE II 2011 Project “Fight against frauds affecting EU’s budget - Sharing the Romanian experience with the Croatian authorities”, 12 – 29 March 2012

As a continuation of the good cooperation between the Romanian and Croatian AFCOS, DLAF achieved in Bucharest (Romania) and Zagreb (Republic of Croatia), the Project “Fight against frauds affecting EU’s budget - Sharing the Romanian experience with the Croatian authorities”, implemented during 12 – 29 March 2012.

The Project was co-funded by the European Commission (OLAF) under the Hercule II 2011 Programme and organised in cooperation with the Independent Department for Combating Irregularities and Fraud – IDCIF within Ministry of Finance, Republic of Croatia.

The purpose of the Project was to share to the Croatian officials DLAF’s experience as a national AFCOS (Anti-Fraud Coordination Service) and national contact institution with OLAF, following the accession to EU. The activities of the project point on raising awareness and exchanging experience and best practice in the areas of investigation techniques, irregularity reporting, recovery and follow-up, cooperation with OLAF and similar bodies from other MS.

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9012/12 GS/ec 45 ANNEX I DG D 2B EN Annex II

Progress registered in the National Office for Prevention and Control of Money Laundering specific activity (ONPCSB – FIU Romania), since the approval of the GENVAL Evaluation Report of Romania on the Fifth Round of Mutual Evaluations "Financial Crime and Financial Investigations", adopted in March 2010.

Important steps have been made by the FIU Romania, since the adoption of the GENVAL Evaluation Report of Romania on the Fifth Round of Mutual Evaluations "Financial Crime and Financial Investigations", in order to strengthen the national AML/CTF system capacity and to enhance the efficiency of the activity. In this regard, we would like to mention:

9 During 2010-2011, one of the measures implemented at national level for the efficiency of the inter-institutional cooperation in the field was the adoption of the National Strategy for Preventing and Combating Money Laundering and Terrorism Financing, according to the Supreme Council for State Defence Decision no. 72 of 28 June 2010. The main objectives of the Strategy are: - Objective I. Enhancement of the national capacity of prevention and combating of money laundering and terrorism financing; - Objective II. Optimization of the available tools and enhancement of the specialization level of the personnel from relevant institutions in the field; - Objective III. Consolidating Romania’s role in international mechanisms and bodies in the field of preventing and combating money laundering and terrorism financing. An Action Plan, aimed to be a proactive tool and a programmatic document for the implementation of the objectives included in the National Strategy for Prevention and Combating Money Laundering and Terrorism Financing, was approved, in September 2010, by all competent authorities in the field, in a Cooperation Protocol. The document comprises measures, activities and deadlines over which the Romanian authorities have the responsibilities, and the measures included in this Plan are enforced with the support of:

9012/12 GS/ec 46 ANNEX II DG D 2B EN - The Inter-institutional Working Group (IWG) formed by the designated specialists of the authorities with responsibilities in the field, which ensures a permanent monitoring of the status of the actions. The IWG participates to periodical and extraordinary meetings, whenever the case; - The Secretariat ensured by the representatives of the Romanian FIU, which coordinates the performance of the activities under the Action Plan umbrella, assures direct communication between the partners, and elaborates periodical reports on the status of the activities. Based on the measures included in the Action Plan, studies, guidelines and analysis on detecting vulnerabilities and risks to ML/TF are elaborated and periodical meetings between the main actors involved in prevention and combating money laundering and terrorism financing field are taking place.

9 Adoption of a pro-active approach as regards the analysis performed by the FIU to the investigative and prosecution activity: The relationship between the Romanian FIU and the General Prosecutor’s Office by the High Court of Cassation and Justice (PICCJ) identified new dimensions, dedicated in particular to increase the quality of the notifications sent by Office to PICCJ. The new direction of proactive use of legislative instruments assigned to the FIU (here, referring to requests for information made by prosecutor’s units which are responsible according to the provisions of the art. 6 para. 4 and art. 5 of Law no. 656/2002, with subsequent modifications and completions, and the submission of notifications to PICCJ, including solid grounds of money laundering and terrorist financing, in accordance with the article 6 para. 1 of the Law no. 656/2002, with subsequent modifications and completions), is one of the effects of implementation of the Protocol of cooperation between PICCJ and ONPCSB, which was finalized in 2010. Based on this initiative, the National Office for Prevention and Control of Money Laundering made significant efforts to:

- Re-evaluate the risk indicators used in the analysis process; - Modify the internal methodology for analysis and processing of information; - Set up, in August 2010, the Compartment for Preliminary Analysis (CAP), for the efficiency of the financial analysis process, by selecting the STRs depending on their risk level. CAP is acting on a risk based approach, as an advanced instrument for filtering the high number of STRs received by the Office. The result adds value for the operational activity of the FIU, because only the STRs with high risk level are distributed to the in-depth financial analysis departments.

9012/12 GS/ec 47 ANNEX II DG D 2B EN On the same time, CAP is a structure established with the purpose to accelerate the process of solving the punctual requests sent by prosecutor’s units, according to the provisions of the art. 6 para. (4) and (5) of the Law no. 656/2002, with subsequent modifications and completions (AML/CTF Law).

9 IN DECEMBER 2011, THE ROMANIAN PARLIAMENT ADOPTED THE LAW NO.238/2011 FOR THE APPROVAL OF THE GOVERNMENTAL EMERGENCY ORDINANCE NO. 53/2008 FOR AMENDING AND COMPLETING THE LAW NO. 656/2002 ON PREVENTION AND SANCTIONING MONEY LAUNDERING, AS WELL AS FOR SETTING UP SOME MEASURES FOR PREVENTION AND COMBATING TERRORISM FINANCING. THIS NORMATIVE ACT INCLUDES NEW LEGISLATIVE MEASURES, ADOPTED IN ORDER TO COMPLY WITH THE RECOMMENDATIONS INCLUDED IN THE MONEYVAL REPORT OF THE COUNCIL OF EUROPE OF THE THIRD ROUND DETAILED ASSESSMENT ON ROMANIA IN THE FIELD OF COMBATING MONEY LAUNDERING AND TERRORISM FINANCING. THE MAIN AMENDMENTS AND COMPLETIONS BROUGHT TO THE GEO NO. 53/2008 ARE:

- THE FIU ROMANIA COMPETENCE TO SUSPEND A TRANSACTION AT A FOREIGN FIU REQUEST („THE OFFICE MAY DISPOSE, BY THE REQUEST OF THE ROMANIAN JUDICIAL AUTHORITIES OR OF THE FOREIGN INSTITUTIONS WITH SIMILAR ATTRIBUTIONS AND WITH THE OBLIGATION OF KEEPING THE SECRECY IN SIMILAR CONDITIONS, THE SUSPENSION OF PERFORMING A TRANSACTION, WHICH HAS AS PURPOSE MONEY LAUNDERING OR TERRORISM FINANCING ACTS, ART. 3 PARA. (2) – (5) BEING APPLIED ACCORDINGLY, TAKING INTO CONSIDERATION THE MOTIVATIONS PRESENTED BY THE REQUESTING INSTITUTION, AS WELL AS THE FACT THAT THE TRANSACTION COULD HAVE BEEN SUSPENDED IF WOULD HAVE BEEN THE SUBJECT OF A SUSPICIOUS TRANSACTION REPORT SUBMITTED BY ONE OF THE NATURAL AND LEGAL PERSONS PROVIDED AT ART. 8”). BY THE ADOPTION OF THIS NORMATIVE ACT, ROMANIA TOOK THE NECESSARY LEGISLATIVE MEASURES TO ENFORCE THE LEGAL TOOL PROVIDED BY THE ART. 47 OF THE COUNCIL OF EUROPE CONVENTION ON LAUNDERING, SEARCH, SEIZURE AND CONFISCATION OF THE PROCEEDS FROM CRIME AND ON THE FINANCING OF TERRORISM, ADOPTED IN , ON MAY 2005 (ROMANIA RATIFIED THE 2005 WARSAW CONVENTION, THROUGH LAW NO. 420/2006.) - Defining „the persons publicly known to be close associates of the natural persons exercising prominent public functions”, included in the politically expose persons category; - Explicit provision of the obligation to report transactions which are to be performed and which reveal suspicions on terrorism financing;

9012/12 GS/ec 48 ANNEX II DG D 2B EN - Explicit provision of the obligation of the reporting entities to notify the Office, when they ascertains that as regards one or more transactions performed in to the account of a client there are suspicions that the funds have as purpose money laundering of terrorist financing; - Provision of the liability for damage caused by the suspension and the prolongation of the suspension of transactions, non-complying with the legal provision; - The extension of the term for records keeping, for a minimum 5 years period; - Reconfiguring the regulatory and supervisory framework for entities with obligations under the AML/CFT Law.

9 Also, in the legislative framework, during the reference period, there were adopted regulations for implementing the international sanctions regime, respectively the Governmental Decision no. 603/2011 for the approval of the Norms on supervision performed by ONPCSB on the modality of applying the international sanctions and the Order of the President of the Office no. 95/2011 on the approval of the Methodological Norms for performing notifications and solving the requests for authorization on performing financial transactions. Taking into consideration the new attribution of ONPCSB to receive notifications and to solve requests for authorizations as regards the financial services and funds transfers, which are subject of restrictive measures, within the Supervision and Control Directorate, the Compartment for notification and approval of transfers to prevent nuclear proliferation was established – unit in charge to analyze all requests regarding the transfers to/from Iran, for implementing the Regulation (EU) no. 961/2010 of 25 October 2010 on restrictive measures against Iran and repealing Regulation (EC) no. 423/2007.

9 ONPCSB’s priority, during the reference period as well as in the present, is the increasing of the quality of information sent by the Office to the General Prosecutor’s Office by the High Court of Cassation and Justice, as notifications or punctual replies to the requests of the relevant prosecutor’s units, so that these documents to be an important source of information for combating the money laundering offence, and to submit these files to GPOHCCJ in a short as possible term, as appropriate, near or along with the commission of the criminal acts. Taking into consideration the fact that the activity of analysis and dissemination of processed financial information is the main attribution of the ONPCSB, the Board of the Office was called to decide and got reunited into 157 working sessions, during which there were analyzed and made decisions over 2970 specialty cases.

9012/12 GS/ec 49 ANNEX II DG D 2B EN

In this context, during the reference period, the Board of ONPCSB has decided to submit to PICCJ a number of 382 notifications in which solid grounds of money laundering were identified. According to the conclusions within the notifications submitted by the Office to the prosecution bodies, during the reference period, the main predicate offence for money laundering remained tax fraud, followed by fraud or offences under the Law 31/1990 on commercial companies and the preferred business areas where the money laundering was identified were "domestic trade", "foreign trade", "real estate", "services", "investments", "financial" and "banking". On the same time, the Board of NOPCML decided to submit simultaneously to the General Prosecutor’s Office by the High Court of Cassation and Justice and to the Romanian Intelligence Service, a number of 23 notifications including solid grounds of money laundering with suspicions connected to terrorism financing. During the reference period, based on the punctual requests submitted by the prosecutor’s offices, in accordance with art. 6 para. 4 and 5 from the Law no. 656/2002, ONPCSB supported the penal cases, by sending additional information in 516 cases, and a number of 171 cases have been finalized by Decision of the Board of ONPCSB for notifying the competent authorities, based on provisions of art. 6 para. 8 of the Law no.656/2002. In a number of 10 cases, the Board of the Office decided to suspend unperformed transactions, which have been submitted by the reporting entities, the total amount for which this administrative measure was disposed reaching the value of 5.931.299 euro and 234.104 RON, measures followed by setting up the seizure by the competent prosecutor’s offices, for 5.666.128 euro and 234.104 RON, and for 170.871 euro the seizure measure was disposed by the National Agency of Tax Administration.

9 In the context of the ONPCSB’s policy of creating a technical infrastructure extended at national level, which allows reporting, via on-line system, by the financial and non-financial reporting entities, and of the results registered in the period 2010-2011 as regards the volume of information collected in accordance with the provisions of the Law no. 656/2002, the following statistical data are reflected:

9012/12 GS/ec 50 ANNEX II DG D 2B EN - During the reference period, ONPCSB received a total number of 7.593 Reports of Transactions Suspected of money laundering and terrorism financing from the reporting entities (STRs) and notes/notifications from the relevant Romanian authorities with competencies in the field, according to the provisions of the Law no. 656/2002, with subsequent modifications and completions. - Also, during the same period, ONPCSB received 90.783 Reports on cash operations >15.000 euro (CTRs) and 15.594 Reports on external transfers to and from the accounts >15.000 euro (ETRs). We would like to mention that in 2011 the amounts transferred in the country totalized 68.850.082.920 euro, value increased with 2,8% vis-a-vis 2010, and the amounts outgoing from Romania were of 67.357.012.761 euro, the value being diminished with 7,8% vis-a- vis the year 2010.

9 In the same time, during the year 2010, the Office obtained the on-line access to the National Agency for Cadastre and Land Registration, as result of the conclusion of the cooperation protocol between the two institutions, in order to obtain in a faster way the data and information regarding the existent real estates. Also, the Office developed, during the reference year, the existing connections with the National Office for Commerce Register, the Ministry of Public Finances and the Ministry of Administration and Interior. During the year 2011, our institution continued this process, by up-dating the cooperation protocol with the National Union of Notaries Public from Romania, with the purpose to insert provisions regarding the on-line reporting system. Also, the National Office for Prevention and Control of Money Laundering concluded a Protocol with Foreign Intelligence Service through which is established the cooperation framework between the two entities.

9 In reference to the cooperation relation between the prudential supervisory authorities and the management of the liberal professions, we mention the organization by ONPCSB, during the period 2010-2011, of 54 training workshops for reporting entities, to which participated approx 2.470 persons. Almost 30 of these were meetings with reporting entities, to which participated over 1.500 persons. The meetings were organized during the Project 2007/19343.01.14 „Combating money laundering and terrorism financing”, which was implemented by the Office together with the Polish Financial Intelligence Unit, during the year 2010. The performing of these seminars took place with the support of the prudential supervisory authorities and professional associations.

9012/12 GS/ec 51 ANNEX II DG D 2B EN

9 The activity of ONPCSB at international level is highlighted, first of all, by presenting the Second Progress Report of Romania in the field of prevention and combating money laundering and terrorism financing, which was adopted, unanimously, by the participant delegations within the Moneyval Plenary, on December 16, 2011. The main evolutions1 registered since the adoption of the previous progress report in September 2009, can be synthesized as follows: - Romania has taken a number of measures to develop and strengthen its AML/CFT system, several of which are relevant in the context of addressing the deficiencies identified in respect of the core Recommendations and their effective implementation; - further amendments in 2011 to the special law on prevention and combating money laundering and terrorism financing, once with the adoption by the Parliament in November 2011 and the promulgation by the President of Romania, of the draft law for approval of G.E.O. no. 53/2008 on amending and completing the Law no. 656/2002; - Romania passes through a reform of the AML/CFT national legal framework. A new Civil Code was adopted in 2009 and came into force in October 2011. Furthermore, the Criminal Code, adopted in July 2009, the Criminal Procedure Code and the Civil Procedure Code, both adopted in July 2010, will probably enter into force in 2012. - the supervisory and control authorities adopted secondary legislative measures taken by in order to cover all aspects of the primary legislation related to AML/CFT; - adoption in June 2010 of the National Strategy for Prevention and Combating ML and FT including an action plan, enhancing, optimizing and consolidating the national capacity for prevention and combating of ML and FT; - new legislative measures were adopted in respect to the power of the FIU to postpone transactions at the request of a foreign FIU providing harmonization with the Warsaw Convention (ratified in 2005); - amendments aimed to achieve a higher degree of harmonization with the European Commission Directive 2005/60/EC and the FATF Recommendations.

1 Excerpt from the Report adopted during the Moneyval Plenary on December 16, 2011.

9012/12 GS/ec 52 ANNEX II DG D 2B EN On the same time, there were noticed positive aspects related to the efficiency of the Romanian system for combating money laundering and terrorism financing, especially on the aspect of increasing the number of indictments in cases of money laundering and the existence of two cases of autonomous money laundering offence, as well as in connection with the sanctions applied by the supervision authorities in the field.

9 The development of the bilateral cooperation of ONPCSB and other foreign Financial Intelligence Units (FIUs), represented also in 2011 one of the main objective envisaged by our institution. In this context, the Office’s policy in the reference year was to continue the efficiency of the bilateral cooperation relations with its foreign partners, by concluding Memoranda of Understanding/Agreements/Declarations of Cooperation, which has as main objective to extend the cooperation framework in the field of exchange of information between FIUs, the general principle of signing such international agreements being guided also by the necessity of adequate implementation of the Council Decision of 17 October 2000 concerning arrangements for cooperation between financial intelligence units of the Member States in respect of exchanging information. Thus, during the reference period the National Office for Prevention and Control of Money Laundering concluded 3 Memoranda of Understanding with FIUs from Serbia, the British Virgin Islands and . Thus, from its establishment till now the Office concluded a total number of 49 international agreements. In order to support the operative analyses, during the period 2010-2011, the Romanian FIU submitted a total number of 344 requests of information to the foreign FIUs, related to the possible involvement of some natural and legal persons in activities of money laundering and terrorism financing. Vis-a-vis to 2010 when the number of requests of information sent by the Office was 145, in the year 2011 was observed an easier increased of the number of requests, this being motivated by the increasing number of the cases existent in the operative directorate, but also by the specific requests received by the competent prosecutors units in cases of money laundering. Also, during the period 2010-2011, ONPCSB received a number of 388 request of information from the similar foreign units, which reveal an equilibrium between the two types of requests of information, which outlines both the capitalization of the information available to the national level, by cooperating with the law enforcement authorities, as well as the continuity in assuming, by the Office, the role of trusting foreign partner by providing concrete, relevant information to foreign FIUs.

9012/12 GS/ec 53 ANNEX II DG D 2B EN 9 During the reference period, ONPCSB also continued to have an active presence at the level of European and international institutions, the re-election of a representative of the institution, as member of the Moneyval Bureau, for the mandate 2011-2013, ensuring the involvement of the Romanian delegation in decisional process of this international fora, being an example, as well as the openness of the Office towards the strengthening of cooperation relationships at international level and constant participation to the activities of the Egmont Group, Committee for Prevention and Combating Money Laundering and Terrorism Financing, Platform of the EU Financial Intelligence Units and the FIU.NET Network.

9 On international cooperation plan, we would also like to underline the fact that, in 2011, ONPCSB became the partner of the European Project HEMOLIA (Hybrid Enhanced Money Laundering Intelligence, Investigation, Incrimination and Alerts), within the EU FP7 Programme. The Project HEMOLIA is implemented following the endorsement of the European Commission, in April 2011, of the Grant Agreement 261710, agreement which was signed by the 11 partners of the consortium, including by ONPCSB. HEMOLIA will represent an innovative approach and will increase the level of detecting money laundering activities, by performing an in- depth analysis of merged financial/telecommunication information.

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9012/12 GS/ec 54 ANNEX II DG D 2B EN