Laundering in Romania

BUCHAREST – Post-communist Romania, struggling with rampant corruption, needs strict law enforcement to tackle money laundering and secure European Union membership, a senior official said yesterday. About half a billion euros a year is laundered in the Balkan state, where corruption, abuse of power and illicit business dealings have affected virtually all aspects of life. International institutions often cite these problems as major hurdles in the country’s drive to join the EU as early as 2007. Transparency International ranks Romania as the most corrupt Eastern European EU candidate. «Unfortunately Romania was late in tackling these issues,» Ioan Melinescu, head of the Office for the Prevention and Control of Money Laundering (OPCSB), said in an interview. The black economy is about 45 percent of gross domestic product, although Romania has started to monitor suspect deals or cash transactions above 10,000 euros after adopting its first money laundering law in 1999, 10 years after the fall of communism. That legislation was altered last year to clearly stipulate disclosure rules and compel more institutions other than banks – the state treasury, the postal authority, bodies overseeing sell-offs, jewelry and art traders – to report suspect deals. It also introduced penalties for those failing to report. «We now have a modern (money-laundering) law. Some experts say it’s the best in Europe, and is fully compliant with the EU,» he said. «But there is still work to be done, mainly in the monitoring of tax refunds and companies’ registration.» He said the heavy tax burden in some areas, such as on oil, alcohol and tobacco, encouraged smuggling. Illegal transfers related to credit cards or the Internet were also on the rise. Melinescu said OPCSB was trying to share its expertise by training employees in customs and other institutions as well as prosecutors dealing with anti-corruption issues under a new body set up in 2002. «We need more discipline and to make our prosecutors more familiar with sophisticated financial matters,» he said. The office has given evidence to prosecutors on about 2,000 cases of illegal transfers since 2000, mostly related to value-added tax refunds, customs and tax evasion or privatizations. «We helped prosecutors discover 100 ghost firms that had been registered at the same address by Turkish, Iraqi and Romanian citizens,» said Melinescu. «In one case, a passport was presented 18 times at various banks, each time with a different photo,» he added. Melinescu said suspect transfers to tax havens or African or Arab countries, which lack monitoring bodies, were the hardest to deal with. But not all information led to «pure» laundering. «We have recently spotted a new pyramid scheme in western Romania which has lured in about 4,000 people so far and is linked to companies in Gibraltar where we have no access,» he said.

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