Money Mover Country Reports - Romania

Posted on the 26th October 2016 by Emily Keates in Country Reports

Romania blog

Romania

Up until the fall of the Soviet Union in 1989, Romania spent more than 40 years behind the closed doors of the “Iron Curtain”. However since then it has thrived. With a large natural resource base and the Black Sea in the east driving a lot of tourism to the country, Romania has grown rapidly in the last few decades.

Following the Cold war, Romania’s ties with Western Europe have significantly strengthened, joining NATO in 2004 and subsequently the EU in 2007.

Romanian Leu

On 1 July 2005, the new leu (RON) was introduced to replace the “old” lei (ROL). The new currency was brought in at the rate of 10,000 “old” lei, partly in order to bring the purchasing power of the leu back in line with other western currencies ready for integration into the EU. The leu is made up of 100 bani (which is also used as the word for “money” in the Romanian language).  The first day of the transition from lei to leu brought many difficulties for both residents and the banks, however by 31 December 2006 all of the old lei had been pulled from circulation.

Political situation

Romania is governed on the basis of a multi-party democratic system, however differs slightly in that it has a semi-presidential set-up, whereby both the government and the president hold executive functions. The president is elected every five years by a popular vote and acts as the head of state, whereas the prime minister is chosen by the president and acts as the head of government.

Although a multi-party system, the political landscape is dominated by the Social Democratic Party (centre-left) and the National Liberal Party (centre-right) who hold around two-thirds of the seats in the Chamber of Deputies.

Trade and Industry

Following the collapse of the Soviet Union in 1989 Romania developed rapidly by strengthening its ties with Western Europe and introducing a number of reforms. Up until the financial crisis of 2008, the Romanian economy was referred to as the "Tiger of the East" due to its high growth and rapid development. However it has suffered since, having to receive a €20bn loan from the IMF and the EUR. Only in recent years has Romania begun to return to its former growth rates that first gained it the name “The Tiger". 

With over 10 million hectares of agricultural land, diverse energy sources and opportunities for expanded development in tourism on the Black Sea and in the mountains, Romania is a country of considerable economic potential and is expected to continue to thrive as the country comes out of the slump following the financial crisis.

romania country report

AML & CTF (Anti-Money Laundering and Counter Terrorist Financing)

In 2008 the Financial Action Task Force (FATF) undertook the last Mutual Evaluation Report for Romania. According to that Evaluation, Romania was deemed Compliant for 8 and Largely Compliant for 17 of the FATF 40 + 9 Recommendations.

Key findings from the US Department of State 2016 International Narcotics Control Strategy Report (INCSR) are as follows:

  • Due to Romania’s geographical location it is a natural transit country for trafficking in narcotics, arms, stolen vehicles, and persons by transnational organized criminal groups. This makes Romania vulnerable to financial activities associated with such crimes, including money laundering.
  • Romania’s economy remains to a large extent cash-based.
  • Though Romania is not a major financial hub and its exposure to foreign proceeds of crime may be limited, there are nevertheless indicators suggesting that organized criminal groups from the neighboring countries and Italy invest in Romanian assets.
  • Romanian organized criminal groups participate in a wide range of criminal activities in Europe, including prostitution, cigarette smuggling, extortion, and trafficking in narcotics, and have collaborated to establish international criminal networks for internet fraud activities and related money laundering schemes.
  • Romania has some of the highest rates of cybercrime and online credit card fraud in the world. Studies have found Romanian servers to be the second largest source of cybercrime transactions worldwide.
  • No international terrorist groups are known to operate in Romania.

Corruption

According to the latest Corruptions Perceptions Index, Romania scores a mid point score of 46 out of 100 (0 being highly corrupt and 100 representing a very clean perception). This reflects a gradual improvement from 43 in 2014, ranking the country 58th out of 167 countries listed. 

Money Mover view

Romania is developing fast, as are its actions to combat money laundering and the financing of terrorism. In 2015, Romania’s financial intelligence unit (FIU) established technical rules on making notifications and authorizing requests for external transfers of information.

Money Mover is happy to process payments to Romania.  Our clients may wish to use our foreign exchange and international payments for several different reasons:

  • Transferring business revenues between branches in Romania and other countries
  • The need to make payments to suppliers based in Romania
  • The need to make pay employees based in Romania.

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