How to confirm the origin of funds in Romania

Based on our practical experience with the relevant jurisdiction, we can conclude that Romania, as a member of the European Union, actively supports transparency standards in financial transactions to prevent money laundering and terrorist financing.

Thus, verification of the origin of funds in Romania is a mandatory procedure, and there are strict requirements for providing documents confirming the legitimacy of funds for both businesses and individuals, which is an important part of financial transactions.

We, as the Law Firm "Prikhodko and Partners", working in the international arena, including in Romania, provide comprehensive services and assistance in resolving issues related to confirming the origin of funds, and also guarantee legal security, speed, reliability and full compliance with the legislation of the country.

In particular, let's consider what is proof of the origin of funds?

The process of verifying the origin of funds in Romania is an important part of financial security and the fight against money laundering.

Therefore, there are basic steps that ensure the correctness and transparency of financial transactions.

1. Customer identification (KYC — Know Your Customer)

• Gathering basic information.
• Identification of beneficial owners.
• Collection of information about client activities.

2. Risk assessment

• Classification of clients by risk level.
• Analysis of the source of funds.

3. Collection and verification of documents to confirm the origin of funds

• Determining the source of funds.
• Verification of the authenticity of documents.

4. Monitoring of financial transactions

• Transaction analysis.
• Suspicious transaction reporting.

5. Ensuring compliance with requirements

• Periodic information updates.
• Document storage and archiving.

6. Taking action in case of suspicion

• Blocking suspicious transactions.
• Notification of authorities.

We suggest paying more attention to Romanian legislation regarding confirmation of the origin of funds.

Romanian legislation on the verification of the origin of funds is regulated within the framework of the fight against money laundering (AML) and the financing of terrorism (CFT) and other provisions of Romanian legislation on this issue.

Legislative acts and regulations:

• Law No. 129/2019 on the prevention of the use of the financial system for the purpose of money laundering and the financing of terrorism. This law is the main document in the field of combating money laundering and implementing international FATF standards.
• Law No. 656/2002 on the prevention of money laundering and terrorist financing, which has been amended and supplemented in accordance with EU requirements.
• EU Directives, in particular Directive (EU) 2015/849 on anti-money laundering measures, as amended. It regulates financial institutions and other entities involved in financial transactions with regard to customer due diligence and verification of the origin of funds.

Procedures for confirming the origin of funds

• Customer identification and verification (KYC — Know Your Customer). This is a key step that requires financial institutions to verify the person or company carrying out the transaction, as well as identify the ultimate beneficiaries.
• Due Diligence. To confirm the legitimacy of the source of funds, the client must provide documentary evidence, which may include:

1. Bank statements, credit or loan agreements.
2. Tax returns and other documents confirming the client's income.
3. Asset purchase and sale agreements (real estate, shares, etc.).
4. Documents confirming the legality of the income received (for example, service contracts or employment contracts).

• Risk-Based Approach. The legislation requires financial institutions to assess the risks of their clients.
• Third parties and law firms. In the event that the client cannot provide the necessary documents on their own or verification of the source of funds outside Romania is required, financial institutions may engage third parties, including lawyers or specialized companies, to assist in the verification.

If we talk about the risks that may await business entities and not only, it is necessary to pay attention to the following:

If there is ambiguous or unreliable confirmation of the origin of funds, this can have serious consequences for businesses and individuals.

In the worst case, it can lead to the blocking of accounts or even criminal prosecution for suspected money laundering.

For individual entrepreneurs and businesses that conduct international activities and have a large turnover, this can become a serious obstacle to conducting transactions or making large purchases.

Considering all the above, the procedure for passing compliance or origin of funds in Romania is an important component in the procedures of state authorities to combat money laundering and terrorist financing, and also ensures the legality and transparency of financial transactions.

Knowing the requirements of the legislation governing these processes, and how to properly comply with them, allows financial institutions to minimize the risks associated with illegal financial flows and ensure the reliability of the country's financial system.

Thus, passing the verification of the source of origin of funds is not only a legal requirement, but also a necessary step to ensure the stability and transparency of the financial system in Romania, and therefore for the entities that carry out the relevant financial transactions.