International Narcotics Control Strategy Report for Romania - 2003

The 2003 International Narcotics Control Strategy Report (INCSR) is an annual report by the Department of State to Congress prepared in accordance with the Foreign Assistance Act. It describes the efforts of key countries to attack all aspects of the international drug trade in Calendar Year 2003. Part I covers drug and chemical control activities. Part II covers money laundering and financial crimes.

Romania - part I

I. Summary

Romania is not a major source of production or cultivation of narcotics. Romania lies along a well-established route used to move heroin and opium from Southwest Asia to Western Europe, and has recently begun to serve as a source of amphetamines. Romania is also used as a transit point for South American cocaine destined for Western Europe. In 2003, Romania made several major drug seizures. A national plan to address drug abuse announced in 2001 was implemented in 2003. Allegations of corruption continued to damage the image of the primary drug fighting law enforcement body. Corruption remains a serious problem, although Romania has begun taking some steps to address the issue. Romania is a party to the 1988 UN Drug Convention.

II. Status of Country

Romania lies along what is commonly referred to as the Northern Balkan Route, and thus it is a transit country for narcotics moving from Southwest Asia, through Turkey and Bulgaria and onward toward Western Europe. In addition, a large amount of precursor chemicals transits Romania from West European countries south toward Turkey. Romania increasingly is becoming a storage location for illicit drugs prior to shipment to other European countries. In 2003, law enforcement officials seized a number of laboratories producing synthetic drugs in Romania, made several important drug seizures and arrests, and dismantled an international drug trafficking and money laundering network. Law enforcement officials noted that a trend of increasing domestic narcotics abuse continued in 2003. While officials stated that heroin and marijuana were the primary drugs consumed in Romania, the use of synthetic drugs such as MDMA (Ecstasy) increased among segments of the country's youth.

III. Country Actions Against Drugs in 2003

Policy Initiatives. Romania continues to build an integrated system of prevention and treatment services at the national and local level, with 47 Anti-Drug Prevention and Counseling Centers located throughout the country. Joint teams of police and social workers carry out educational and preventative programs against drug consumption.

Accomplishments. Romanian courts have sentenced several drug traffickers to long sentences under the tough provisions of the narcotics law enacted in 2000, and the Romanian police have established an undercover drug investigation unit to take full advantage of the authority for undercover operations that the drug law provides.

Law Enforcement Efforts. In 2002, Romanian authorities confiscated 43,674 kilograms of illegal drugs and convicted 432 individuals for drug-related crimes. In the first nine months of 2003, Romanian authorities dismantled 115 drug trafficking rings, investigated 988 persons for drug-related crimes, and seized over 337 kilograms of drugs and 1,893 kilograms of precursor chemicals. Also in 2003, Romanian authorities shut down one synthetic drug production laboratory and a major heroin trafficking network through the Negru-Voda border point. A Romanian-Serbian network trafficking marijuana, Ecstasy and cocaine was destroyed along with drug trafficking networks in Iasi and Botosani counties. Police officers of the General Directorate for Combating Organized Crime and Anti- Drug Operations (DGCCOA), in cooperation with the General Prosecutor's Office, dismantled an international drug trafficking and money-laundering network, which trafficked 2 tons of heroin from Turkey through Romania to the Netherlands, Germany and Italy.

Romania continues to modernize and reorganize its primary drug fighting service, the DGCCOA. The DCCOA was reorganized into two divisions, an organized crime division and a counternarcotics division. The counternarcotics side of the DGCCOA now has some 50 officers; it also has internal squads working undercover operations. The DGCCOA announced plans to double its forces by the end of 2004 and made progress toward establishing 15 Regional Centers for Countering Organized Crime and Narcotics.

Corruption. Corruption remains a serious problem within the Romanian government, including within the judiciary and law enforcement branches. The reorganization of the DGCCOA was triggered by a scandal in which the head of one of its drug squads was accused of using an informant to divert confiscated drugs. The Ministry of Administration and Interior, Ministry of Justice and Customs undertook a major reorganization at the beginning of the year 2003, resulting in several dismissals of high officials within the police. Additionally, the Anti-Corruption Prosecutor's Office (PNA) began operation September 1, 2002 and has made good progress on investigating corruption cases, investigating over 2200 cases by 1 October 2003. In 2003, Romania drafted a code of ethics for police officers and passed an Anticorruption Law, including measures, which if fully implemented, would promote transparency in the civil service.

Agreements and Treaties. Romania is a party to the 1988 UN Drug Convention. An extradition treaty is in force between Romania and the United States, and a mutual legal assistance treaty came into force in October 2001 .

Drug Flow/Transit. Illicit narcotics from Afghanistan enter Romania primarily over land through its southern border with Bulgaria. However, drugs are also brought into the country via the Black Sea port of Constanta, as well as via the country's international airports. Once in Romania, the drugs move either northwest through Hungary, or west through Serbia. Police estimated that 80 percent of the drugs that enter Romania continue on to Western Europe.

Domestic Programs (Demand Reduction). While consumption of narcotics in Romania has historically been low, this appears to be slowly changing; the Romanian government has become increasingly concerned about domestic drug consumption. Detoxification programs are offered through some hospitals, but treatment is very limited. These programs are hampered by a lack of resources and adequately trained staff. As of June 2003, 1,913 individuals were registered for treatment.

IV. U.S. Policy Initiatives and Programs

Bilateral Cooperation. In 2003, the United States provided $975,000 in assistance to Romania to further develop its cyber-crime and counternarcotics capabilities, reform of the criminal justice system, and combat official corruption. Romanian police officers participated in U.S. Bureau of Customs and Border Security Canine Enforcement Officer training and the U.S. Secret Service offered courses on financial crimes. Romania also benefited in 2003 from the over $1.8 million in U.S. and other assistance to the Southeast Europe Cooperative Initiative (SECI) Center for Combating Trans-border Crime, which more broadly supports the twelve participating states in the Balkan region and focuses on trans-border crime.

The Road Ahead. Romania has put a serious emphasis on its counternarcotics efforts and cooperation with the USG. The USG believes that cooperation will continue, as the Romanian government has become increasingly concerned with domestic drug consumption.

Romania - part II

Romania continues to develop its anti-money laundering regime. Its geographic location makes it a natural transit country for trafficking in narcotics, arms, stolen vehicles, and persons and, therefore, vulnerable to money laundering. The majority of crimes generating illicit funds in 2003 were tax/VAT fraud and tax evasion. Romania also has one of the highest occurrences of online credit card fraud in the world. As in other countries in Eastern Europe, corruption and the presence of organized crime activity facilitate money laundering. The Romania National Office Against Money Laundering estimates $1.64 billion euros ($2.02 billion) has been laundered in Romania since 2001. Money laundered comes primarily from domestic criminal activity carried out by international crime networks. Romania saw a surge in organized crime activity during the first part of 2003. Transparency International placed Romania in the top tier of the world’s most corrupt countries. The proceeds of financial crimes and from the smuggling of cigarettes, alcohol, coffee, and other dutiable commodities are also believed to be laundered in Romania. From Romania, most of the laundered funds go to Cyprus (222 million euros in 2003).

Romania criminalized money laundering with the adoption in January 1999 of Law No. 21/99 “On the Prevention and Punishment of Money Laundering.” The law became effective in April 1999 and mandates provisions for customer identification; record keeping; reporting transactions of a suspicious or unusual nature; currency transaction reporting for transactions over 10,000 euros; a financial intelligence unit (FIU), known as the National Office for the Prevention and Control of Money Laundering (NOPCML); and internal anti-money laundering procedures and training for all domestic financial institutions covered by the law. The list of entities subject to money laundering controls includes banks, nonbank financial institutions, attorneys, accountants, and notaries. However, in practice, these controls have not been as rigorous as those imposed on banks. There exists some natural discomfort on the part of the banking industry regarding requirements to assist law enforcement, but this has not stopped the Government of Romania (GOR) from establishing further measures, such as Norm No. 3, “Know Your Client.” These norms, issued in February 2002 by the National Bank of Romania, bring Romania’s norms into line with the Basel Committee’s “Customer Due Diligence for Banks Supervision in the insurance sector has recently been tightened.

In December 2002, the Law on the Prevention and Sanctioning of Money Laundering went into effect, changing the list of predicate offenses to the “all-crimes” approach and requiring that every banking operation involving a sum exceeding 10,000 euros be reported to the NOPCML and monitored. The law also revises certain provisions in the former law. In addition, the new law expands the number and types of entities required to report to the NOPCML. Some of these new entities include art dealers, travel agents, privatization agents, postal officials, money transferors, and real estate agents. The new law also provides for both suspicious transaction reports (STRs) and currency transaction reports (CTR), with the CTR amounts conforming to European Union (EU) standards. The know your customer identification requirements have also been honed so that identification of the client becomes necessary upon both the beginning of a relationship and upon single or multiple transactions meeting or approaching a 10,000 euro standard. In accordance with a new national strategy on money laundering, lawyers are now obligated to report to the NOPCML. In addition, and in line with the Second EU Directive, tipping off has been prohibited. Romanian law permits the disclosure of client and ownership information to bank supervisors and law enforcement authorities, and protects banking officials with respect to their cooperation with law enforcement.

The NOPCML receives and evaluates STRs as well as CTRs. The law also provides for feedback to be given, upon request, to NOPCML from the General Prosecutor’s Office, and for NOPCML to participate in inspections and controls in conjunction with supervisory authorities. In 2002, MOPCML received 433 suspicious transaction reports filed on over 1,600 persons. During the first three-quarters of 2003, NOPCML had received 342 reports and investigated more than 1,500 persons. Of these, 256 cases were referred to the Prosecutor’s Office. However, efforts to prosecute these cases have been hampered by delays in reporting suspicious transactions, by a lack of resources in some regions, and by insufficient training in conducting complex historical financial investigations. The Law on the Prevention and Sanctioning of Money Laundering increased the powers of NOPCML, but it did not provide for an increase in administrative capacity. Romania has been working closely with Italy to improve the efficiency and effectiveness of NOPCML. Romanian law has some, but limited, provisions for asset forfeiture in the Law on Combating Corruption, No. 78/2000, and the Law on Combating Tax Evasion, No. 87/1994. The Directorate of Economic and Financial Crimes of the national police also has a mandate to pursue money laundering. Despite hundreds of money laundering cases investigated since 2001, the interface with the justice system remains ineffective.

The GOR announced a national anti-corruption plan in early 2003 and passed a law against organized crime, codifying the provisions of the UN Convention in January 2003, as well as a new anti-corruption law in April 2003. In the thirteen months since the September 2002 founding of the Anti-Corruption Prosecutor’s Office (PNA), over 2200 cases of corruption have been investigated. A new Criminal Procedure Code was passed and became effective on July 1, 2003. The new Code contains provisions for authorizing wiretapping, intercepting, and recording telephone calls for up to 30 days, in certain circumstances. These circumstances, as provided for within the new Code, include terrorism acts and money laundering.

After the events of September 11, 2001, Romania passed a number of legislative measures designed to sanction acts contributing to terrorism. Emergency Ordinance 141, passed in October 2001, legislates that the taking of measures, or the production or acquisition of means or instruments with an intention to commit terrorist acts, are offenses of exactly the same level as terrorist acts themselves. These offenses are punishable with imprisonment ranging from five to 20 years. Emergency Ordinance 159, also passed in 2001, sets measures for preventing the use of the financial and banking system to finance terrorist attacks, and sets forth the parameters for the government to combat such use. The National Bank of Romania, which oversees all banking operations in the country, also issued Norm No. 5 in support of Emergency Ordinance 159. Emergency Ordinance 153 was passed to strengthen the government’s ability to carry out the obligations under UNSCR 1373, including the identification, freezing and seizure of terrorist funds or assets. The National Bank of Romania receives lists of individuals and terrorist organizations from the UN. Sanctions Committee, EU, and USG, and circulates these to banks and financial institutions. No arrests or prosecutions have been carried out in regard to terrorism financing.

In April 2002, the GOR’s Supreme Defense Council of the Country (CSAT) adopted a National Security Strategy, which included a General Protocol on the Organization and Functioning of the National System on Preventing and Combating of Terrorist Acts. This system, effective July 2002 and coordinated through the Intelligence Service, brings together and coordinates a multitude of agencies, including 14 ministries, the General Prosecutor Office, the National Bank, and the National Office for the Prevention and Control of Money Laundering. The GOR has also set up an interministerial committee to investigate the potential use of the Romanian financial system by terrorist organizations.

The EU’s Europe Agreement with Romania provides for cooperation in the fight against drug abuse and money laundering. Romania is a member of the Council of Europe (COE) and participates in the Council of Europe’s Select Committee of Experts on the Evaluation of Anti-Money Laundering Measures (MONEYVAL). A mutual evaluation in April 1999 by that Committee uncovered a number of areas of concern, including the high evidence standard required for reporting suspicious transactions, a potential conflict with the bank secrecy legislation, and the lack of provisions for cases in which the reporting provisions are intentionally ignored. Romania has been working to address these concerns, bringing in legal experts from the EU to consult. In late 2003, Romania also underwent a Financial Sector Assessment Program (FSAP) by the World Bank as part of that organization’s pilot program.

The NOPCML is a member of the Egmont Group. The Mutual Legal Assistance Treaty signed in 2001 between the United States and Romania entered into force in October 2001. Romania has demonstrated its commitment to international anti-crime initiatives by participating in regional and global anti-crime efforts. Romania is a party to the 1988 UN Drug Convention, the Agreement on Cooperation to Prevent and Combat Transborder Crime, and the UN Convention against Transnational Organized Crime. With Law No. 263/2002, passed in 2002, Romania ratified the Council of Europe Convention on Laundering, Search, Seizure, and Confiscation of the Proceeds from Crime. During 2002, Romania also ratified the Council of Europe’s Criminal Law Convention on Corruption, and in December signed the UN Convention Against Corruption. Romania ratified the UN International Convention for the Suppression of the Financing of Terrorism in January 2003.

Romania should continue addressing the concerns of the Council of Europe evaluators as to further improvements in its anti-money laundering regime, and should continue its progress on money laundering investigations and prosecutions. The GOR should adopt procedures for the timely freezing, seizure and forfeiture of crime or terrorism related assets. The GOR should adopt reporting requirements for the cross-border movement of currency and monetary instruments.

Released on March 1, 2004