The European Union’s efforts to improve the regulations concerning the prevention and combating of money laundering in the Republic of Moldova as a consequence of the Association Agreement turned out to be insufficient. The national risk assessment was superficial and not all the offenses were taken into consideration. The areas with a high risk level weren’t identified and comprehensive measures weren’t proposed, shows a policy document published by the Independent Think Tank “Expert-Grup”, IPN reports.
According to the publication, the international community designed conventions and international standards for combating illicit financial flows. Nevertheless, the insufficient application of the law and inappropriate compliance can have unfavorable consequences and can affect the efficiency of the whole prevention framework. The Laundromat case that involved entities from the EU is a conclusive example. A money laundering scheme was applied by which funds from Russia were transferred to banks in the EU by using state intuitions and banks in Eastern European countries, such as Moldova and Latvia.
The authors note it is not a surprise that the reforms in the field of prevention and combating of money laundering laid emphasis only on the private sector without suggesting a structural reform for fighting corruption, increasing transparency and stimulating international cooperation. The recommendations of the Financial Action Task Force (FATF) are based on the hypothesis that public functionaries are honest persons who obey the law. The FATF should review its recommendations for Eastern Europe and other states and regions where criminal activity is closely interconnected with the state authorities, taking into account the fact that particular state intuitions can play essential roles in organizing money laundering scheme.
According to “Expert-Grup”, specific control and risk assessment mechanisms should be suggested to stop or at least to diminish the effect of this phenomenon An international team of experts should be convened to assess the new money laundering schemes that involved state institutions. Otherwise, the judicial system and state procurement and privatization agencies could facilitate money laundering schemes instead of hampering these.
The publication says that if new international standards are not thought up, the EU could be exposed to money laundering risks when it performs financial transactions in jurisdictions with inefficient state institutions. The Russian Federation poses a special risk as this looks for methods to finance its propagandistic and information war in Western states. Russia’s proximity and its historical ties with Eastern Europe makes this region extremely vulnerable to money laundering schemes.
