ROMANIA: Anti-money Laundering Agency proposes legislation that increases NGO administrative burdens, under threat of dissolution (UPDATED)

UPDATE 26 November 2018: The law was approved by the parliament at the end of October. Find a preliminary comment at the end of the article

3 March 2018:

<<The recent proposal adds on to several legislative initiatives from 2017, all originating in the governmental coalition, that are meant to burden NGO activities with new reporting obligations. This new proposal from 2018, still under public consultation, aims to impose the NGO obligation to disclose to the Ministry of Justice full information on the identity of their “real beneficiaries”. Such reports should be made at least once a year or whenever the real beneficiaries change. While it is unclear how NGOs with large number of beneficiaries would report all this information, the sanction for failure to do so is sanctioned with a fine of over 1000 EUR, followed by dissolution, in case of non-compliance in 15 days after being fined.>> writes Andrei Pop from the Foundation for Development of Civil Society.

Translation of a press release by APADOR: find the original in Romanian here 

The government uses a European directive on anti-money laundering to close down NGOs

The National Office for the Prevention and Control of Money Laundering published a draft law on the prevention and fight against money laundering amending several normative acts, including the “Law of NGOs” (Government Ordinance No. 26 / 2000) [1].

The pretext of these legislative amendments is the implementation of the European Directive no. 2015/849 / EU of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing.

The Government wants to oblige associations and foundations to report periodically to the Ministry of Justice [2] (annually and whenever new situations occur) numerous data and information, including the names and identification data of each person with whom the association or foundation gets in touch or to whom provides support in any way in the course of their work. Nevertheless, the European Directive does not expressly request this and leaves a margin of discretion to each state.

In case of non-compliance with the obligation to report this data or other information, the draft law proposes sanctions ranging from a significant fine (up to 5,000 lei) [3] to the dissolution of the association/foundation [4 ] .

Given the unclear, confused and disproportionate categories of data and information to be reported by NGOs listed in the draft law, it is obvious that the Government is seeking to introduce burdensome legal obligations which, objectively, will not be able to be met by NGOs. And the final sanction for failure to meet this reporting obligation is manifestly disproportionate, namely, the “supreme” sanction of dissolution.

APADOR-CH points out that the Parliament is currently debating a draft bill proposed by the ruling party, providing for the dissolution of NGOs in case of non-compliance with the burdensome request of reporting any financing grant (regardless of its value). Also, the Ministry of Public Finance is preparing, upon recommendation from the Court of Auditors, a draft law which will allow NGOs to be scattered with targeted fiscal control pretexting monitoring the use of the 2% tax rate that can be redirected to NGOs.

The government is already adopting a “modus operandis” toward NGOs, which has two components:

  1. the introduction of bureaucratic, confusing and burdensome obligations for NGOs (mostly in the form of excessively detailed and frequent reports);
  2. the provision of manifestly disproportionate sanctions (dissolution of the NGO) in the event of failure to meet these bureaucratic obligations, which in reality cannot be fulfilled.

So instead of focusing on their work and their mission purpose, associations and foundations will dedicate their time and energy to drafting reports and sending them to the different public entities. The latter will not be able to process that much information (there are sufficient precedents of such institutional incapacity, for example, the catastrophic monitoring by ANAF (the national fiscal administration agency) of of payment of health contributions). But if an NGO is too loud or critic of the governing authorities, it could be put under scrutiny for some forgotten report out of dozens of reports requested or for missing a date on the requested information, leading to its dissolution.

APADOR-CH reminds that for associations and foundations; the dissolution is a sanction comparable to the death penalty for the individual. However, if the “death penalty” can still apply to (legal) entities in the EU, at least the conditions for its application must be sufficiently clear and restrictive, and should be limited to truly exceptional cases to prevent abuse.

APADOR-CH appeals to the Government to temper its increasingly brutal attempt to retaliate against the criticism coming from civil society by introducing legal regulations that prevent normal functioning of associations and foundations.

[1] At:

[2]Point 18 of the draft law introduces the obligation to communicate to the Ministry of Justice the identification data of “real beneficiaries”. And, in the case of associations and foundations, art. 4 al. 2 lit. c of the draft Law on the Prevention and Control of Money Laundering and Terrorist Financing, the notion of “real beneficiary” also includes “natural persons … in whose main interest the association or foundation was established or is operating”. Because the notion of “main interest” used in the bill is not defined anywhere, it can refer to anything, including the interest of individuals in being supported by an association/foundation. For example, an association for consumer protection or patient protection was set up in the interests of consumers or patients. The consequence of this bill is that the name and other identification data of consumers or patients coming into contact with such associations should be reported to the Ministry of Justice. According to the draft law, each person will have to be identified and reported to the Ministry of Justice by the association/foundation. If this obligation is not respected, the association/foundation will be dissolved (abolished).

[3] Point 18 of the draft law

[4] Point 24 of the draft law

Featured image by Andreea Alexandru /Mediafax Foto