Anti-Money Laundering Policy

Status 01.12.2020
Contact Person: Bogdan Vasile

1. Overview

1.1 This Anti-Money Laundering Policy (“AML Policy“) provides guidance on the management of the risks, threats and vulnerabilities imposed by Money Laundering and Terrorist Financing regulations, particularly the 4th AML Directive and the local AML laws implementing the 4th AML Directive. It implements the results of the in-house AML risk analysis of Lospa Lawyers prepared in June 2017 and updated in Decembre 2020.

1.2 The AML Policy addresses the responsibilities of Members both when accepting a mandate as well as on a continuous basis and serves the purpose of preventing Lospa Lawyers from liabilities and, amongst other possible sanctions, from working without enforceable claim for fees.

2. The Principles

2.1 Applicability of the AML Policy must be evaluated at the outset of each Lospa Lawyers mandate (see section 3). Team Compliance will provide an initial Compliance assessment of AML issues upon every conflict check and/or the opening of a new file.

2.2 If the matter is qualified as AML relevant, you have to consider and define the specific obligations under the AML Policy:
(A) client due diligence (see section 4);
(B) monitoring (see section 5);
(C) reporting (see section 6); and
(D) documentation and record keeping (see section 7).

2.3 Compliance with applicable AML obligations must be documented.

2.4 In case of suspicion of Money Laundering or Terrorist Financing and whenever you are in doubt consult with Paul Lospa and the Compliance Officer.

3. Applicability of the AML Policy

3.1 Before accepting a mandate, please assess whether the advice/representation concerns one of the following risk-prone matters:
(A) Real estate and corporate transactions:
– purchase and/or sale of real estate;
– purchase/sale of business entities (or shares in them)
(B) Asset management:
– management or custody of financial means, securities and other assets;
– opening and administration of bank, savings or securities accounts
(C) Establishing companies:
– establishment, operation and administration of companies;
– establishment, operation and administration of trust companies or similar structures (eg trusts, foundations) or other legal persons; and procurement of funds required to establish, operate and administer companies (fundraising).

3.2 In any such matter you must always consider your client due diligence, monitoring, reporting and record keeping obligations imposed under sections 4 until 6.

3.3 These obligations apply also for longstanding clients no matter how good you know the client already.

3.4 If the matter is not risk-prone, no action is required under the AML Policy unless you know, suspect or have a legitimate reason to assume that a certain matter/ transaction serves Money Laundering or Terrorist Financing (see section 4.1.3.).

4. Client Due Diligence Measures

4.1 Client due diligence (Know Your Client – KYC) measures must be applied upon any of the following events:
(A) establishment of a business relationship;
(B) in case of any transaction with a value of at least EUR 15,000;
(C) if you know, suspect or have a legitimate reason to assume that a certain transaction serves Money Laundering or Terrorist Financing;
(D) you doubt the authenticity or appropriateness of the identification data received. If KYC measures must be conducted, please complete all of the five steps specified below.

4.2 FIRST, you must determine and verify the potential client’s and (where applicable) the Beneficial Owner’s identity as well as the identity of an eventual attorney-in-fact or trustor:
1. The identity of the client and an eventual attorney-in-fact or trustor has to be verified by personal presentation of an official identification document in case of natural persons and in case of legal persons on the basis of documents, data or information obtained from a reliable and independent source. If the client may not be physically present (long distance transaction), you must take additional conclusive and adequate measures for the identification of such client and procure that the client carries out an account payment or a first payment through a bank account opened in the client’s name with a credit institution subject to the AML Directive.
2. Where applicable, the identity of a Beneficial Owner must be verified by taking risk-based and adequate measures so that you are satisfied that you know who the Beneficial Owner is, including, as regards legal persons, trusts and similar legal arrangements, understanding the ownership and control structure of the client. You may rely on third parties that are subject to the same client due diligence in accordance to the AML Directive, i.e. lawyers, notaries, auditors and tax consultants or domestic credit and financial institutions respectively credit and financial institutions situated in the European Union or in a third country where Client due diligence requirements and record-keeping requirements apply which are consistent with those laid down in the AML-Directive, and where their compliance with the requirements of the AML-Directive is supervised in a manner consistent with Section 2 of Chapter VI. of the AML-Directive. However, please note that the ultimate responsibility for meeting those requirements remains always with you.

4.3 Some of the required data can be checked or provided by Lospa Lawyers’s internal Compliance team. For data not accessible on that database, information shall be requested from the client via Client Identification Form.

4.4 Certain natural and legal persons and associations that are involved with terrorist acts are blacklisted by the EU and the UN. Mandates involving any such person as client/trustor/Beneficial Owner etc must not be entered into or continued. Team Compliance will perform the required checks and raise alarm in case of any such involvement.

4.5 SECOND, you are further obliged to obtain risk-based information on the purpose and intended nature of the business relationship and to conduct ongoing monitoring of the business relationship including scrutiny of transactions undertaken throughout the course of that relationship. This is usually handled on a regular basis by the partner/attorney leading the matter; on a need to know basis (legal necessity and/or doubts), you may have to raise additional specific questions to the client.

4.6 THIRD, based on the results of the internal checks by Lospa Lawyers’ internal Compliance team and/or a declaration of the client, you must also verify whether the client or any of its Beneficial Owner is a (i) Politically Exposed Person (“PEP”), (ii) an (immediate) Family Member of a PEP, or (iii) a Person Known to be a Close Associate of a PEP. Mandates involving a PEP may only be accepted subject to the following conditions:
(A) prior consent of and check by an equity partner;
(B) prior consent of the Compliance Officer in consultation with partners and/or the Steering Committee;
(C) appropriate action by the Member in charge to review the source of funds used during the mandate;
(D) escalated, continuous monitoring; and
(E) preparation of an internal note of the Member in charge on the risk considerations and factors.

4.7 FOURTH, due diligence obligations are simplified regarding certain authorities or public institutions, eg listed companies whose securities are admitted to trading on a regulated market and where the client is a credit or financial institution, in each case as defined in the local laws implementing the AML Directive.2 In such a case you are not obliged to apply any of the client due diligence measures set forth above; however, you have to obtain enough information to determine that such exemption applies.

4.8 FIFTH, in addition to the required checks and monitoring obligation described above you must apply enhanced client due diligence, on a risk-sensitive basis, in especially complex and unusual transactions and in situations which, by their nature, can present a higher risk of Money Laundering or Terrorist Financing, and at least in the following situations:
(A) long-distance transactions;
(B) where a client demands exceptional and unusual anonymity or discretion;
(C) if the client/representative/Beneficial Owner is domiciled or resides in a riskprone and/or corruption-prone country; and where a PEP, an (immediate) Family Member of a PEP, or a Person Known to be a Close Associate of a PEP is involved as client/representative/Beneficial Owner.

With regard to points (C) and (D) Team Compliance will perform the required checks and raise alarm in case of any such involvement.

4.9 In certain cases, the risk of Money Laundering derives from the client’s field of business such as eg (i) restaurants with high cash volumes, (ii) exporters and importers of goods that are subject to trade restrictions, (iii) money transmitters and (iv) construction industry (high contract values; typical incident of corruption in public and private sphere). In any of these cases conduct an AML risk assessment in consultation with the Compliance Officer.

4.10 The following circumstances regarding the person or conduct of the client must be deemed conspicuous and may trigger a suspicious activity report (see section 6), if plausible reasons for these issues cannot be found (suspicions based on individual’s behavior):
(A) the client demands discretion or anonymity to an unusual extent;
(B) the client attempts to avoid personal contact with the lawyer (and deploys a front man instead);
(C) the client makes false, ambiguous or misleading statements or denies them for no plausible reason;
(D) the client frequently changes lawyers without plausible reason;
(E) lack of interest in an explanation of costs by lawyer;
(F) the client requests lawyer to conduct layered activity;
(G) forced (cash) payments into custodial/escrow accounts (e.g. retainer) by the client; and
(H) withdrawal of assets shortly after crediting to the custodial/escrow account or investment account, etc.

4.11 The following transactions entail a presumed elevated risk of Money Laundering that, in and of themselves, do not warrant a suspicious activity report (see section 6), but do necessitate establishing the plausibility of the transaction background (suspicious factors of a business nature):
(A) the structure of the mandate is tantamount to an unlawful purpose, because the business purpose is dubious, or the structure appears economically infeasible;
(B) the purpose of the mandate is a transaction outside the client’s field of activit (with no discernible reason);
(C) assets are passed directly through an account for the sole purpose of cycling it, without business necessity;
(D) the business holds bank transfers to and from abroad without discernible connection to the business entity or the person of the client;
(E) as part of the mandate, unknown third party collateral is provided, potentially for loans that do not conform to market standards, without discernible connection to the business entity or the person of the client;
(F) the purpose of the mandate is bank transfers to or from other banks without recipient details, or recurring large wire transfers abroad, with the demand for cash payments in or from drug production countries;
(G) as part of administering the client mandate, distressed loans are repaid unexpectedly and without plausible explanation of the sudden liquidity; or
(H) numbered accounts (or pseudonyms) are used to settle business transactions.

5. Monitoring

5.1 If you are obliged to do KYC checks, you must also conduct an ongoing monitoring of the mandate (the business relationship). Monitoring shall include scrutiny of the transactions undertaken throughout the course of the mandate to ensure that these transactions are consistent with our knowledge of the client, its business and risk profile, including where necessary the source of funds and ensuring that the documents, data or information held are kept up-to-date.

5.2 If the client or any of its Beneficial Owners is a PEP, an (immediate) Family Member of a PEP, or a Person Known to be a Close Associate of a PEP, the level of scrutiny shall be enhanced.

6. Reporting Responsibilities

6.1 If you know, suspect or have reasonable grounds to suspect that a certain transaction serves Money Laundering or Terrorism Financing you must promptly liaise with the Compliance Officer and the responsible partner in order to jointly assess whether the competent national AML authorities must be notified.

6.2 If a mandate triggers client due diligence obligations, a suspicious activity report (“Report”) must be submitted in coordination with the Compliance Officer to the respective competent national authority (“AML-Authority”); see the List of AML Authorities if (alternatively):
(A) there are reasonable grounds to suspect that the transaction facilitates Money Laundering / Terrorist Financing;
(B) legal advice is obviously sought for the purpose of Money Laundering/ Terrorist Financing; or
(C) the client intentionally and conclusively withholds information when determining identification (note: The Member must first advise the client on the consequences of denial/refusal).

The Report is warranted where the Member, after meticulous review of a matter and after discussing it with the Compliance Officer, has reason to assume that legal advice could be misused for Money Laundering or Terrorist Financing purposes. A bona fide notification to the AML-Authority is not considered a breach of client attorney privilege or other contractual, legal or administrative regulations on regulated disclosure restrictions (confidentiality obligations). Note that the reporting obligation does not terminate if the Member rejects a potential client.

6.3 There is no duty to report suspicious factors pertaining to Money Laundering or Terrorist Financing that are unconnected with the legal advice. A Member is not obliged to submit a Report on the fact(s) if he/she had learned them in connection with the mandate through a court, an authority or the public prosecution’s office.

6.4 A suspicious transaction for which a Report has to be filed must not be carried out prior to the notification of the AML-Authority. However, if you request a decision from the national AML-Authority and the transaction is not objected by the end of the following business day, the suspicious transaction may be executed. If cancellation/ postponement of a suspicions transaction is impossible or would impair or impede the integrity of the assets, the Member must report the necessary information to the AML-Authority immediately thereafter.

6.5 With the exception of the AML-Authority, the national bar associations and law enforcement agencies (public prosecution’s office or police), the Member must neither inform the client nor any third party of filing of the Report. Information transfer within Lospa Lawyers is permissible.

7. Documentation and Record Keeping

7.1 Identification documents and other records and copies in connection with KYC checks, including the results of the initial compliance check by Team Compliance, must be stored (if possible) in original and/or electronically in the Lospa Lawyers server (subfolder Administration – Compliance).

7.2 The factors and indications of suspicion must be documented as precisely as possible. Similarly, the assessment of a suspicious factor that would trigger a report must be set out in writing. Even if a suspicion ultimately turns out not to be relevant, a written substantiation is required in the form of a file note.

7.3 The retention period is 10 years from termination of the client relationship.

8. Possible Sanctions

8.1 No fees must be accepted if you or any other Member know of a Money Laundering or Terrorist Financing offence and the objective circumstances suggest a criminally liable origin of the client’s funds designated for the fee payment. If you are of the opinion or have reason to believe that a client offers funds from a criminal origin, you have a reporting obligation (abuse of legal counsel for criminal purposes). However, a subsequent recognition of the criminal origin of a fee is not punishable, if it was initially accepted in good faith.

8.2 You may be subject to criminal prosecution upon intentional commitment of a Money Laundering or Terrorist Financing offence (ie if you recognise that the advice and/or representation would be tantamount to an act of Money Laundering or Terrorist Financing and you fail to submit a Report to the AML-Authority).

8.3 Breaches of client due diligence obligations under Money Laundering and Terrorist Financing regulations are subject to disciplinary action by the national Bar Associations, including warnings, monetary fines and in extreme cases even limited suspension or expulsion.

8.4 If a Member commits the offence of Money Laundering or Terrorist Financing, then the respective legal entity in the country (e.g. Oficiul Național de Prevenire și Combatere a Spălării Banilor, Bucharest, Romania) may be criminally liable and be penalised by a monetary fine. The legal entity may likewise be subject to monetary fines if a Member (intentionally) commits a Money Laundering or Terrorist Financing offence is such entity has failed to implement preventive measures.

8.5 Further liabilities may arise from labour and civil law (damage claims).

9. AML whistleblowing – internal anonymous reporting procedures

9.1 Art. 61 sec. 3 4th AML Directive contains the obligation to implement appropriate procedures for employees, or persons in a comparable position, to report breaches internally through a specific, independent and anonymous channel. The requested AML whistleblowing procedures as follows: a link on the intranet/Compliance portal where you can report any internal AML incident to the Compliance Officer via an anonymous email. The email cannot be traced back to the sender and will not be recorded.

9.2 Lospa Lawyers encourages a work environment in which you or any other Member may report concerns without fear of retaliation such as being punished, discharged, suspended, failing promotion, threatened or the like. It is important that any concerns are identified and resolved at the earliest possible opportunity without any kind of retaliation against those who report such concerns honestly and with good intentions.

10. Contact

Bogdan Vasile
T: +40 749 264 899
E: bogdan.vasile@lospa.ro

DEFINITIONS

AML Directive

The Directive 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive
2006/70/EC.

Beneficial Owner

The natural person(s) who ultimately owns or controls the customer and/or the natural person(s) on whose behalf a transaction or activity is being conducted and includes at least:

(A) in the case of corporate entities:
(i) the natural person(s) who ultimately owns or controls a legal entity through direct or indirect ownership of a sufficient percentage of the shares or voting rights or ownership interest in that entity, including through bearer shareholdings, or through control via other means, other than a company listed on a regulated market that is subject to disclosure requirements consistent with European Union law or subject to equivalent international standards which ensure adequate transparency of ownership information (a shareholding of 25 % plus one share or an ownership interest of more than 25 % in the customer held by a natural person shall be an indication of direct ownership; a shareholding of 25 % plus one share or an ownership interest of more than 25 % in the customer held by a corporate entity, which is under the control of a natural person(s), or by multiple corporate entities, which are under the control of the same natural person(s), shall be an indication of indirect ownership);
(ii) if, after having exhausted all possible means and provided there are no grounds for suspicion, no person under point (i) is identified, or if there is any doubt that the person(s) identified are the beneficial owner(s), the natural person(s) who hold the position of senior managing official(s), the obliged entities shall keep records of the actions taken in order to identify the beneficial ownership under point (i) and this point;

(B) in the case of trusts:
(i) the settlor;
(ii) the trustee(s);
(iii) the protector, if any;
(iv) the beneficiaries, or where the individuals benefiting from the legal arrangement or entity have yet to be determined, the class of persons in whose main interest the legal arrangement or entity is set up or operates;
(v) any other natural person exercising ultimate control over the trust by means of direct or indirect ownership or by other means;

(C) in the case of legal entities such as foundations, and legal arrangements similar to trusts, the natural person(s) holding equivalent or similar positions to those referred to in point (B).

CMS

Lospa Lawyers’ compliance management system which comprises all measures and processes within the firm aiming at ensuring that personnel are aware of and take steps to comply with relevant laws and regulations.

Compliance Officer

An independent and objective body that oversees and advises/ supports the Steering Committee in the development, introduction, maintenance, regular review and improvement of Lospa Lawyers’ Compliance Management System.

Family Members

“Family members” includes the following:
(i) the spouse, or a person considered to be equivalent to a spouse, of a politically exposed person; (ii) the children and their spouses, or persons considered to be equivalent to a spouse, of a politically exposed person;
(ii) the parents of a politically exposed person.

Member

Any employee, associate, internship-student, summer associate, attorney at law and partner in Lospa Lawyers’ office.

Money Laundering

The following criminal conduct, when committed intentionally:
(i) the conversion or transfer of property, knowing that such property is derived from criminal activity or any participation in such activity, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in the commission of such activity to evade the legal consequences of his action;
(ii) the concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of property, knowing that such property is derived from criminal activity or from an act of participation in such activity;
(iii) the acquisition, possession or use of property, knowing, at the time of receipt, that such property was derived from criminal activity or from an act of participation in such activity; and
(iv) participation in, association to commit, attempts to commit and aiding, abetting, facilitating and counselling the commission of any of the actions mentioned in the foregoing points.

Persons known to be close associates

“Persons known to be close associates” means:
(i) natural persons who are known to have joint beneficial ownership of legal entities or legal arrangements, or any other close business relations, with a politically exposed person;
(ii) natural persons who have sole beneficial ownership of a
(iii) legal entity or legal arrangement which is known to have been set up for the de facto benefit of a politically exposed person.

Politically Exposed Person (PEP)

Politically Exposed Person (PEP) means a natural person who is or who has been entrusted with prominent public functions and includes the following:
(i) heads of State, heads of government, ministers and deputy or assistant ministers;âmembers of parliament or of similar legislative bodies;
(ii) members of the governing bodies of political parties;
(iii) members of supreme courts, of constitutional courts or of other high-level judicial bodies, the decisions of which are not subject to further appeal, except in exceptional circumstances;
(iv) members of courts of auditors or of the boards of central banks;
(v) ambassadors, chargés d’affaires and high-ranking officers in the armed forces;
(vi) members of the administrative, management or supervisory bodies of State-owned enterprises;
(vii) directors, deputy directors and members of the board or
(viii) equivalent function of an international organisation.

No public function referred to in points (i) to (viii) shall be understood as covering middle-ranking or more junior officials.

Steering Committee

Lospa Lawyers’ central management body, currently consisting of Paul Lospa and Bogdan Vasile.

Key Contacts

Paul Lospa

+40 725 387 205

Livia Dianu-Buja

+40 751 214 154

Alexandra Iliescu

+40 726 014 951

Elena Armașu

+40 729 288 776

Elena Pîrvu

+40 727 214 655

Bianca Răileanu

+40 785 647 274

Simina Cîrstescu

+40 724 588 171

Bogdan Vasile

+40 749 264 899

Radu Dodoi

+40 766 491 750

Andrei Ivan

+40 722 518 085

Gabriela Lospa

+40 722 693 208

Jason Wolfe

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