FATF Status

Moldova is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The last follow-up Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Moldova was undertaken in 2022. According to that Evaluation, Moldova was deemed Compliant for 9 and Largely Compliant for 23 of the FATF 40 Recommendations. It remains rated Highly Effective for 0 and Substantially Effective for 3 with regard to the 11 areas of Effectiveness of its AML/CFT Regime.

US Department of State Money Laundering assessment (INCSR)

Moldova was deemed a Jurisdiction of Concern by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -

Moldova is not a regional financial center. The economy is largely cash-based and remains highly vulnerable to money laundering activities. The Government of Moldova monitors money flows throughout the country, but does not exercise control over the breakaway region of Transnistria.  Transnistrian authorities do not adhere to Moldovan financial controls and maintain a banking system independent of, and not licensed by, the National Bank of Moldova (NBM). The breakaway region of Transnistria is highly susceptible to money laundering schemes. Due to the Moldova government’s inability to enforce the laws on this territory, Transnistrian banking and financial laws and regulations are not in compliance with accepted international AML/CFT norms.

Criminal proceeds laundered in Moldova derive substantially from tax evasion, contraband smuggling, fraud, and corruption. Money laundering occurs within the banking system, exchange houses, and the offshore financial centers in Transnistria. Currently, 11 banks are operating in Moldova. Neither offshore banks nor shell companies are permitted; despite this ban, shell companies continue to be used to launder illicit proceeds. Internet gaming sites exist, although no statistics are available on the number of sites in operation. Internet gaming comes under the same set of regulations as domestic casinos. Enforcement of the regulations is sporadic.

In late November 2014, an estimated $1 billion was stripped from the assets of three large banks in Moldova, which has led to their liquidation. The theft is being investigated by Moldova’s National Anticorruption Center (NAC) in conjunction with some outside assistance. However, the theft appears politically connected and the investigation is lingering, casting doubt on the government’s ability and commitment to identify and prosecute the perpetrators.

Moldova contains seven free trade zones (FTZs), some of which are infrequently used. Reportedly, goods from abroad are sometimes imported into the FTZ and then resold and exported to other countries with documentation indicating Moldovan origin. Companies operating in FTZs are subject to inspections, controls, and investigations by inspectors from the Customs Service and the General Police Inspectorate.

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           42

World Governance Indicator – Control of Corruption             43

Moldova's business environment is one of the most challenging in the region and is weakened by pervasive government corruption and a burdensome regulatory environment. The government lacks transparency, and Moldova's public officials commit acts of corruption with impunity. The judiciary is one of the weakest in the world in relation to independence from the political elite, and judges and prosecutors regularly extort bribes in exchange for reducing charges or imposing milder penalties. International companies pay bribes and kickbacks to obtain construction permits and operating licenses and to secure government contracts. Moldova's Criminal Code prohibits active and passive bribery, extortion, abuse of office, bribery of foreign public officials and trading in influence. However, Moldova's anti-corruption legislative framework is deficient as a result of inadequate financing and monitoring and a general lack of resources. Facilitation payments are often expected when operating in Moldova and are not addressed in law. For further information - GAN Integrity Business Anti-Corruption Portal

Under the current pro-reform government, Moldova is making progress on economic reforms and strengthening democratic institutions.  The pro-reform message voters sent when they chose Maia Sandu as Moldova’s President in November 2020 was solidified when the pro-Western, anti-corruption Action and Solidarity Party (PAS) won snap parliamentary elections in July 2021. The government’s reform agenda enjoys wide support among the business community.

In December 2021, the government secured a 40-month, $560 million governance-focused program with the International Monetary Fund (IMF). Amid the economic fallout from Russia’s further invasion into Ukraine, this amount was increased to a total of $795 million.

In 2022, Moldova’s economy contracted sharply by almost 6%, following a record 13.9% growth in 2021. The downturn reflected spillovers from Russia’s war against Ukraine, which had an immediate and significant negative impact on Moldova’s economy. The country was faced with an energy crisis and unprecedented inflation which spurred a cost of living crisis. Almost 20% of Moldova’s goods were imported from Ukraine, Russia, and Belarus before the war; with those supply routes frozen, Moldovans have had to substitute goods from the EU at significantly higher costs.  Moldova previously relied on the Odesa seaport and Ukraine’s railway system for much of its trade and now must pay significantly higher transport fees for goods to be trucked in from Romania via the land border. A modest recovery is expected in 2023; the government is enacting a series of reforms to better support businesses to improve economic growth.

The government is committed to strengthening Moldova’s investment and business climate to attract foreign investment, which will help mitigate the negative economic impacts of the COVID-19 pandemic, energy crisis, and disruptions to Moldovan economy because of Russia’s invasion of Ukraine. In the wake of the massive bank fraud in 2014, when more than a billion dollars was stolen from Moldova’s state coffers, the government is taking action to reform the justice sector, investigate and prosecute those responsible, and tackle the pervasive corruption that continues to undermine public trust and slow economic development.  Moldova ranks 91 out of 180 on the Transparency International Corruption Perceptions Index.

As a WTO member since 2001, Moldova has adopted modern commercial legislation in accordance with WTO rules.  The main challenges to the business climate remain the lack of effective and equitable implementation of laws and regulations, and arbitrary, non-transparent decisions by government officials to give domestic producers an edge over foreign competitors in certain areas.  For example, an environmental tax is applied on bottles and other packaging of imported goods, but not levied on bottles and packaging produced in Moldova.  There are reports of problems with customs valuation of goods, specifically that the Customs Service has been applying the maximum possible values to imported goods, even if their actual purchase value was far lower.

In June 2014, Moldova signed an Association Agreement (AA) with the European Union (EU), including a Deep and Comprehensive Free Trade Agreement (DCFTA), committing the government to a course of reforms to bring its governmental, regulatory, and business practices in line with EU standards.  In 2022, the EU granted Moldova the formal status of candidate country. The DCFTA has helped integrate Moldova further into the European common market and created more opportunities for investment in Moldova as a bridge between Western and Eastern European markets. Moldova now exports over 80 percent of its goods to European, North American, and other non-Russian markets.

While some large foreign companies have taken advantage of tax breaks in the country’s free economic zones, foreign direct investment (FDI) remains low.  Finance, automotive, light industry, agriculture, food processing, IT, wine, and real estate have historically attracted foreign investment.  Largely through USAID programs, the United States has supported the development of a number of these emerging sectors, yet risks remain.  The government has identified seven priority sectors for investment and export promotion: agriculture and food processing, automotive, business services such as business process outsourcing (BPO), clothing and footwear, electronics, information and communication technologies (ICT), and machinery.

Private investors, including several U.S. companies, have shown strong interest in the ICT sector in response to a new preferential tax regime.  Improvements in the strength and transparency of the financial sector also helped attract interest.  Many U.S. businesses have explored opportunities in the agricultural and energy sectors.

Country Links

Office for Prevention and Fight Against Money Laundering (SPCSB)

National Bank of Moldova

National Commission for Financial Markets - CNPF