Interview published by Ziarul Financiar on August 29, 2019, with Luminiţa Runcan, Deputy CEO – CRO (Chief Risk Officer): “We will gradually scale back the bank’s relationships with clients active in the gambling industry because it exceeds BT’s risk appetite.”

Banca Transilvania, Romania’s largest bank, is beginning to align its commercial policies with the changes following the adoption of the new law on preventing and combating money laundering and terrorist financing (Law No. 129 of July 11, 2019). This will mean closer scrutiny of clients, the source of funds, the transactions they carry out in Romania, and, not least, who the ultimate beneficial owner of a business is.

“For most customers—BT’s core customers—nothing changes. We have been, and remain, vigilant about who the ultimate beneficial owner is, and we receive and process supporting documents for our clients’ transactions. We also continuously review—now even more so—our entire client portfolio to ensure we hold all information required by law to fulfil our role, a process that also has clear commercial benefits: the better we know our clients, the more appropriately the bank can tailor products and services for them.”

She says Banca Transilvania will become more selective with certain categories of clients, such as non-residents, and will closely monitor their links to genuine economic activity in Romania.

“We will also gradually wind down the bank’s relationships with clients active in the gambling industry because this exceeds BT’s risk appetite. All these actions are calibrated by our bank in a measured way, both in intensity and over time.”

Luminiţa Runcan has been with Banca Transilvania since the very beginning, in 1994, and in her current role as head of risk she is responsible for implementing the banking procedures that follow from the new anti–money laundering legislation.

This regulatory and compliance risk has become extremely important, rising to the same level as commercial risk—namely, lending.

“Each of the risks mentioned has its own importance and, moreover, they are not isolated; they are interdependent. Certainly, in recent times the importance of compliance risk has grown exponentially, and those who treat it commensurately will not run into problems.”

Also, cash transactions of 10,000 euros and above will need to be explained more thoroughly by clients.

At the same time, the category of clients who are politically exposed persons is being broadened, and their transactions will need to be monitored by banks.

Banca Transilvania expects that these new changes and the more rigorous checks that will need to be carried out on transactions will generate reticence and many questions from clients.

“I don’t think we can speak of fear, but we do expect some reticence, which may stem from not knowing or not understanding certain details or obligations that fall to reporting entities in their dealings with customers. Clearly, any legislative change entails additional effort to adapt, but once we get past the learning curve, things go much more smoothly.”

Fines in this area are becoming larger and larger, and banks have to adapt their operations to the new changes.

Luminiţa Runcan says that every year costs run to a few million euros for software, applications, implementation, licenses and team training.

In 2018, Banca Transilvania became the new leader of the local banking system by assets, following the acquisitions of Volksbank and Bancpost, reaching assets of 74.3 bn lei (15.8 bn euros) and a market share of 16.5%. The bank is listed on the Bucharest Stock Exchange, where it has a total market capitalization of over 12.4 bn lei (2.6 bn euros).

How can clients explain cash transactions exceeding 10,000 euros—what should a client in this position do?

It’s not very hard, especially since in most cases there are documents that show the source of funds, which must be presented to the bank. Romanians’ continued appetite for cash is well known; however, in an increasingly digital world, we do not wish to encourage it.