Global Head of IP David Stone speaks to Lexology Learn and discusses why protecting and enforcing design rights in the UK is becoming a lot more attractive, as well as new measures being introduced by the Intellectual Property Enterprise Court. He also looks at where there is room for improvement in the English courts.
Welcome to our Annual Review of developments relating to trade marks, copyright and designs during 2019. We have selected a number of the reports that we have published over the course of the last 12 months, commenting on issues ranging from the latest guidance on the boundaries of trade marks and designs through to a number of interesting questions on copyright protection in the light of developing technology and business models. This year’s Review mentions a couple of cases in which we acted, including in a website blocking action for Nintendo in relation to sites selling devices seeking to circumvent encryption measures, and an important case for Sky in the European Court of Justice relating to trade marks.
We also include a brief update on the Brexit position. Now that the Withdrawal Agreement has been ratified and the UK has left the EU, we are in the transition period. During this period, which will end on 31 December 2020 (unless it is extended, albeit the UK Government has said this will not happen), the status quo will be preserved. There will be no change in how IP rights will be protected and enforced during the transition period and, more specifically, EU Trade Marks and Designs will continue during the transition period to extend to the UK. As part of our Brexit preparations, we have set up Mishcon de Reya IP B.V., a trade mark practice based in The Netherlands. Mishcon de Reya IP B.V. is a wholly owned subsidiary of Mishcon de Reya LLP and will allow us to ensure continued representation in relation to EU Trade Mark and Design matters before the EUIPO following the end of the transition period. We will continue to update you on Brexit developments throughout the year.
Click here to view the pdf version of our Review.
We hope you enjoy reading the Annual Review. Please get in touch if you have comments or queries on any of the topics raised.
Compared to previous years, trade mark law and practice in 2019 focussed to a much lesser extent on questions of infringement and enforcement. Instead, the key cases raised questions relating to clarity and precision of trade mark specifications (and whether this can be a ground of invalidity of a registered mark), and alleged bad faith during the trade mark application process. […read more]
In a continuing trend, 2019 saw the CJEU issue a series of decisions following referrals from Member State national courts on various issues under the Copyright Directive and related Directives. This looks set to continue in 2020 with the CJEU due to hear more copyright referrals. […read more]
Alongside an important referral to the CJEU relating to ‘first disclosure’ for Unregistered Community Designs, the implications of the Supreme Court’s Trunki decision continue to be felt in the UK Courts. […read more]
The UK left the EU on 31 January 2020. The EU and UK reached a revised Withdrawal Agreement which includes a transition period ending on 31 December 2020. During the transition period, the status quo continues to apply in relation to IP rights, with EU trade marks and designs continuing to extend to the UK. […read more]
Other interesting developments over the last year relate to competition law considerations in relation to brands and online marketplaces.
Travelling communities – including Roma and Gypsies – are some of the most discriminated against minority groups in Europe. They have long been the targets of prejudice and hate and have experienced widespread inequalities across almost area of society since they have existed. In the UK alone, both Roma and Irish-Gypsies are disadvantaged in the education, health, and business sectors (to name a few). They are regularly discriminated against – by individuals, groups and authorities – and they are often cut off from vital services.
Despite these inequalities, the UK remains a relatively safe place for Travellers when compared to its neighbouring countries, and as such has become a long-standing refuge from states which are less tolerant. In the run up to and during the Second World War, for instance, Romani Gypsies fled Germany and other Nazi-occupied countries for the UK when they were persecuted by the Nazi regime. Equally, over the last century, Roma have fled places like Hungary, Romania, and the Czech Republic where they are commonly the targets of persistent persecution and racism. As such, the UK has historically acted as a refuge of sorts for Travelling communities, with Roma either officially claiming asylum or utilising free movement laws to move here. The latter has long been a core facet to Roma culture, which centres around nomadic principles; the ability to move easily across borders and maintain mobility in this respect is therefore a vital part of their lifestyle.
Brexit, and the end of free movement it promises, greatly threatens the future mobility of Roma and Gypsy communities, both in and outside of the UK. And it does this in multiple ways. Firstly, it threatens it on a fundamental level; the end of free movement will mean that moving from or into the UK from any European country will be more complex at the border. More documentation will be required at customs, and visa restrictions will apply for anyone looking to visit, work in, or study in Britain. This threatens Romani and Gypsy lifestyle principles, as such restrictions would effectively end their ability to be ‘rootless’, as is central to nomadic practices. What’s more, this loss of mobility also presents extra hurdles for those looking to flee persecution and discrimination in other EU countries. Needing to secure a visa, or claim political asylum makes the process that much harder – particularly for groups like Roma who are often cut off from legal services
Equally, Brexit also poses a threat for European Roma populations already living in the UK. Although Johnson and his cabinet may have promised to ensure that the rights of European nationals living in the UK remain the same after Brexit, there are uncertainties about what will happen to those who do not register to keep them in time for the deadline. As it stands, any EU national who arrived in the UK before or during the implementation period (which ends on 31st January 2020), can register for settled status in the UK which secures their right of abode. Currently, there is less than a year to register, and still an estimated 500,000 people yet to do so.
According to Mihai Bica, a representative from the Roma Support Group, a huge portion of this total is made up by members of Roma, Gypsy and Traveller communities. This disparity, she suggests, is down to a combination of three factors: a lack of resources and services to inform Roma of their rights; an inability to access or use the online tools required to register; and a lack of supporting documentation.
In the wake of the Windrush scandal, the idea that Travelling communities could be left to fall through the cracks of the system is extremely worrying, particularly since they are already ostracised from society. Roma and Gypsies have long been the bearers of racism and xenophobia, at both a public and political level. Communities face a string of inequalities across the education, social, health, and business sectors, to name a few. At the other end of the spectrum, they are subject to serious and life-threatening hate crime.
And Brexit has a part to play in this too. Since the referendum result in 2016, hate crime has spiked, rising by almost double in four years; social landscapes have changed drastically and anti-migrant and anti-other attitudes have been normalised in many sections of British society, and even harnessed by pro-Leave groups and organisations.
Unfortunately, though, it is not only in its impact on mobility, status, and attitudes that Brexit is set to hurt Travelling communities. As it stands, the EU currently holds a budget of €11.6 billion for social research and strategy – about 20% of this is dedicated to social inclusion. This is used within minority communities, including Roma, for integration schemes which aim to open up dialogues with and promote the inclusion of Travelling communities. Once the UK entirely leaves the EU at the end of the year, this budget will be lost, and it is unclear what it will be replaced with (if it is replaced with anything at all).
As such, it would seem that Brexit’s threat to the Roma and Travelling communities is three-fold; individuals are set to lose their movement rights, lose access to funding, and be put at a further risk of discrimination and hate crime. Urgent and vast work must be conducted to prevent and address these issues. Support must be given to inform and assist unregistered European Roma living in and entering the UK during the next year, and schemes must be put into place to continue with and improve on EU Roma integration and inclusion efforts. Equally, dialogues must be started in every sector, particularly education which forms the attitudes of children of young people, to promote understanding and representation of Gypsy culture – it is only through this that racist, xenophobic and discriminative attitudes can be challenged.
William Phillips, was selected as Employment Discrimination Lawyer of the Year by Leaders in Law Global Awards 2020. He is the managing partner of Phillips & Associates. The firm has represented clients in thousands of employment cases, including those involving sexual harassment, race discrimination, pregnancy discrimination, and disability discrimination. Our New York City employment lawyers have worked hard to obtain the best possible results for employees in Manhattan and the other boroughs of NYC. We have obtained tremendous success in securing millions of dollars in settlements and damages awards.
Mr. Phillips previously has been recognized as one of the 10 Best Labor and Employment Attorneys in New York by the American Institute of Legal Counsel and as a Top 100 Labor & Employment Lawyer in New York by the American Society of Legal Advocates. He has been selected as a member of Lawyers of Distinction in Employment and Labor Law. He belongs to the prestigious Million Dollar Advocates Forum, as do three other employment attorneys at Phillips & Associates.
Phillips & Associates has 18 workplace discrimination attorneys at our Manhattan office. Thus, we possess the resources to level the playing field for an employee who has been wronged. We are one of the largest workplace discrimination and sexual harassment law firms in the country, representing workers in New York, New Jersey, and Pennsylvania.
New York City employees face a huge disadvantage in the workplace, and the disparity in power between employees and employers only intensifies when an employee experiences discrimination or sexual harassment. Our firm takes a personalized and compassionate approach to representing each of our clients.
Employees face substantial hurdles during litigation, so it is important to be represented by a seasoned employment lawyer like the attorneys at Phillips & Associates. More than 75% of employees lose before getting to trial, according to a federal judicial study of the summary judgment stage. Often, when a company in Manhattan or elsewhere is sued for discrimination, its attorneys file a motion for summary judgment or another dispositive motion. When an employer is successful on its summary judgment motion, the case is over before it even gets to a jury. Getting skilled legal counsel on your side at the very beginning of your case can help make sure that your claim survives these initial challenges.
An employee should make sure to retain a law firm with the knowledge and experience to decide whether it makes sense to settle a case or to take it to trial. We apply a risk/reward analysis to each case that we handle, and we continue to apply this analysis throughout the litigation. Sometimes the situation changes as a lawsuit unfolds, based on information or testimony that emerges. Our firm is conscientious about advising our clients when it is wise to settle and when it is appropriate to take the risk of going to trial.
Our goal is to secure a favorable resolution that provides our clients with closure and a definitive outcome. This often means a settlement, but sometimes an employer does not offer fair settlement terms. When this happens, our experience and skill allow us to take your case all the way through trial, vigorously defending your rights before a judge or jury.
Retain an Experienced Employment Attorney in NYC
To discuss your case with an experienced employment discrimination attorney, contact the law firm of Phillips & Associates by calling (212) 248-7431 or completing our online form. We offer a free consultation because we understand that our clients often are facing financial difficulties. Also, we represent clients on a contingency fee basis. This means that we do not collect attorneys’ fees unless we successfully secure a settlement or verdict on your behalf. We represent employees in Manhattan and throughout New York City, as well as in Nassau, Suffolk, and Westchester Counties. Our firm also handles employment litigation in New Jersey and Pennsylvania.
Cyprus in the last few years is establishing itself as one of the top investment fund centers in Europe.
The Fund management industry is fast becoming one of the most promising sectors of Cyprus economy. The volume of funds and assets under management have shown huge increase, as assets under management have more than tripled from €2.1 billion in 2012 to €6.8 billion in June 2019. Assets under management are expected to reach €20 billion in the next five years.
What is an Alternative Investment Fund or AIF in short?
Alternative Investment fund is joint investment agreement raising capital from a number of investors with a view to investing it in line with an investment policy for the benefit of the involved investors.
Alternative Investment Funds legislation has aligned Cyprus legal and regulatory framework with the European directives on asset management enhancing transparency and investor protection.
Cyprus has introduced a new law offering more investment structuring possibilities and upgraded rules for the authorisation, on-going operations, transparency requirements and supervision of Cyprus AIFs. In addition, new rules shape the regulation on the role and responsibilities of their directors, custodians but also external managers.
AIFs that are established under domestic Cyprus fund legislation can be sold on a private placement basis or marketed to professional investors across the EU under the AIFMD passport.
An AIF can take the following legal forms and may be established with limited or unlimited duration:
- Fixed Capital Investment Company – FCIC
- Variable Capital Investment Company – VCIC
- Limited Partnership – LP
- Common Fund – CF
A Variable Capital Investment Company (VCIC) and Fixed Capital Investment Company (FCIC) may be set-up as self-managed, or it may be externally managed. A Limited Partnership (LP) and Common Fund (CF) must always appoint an external manager.
Types of Investors.
A professional investor is the person who has the experience and expertise to make his/her own investment decisions and assess the risks involved. The investor must also comply with the criteria prescribed in the Markets in Financial Instruments Directive.
When a person is not considered a professional investor confirming in writing that he is a qualified investor aware of the risks involved with an investment in the relevant AIF. Also, a Well-informed investor has to make an investment of a minimum €125,000 or has been evaluated by a licensed bank, or an authorised investment firm or an authorised Management Company that he has the experience and knowledge in evaluating an investment opportunity.
Any investor who not considered either professional or well-informed investor.
Types of AIF’s. There are two different types of AIF’s.
AIF with unlimited number of persons.
- May be marketed to “retail”, or “well-informed” and/or “professional investors”
- Freely transferable investor shares
- Minimum capital requirements of €125,000 or €300,000 if a self-managed fund
- Must be appointed to a global custodian
- Can be listed on stock exchange, and AIFs marketed to retail investors can be traded
- Depending on the investor type and the overall investment policy may fall under certain investment restrictions
AIF with limited number of persons.
- May be marketed only to “well-informed” and/or “professional investors”
- Cannot exceed total number of 75 investors / unit holders
- Freely transferable investor shares, with the condition that their transfer does not result in the AIF having more than 75 investors
- May not be required to appoint a licensed manager or a custodian in some cases
- Assets under management do not exceed the AIFMD thresholds of €100 million (including leverage) or €500 million (5-year lock-up period without leverage)
Tax advantages of AIF in Cyprus.
- Notional Interest Deduction (NID) for new equity may reduce taxable base for interest received by up to 80% (for company-type funds) reducing the effective tax on interest to 2.5%Tax resident funds are eligible to all benefits under a double tax treaty or the EU Directives
- Services provided by the Investment Manager of fund are not subject to VAT
- No withholding tax on any type of payments to non-residents
- No subscription tax on net assets of a fund
- Extensive network of Double Tax Treaties in place with more than 60 countries
- Dividends received, capital gains arising from sale of property abroad, capital gains from sale of shares of foreign property companies are excluded from tax
Other advantages of AIF in Cyprus.
- Easy to set-up, cost-efficient management and operations
- A framework fully in line with EU directives
- Full transparency through annual audited reports to CySEC and investors (That includes financial statements, borrowing information, acquiring portfolio information and Net Asset Value)
- Supervised by a competent and accessible regulatory authority
- No restrictions imposed by the Regulator on type of investments
- Can be self-managed – subject to the approval of the Regulator
- Can be set-up as umbrella funds with multiple compartments
- Can be listed on Cyprus Stock Exchange and other recognised EU stock exchanges ( in case the number of investors is not limited)
Law of the Republic of Azerbaijan “on Amendments to the Tax Code of the Republic of Azerbaijan” was approved by the President of the Republic of Azerbaijan on 29 November 2019. These amendments become effective from January 1st, 2020.
The amendments concerns the following matters:
- E-tax invoice cancellation and application of various types of electronic invoices depending on the nature of the transaction;
- Application of a single approach to VAT calculation and payment (cash method);
- Abolition of simplified tax on building;
- False Transactions and Potentially Dangerous Taxpayer;
- Changes on excise rates;
- New tax exemptions;
- Control of installation of POS-terminals and introduction of new generation cash registers;
- Improvements in the simplified tax payment;
- Centralized tax registration;
- Taxation by state-owned subsidies from residential and non-residential areas;
- Reporting on transnational group of companies;
- Carrying out of joint inspections with tax authorities of other state as regulated by international treaties;
- Editing and refining.
General provisions and new concepts
The following new concepts were added to the Tax Code:
Non-Commodity Transaction – is a transaction disclosed in the course of tax control, concluded for the purpose of concealing another transaction and generating profit without the provision of goods, works and services;
Risky Taxpayer – means a taxpayer regarding whom there is a decision of the relevant executive authority (body) and who meets the criteria approved by the decision of the relevant executive authority (body), as well as a taxpayer who carries out non-commodity and/or risky transactions; A taxpayer may be considered as a risky taxpayer upon respective decision of the competent body.
Transnational group of companies – a group of companies, which includes two or more companies that are residents in different countries, or a company that is resident in one country and operates through a permanent representation in another country.
New provisions (Article 16.1.4-2) to the taxpayer’s responsibilities regarding the Transnational Group of Companies will be added in the following content:
If the total income for the fiscal year of the Transnational Group of Companies exceeds the manat equivalent of 750 million euros, the enterprise, which is a member of a transnational group of companies for the purpose of automated information exchange with the competent authorities of other countries under international treaties supported by the Republic of Azerbaijan and is a resident of the Republic of Azerbaijan, submits the report to the tax authority in the form and manner specified by the relevant executive authority (body).
A tax sanction of 500 manat is applied to the taxpayer in case of failure to submit the electronic report in prescribed manner and time to the taxpayer.
Registration of taxpayers
The article 33.7 (Registration of taxpayers) will be amended in the following content:
The following taxpayers can be registered in a centralized manner by the tax authority as determined by the relevant body (body) of the relevant executive authority:
- Natural monopoly subjects;
- Enterprises with special tax regime;
- Taxpayers who meet one of the following requirements:
– Average number of employees 251 and above;
– The average annual residual value of fixed assets on the balance sheet exceeds AZN 5,000,000.
Persons who have been registered at the place of their taxation are then registered in the centralized order with the previous identification numbers when referring to taxpayers or enterprises with a special tax regime.
Tax registration of taxpayers and branches, representative offices or other economic entities (objects) of the special tax regime, registered in the centralized manner, shall be carried out in the aforementioned manner.
Legal entities, registered at the place of their taxation, are required to apply to the relevant tax authority for centralized registration within 15 days of commencement of activities under the special tax regime.
Centralized re-registration or de-centralization of enterprises operating under special tax regimes, commencement or termination of their activities under a special tax regime shall be made within 15 days from the date of their application to the relevant tax authority.
III. Responsibility for violation of tax legislation
Provisions about the expiration of the term for calling to account for violation of tax legislation and application of financial sanctions (Article 56) will be amended to the following content:
Except for the results of on site tax inspection conducted in accordance with the relevant decision on the conduct of tax inspection in accordance with the criminal procedure legislation, the person cannot be called to account for violation of tax legislation and no tax liabilities may arise if the period of 3 years (the period of 5 years after the relevant information from the competent authorities of foreign countries on income received abroad) had passed from the date of the tax violation.
The period specified in this article covers a period of 3 years preceding the date of the decision of the tax authority to conduct on site tax inspection, irrespective of the date of making a decision on liability in accordance with the article 49.1 of the Tax Code.
Electronic delivery notes and purchase act of goods
The provisions regarding electronic delivery notes (Article 71-1) will be amended to the following content:
In the cases established by this Code, a person providing goods, performing work and rendering services to individual entrepreneurs and legal entities shall issue an electronic invoice to them within the following terms:
– providing goods – time of delivery of goods;
– providing not pre-ordered goods – within 5 days from the date of issuance of the document confirming delivery of goods;
– performing works and rendering services – within 5 days from the date of performance of works and rendering of services.
New provisions to the electronic delivery notes (Article 71-1) will be added in the following content:
When goods (works, services) are delivered to buyer not registered as a taxpayer, he / she will be given a receipt or a check.
Tax invoices are subject to the following types of electronic invoices, depending on the nature of the operation:
on the provision of goods, works and services;
on return of goods;
according to the article 163 of the Tax Code, except for return of goods;
on transfer of goods to agent (commissioner);
provided by agent (commissioner) to buyer of goods;
on acceptance to eventual processing of goods;
according to the article 177.5 of the Tax Code.
Purchase act of goods (Article 71-2) will be added to the Tax Code:
Within 5 days from the date of purchase of goods, purchase act and electronic purchase act (the form of which is established by the relevant executive autority) shall be drawn up for goods purchased for the purpose of economic activity (excluding individual consumption) by legal entities and individuals.
In the event that an electronic purchase act issued by a taxpayer has been printed and signed by an individual not registered within the tax authority, this document shall be considered as a document confirming purchase of goods and a purchase act shall not be drawn up on paper.
Restaurants Face Challenges
While retail in general faced challenges in 2019, food services faced an extremely difficult period. We expect these challenges to continue into 2020. With a tight labour market, increased competition, rising minimum wages and a strong economy, restaurants continue to be squeezed. For this reason, we expect that landlords will be receiving requests for modifications, notices of bankruptcy filings and ongoing challenges in filling vacated restaurant units.
Looking at 2019, while a number of restaurants closed units, the Papa Gino’s and Real Mex cases continued to work their way through bankruptcy courts. Meanwhile, the Houlihan’s restaurant chain along with several of its subsidiaries filed for bankruptcy with Landry’s acquiring substantially all of the assets of the debtor. In a transaction of this type, landlords need to be aware of their rights as a number of leases were assumed and assigned. In the event of assumption and assignment, a landlord has strong protections under the Bankruptcy Code, including, among other things, the right to have all defaults cured. In the event the debtor is rejecting a lease, to minimize the loss incurred, it is essential that a landlord takes steps to maximize its recovery and preserve any claim it may have. In particular, landlords must act during the bankruptcy case or risk waiving certain rights and claims.
The proliferation of Lifestyle (i.e., Health and Fitness facilities) has been quite significant over the last several years. Two well-known fitness centre operators, Town Sports and 24 Hour Fitness, have been noted for a change in their financial condition as discussed below.
Recent reports indicate that Town Sports International Holdings, Inc. recently had S&P reduce the credit rating on the certain debt to CCC. According to reports, Town Sports has significant debt which will become due in 2020 and has suffered a decline in revenue. According to reports, Town Sports is attempting to refinance its debt.
Market reports towards the end of 2018, indicated that the value of bonds issued by 24 Hour Fitness declined into the distressed range. Once again, those who are investors, landlords or creditors of 24 Hour Fitness should carefully evaluate their exposure.
The pressure is still being felt across the retail space. Fairway Markets is rumoured to be close to filing a second bankruptcy case. Pier 1 is also facing financial challenges and is said to be closing 450 stores and nearing bankruptcy. While these two retailers are noted due to recent reports regarding their financial condition, they are not alone, and the increased minimum wage will only put further pressure on traditional brick and mortar retailers. Landlords should carefully monitor their retail tenants to avoid allowing them to accrue large arrearages. It is also likely that tenants will request modifications or an opportunity to meet to discuss their lease.
Party City also continues to face financial challenges and maybe slipping towards bankruptcy. The company sharply underperformed its third-quarter guidance. If a party has leases or interests in Party City, they would be well-advised to evaluate their current position and to consider what actions could be taken to minimize the impact of a possible restructuring or bankruptcy.
Major Changes to Bankruptcy Laws in 2020
There are major changes coming to the Bankruptcy Code in 2020. Key among these are changes to the laws affecting Small Business restructuring. Small Businesses are defined as those with less than $2,725,625 in debt. For those companies that qualify, they will be able to obtain relief without being required to abide by the Absolute Priority Rule (i.e., all senior creditors must be paid in full before a junior creditor can be paid or an equity holder can retain its holdings). Moreover, there are rumours that the debt limit could be raised to $10,000,000. If this were to occur, the vast majority of bankruptcy filings could qualify as small business filings. It is unclear if (and when) an increase in this limit might occur.
With changes and new challenges approaching, it is critical to seek counsel with significant experience in bankruptcy, restructuring and out of court workouts to advise you through the process and participate in ongoing negotiations. Rosenberg & Estis, P.C. has represented creditors and debtors in many of the largest and most complex bankruptcy cases, making us the ideal partner for any client-facing these challenges. Please don’t hesitate to call us today.
As a Romanian law firm, we are aware of the issues concerning money laundering not only from a professional point of view (know your client), but also from advising clients of their liabilities. This short article is to highlight issues which may not be immediately apparent and of which clients should be aware and at the same time to draw attention to registration and other requirements required under the Law. We urge those in the relevant fields to contact advisors for further information as required. The penalties are not insignificant.
In July 2019 Law no. 129 (“Law”) for the prevention and combating of money laundering and terrorist financing was adopted.
The Law established the national framework for preventing and combating money laundering and terrorist financing, and includes, but is not limited to authorities, institutions and private companies and individuals who carry on business in their own name. This article is intended to give an overview of the legislation and some guidance as to how it will affect business in Romania and that business needs to be aware of its provisions and impact.
The Law transposed the two European directives, Directive (EU) 2015/849 which amended the Regulation (EU) no. 648/2012 of the European Parliament and Directive (EU) 2016/2258 amending Directive 2011/16.
The following persons and businesses in Romania are now subject to the Law and become reporting entities. Romanian credit institutions, and branches of foreign credit institutions; Romanian financial institutions and branches of foreign financial institutions; administrators of private pension funds in their own name and for the private pension funds that they manage. Providers of gambling services; auditors, accounting experts and authorized accountants, auditors, persons providing tax, financial, business or accounting advice.
Public notaries, lawyers and judicial executors if they provide assistance regarding the purchase or sale of immovable property, shares or social shares or elements of the fund; trading in and administration of financial instruments, securities or other assets of clients, transactions that involve sums of money or the transfer of property.
Persons involved in the establishment or administration of bank accounts, savings or financial instruments, organizing the process of underwriting contributions necessary for the establishment functioning or administration of a company. Those involved in the establishment, administration or management of such companies; collective investment undertakings in securities or other similar structures, as well as participating on behalf of or for their clients in any operation of a financial character or targeting immovable property; service providers for companies or trusts; real estate agents.
Finally other entities and natural persons who trade like professionals in goods and/or provide services who carry out cash transactions whose amount represents the equivalent or more in RON of ten thousand EUR regardless of whether the transaction is executed through a single operation or through several operations that have a connection between them.
It can be seen by these definitions that the provisions of the Law are wide and potentially involve nearly every aspect of commercial life.
The Directives and the Law require that matters are now approached on a risk-based approach. Countries and their competent authorities and banks will have to identify, assess, and understand the money laundering and terrorist financing risk to which they are exposed, and take the appropriate mitigation measures in accordance with the level of risk.
This will mean that these authorities can require that all relevant persons and bodies in Romania who could be involved, even without realising it in such transactions are to report any suspicious or potentially suspicious transaction. Already several of our clients have been asked to justify certain transactions to their banks and authorities and more stringent reporting requirements will evolve over a period.
The risk-based approach is achieved, at a national level, through establishing the businesses and categories of reporting entities based on the analysis of the risk of money laundering and terrorist financing to which they are exposed and establishing administrative obligations on them in order to mitigate these risks.
The authorities also must assess the fulfilment of these obligations imposed by the measures that have been adopted and applied by the reporting entities according to their individual evaluated risks.
Romania has established its own office in relation to the prevention and combating money laundering (Oficiul Național de Prevenire și Combatere a Spălării Banilor) who will ensure the publication on its own website a summary of the national risk assessment and will transmit to the EU supervisory authorities the relevant elements of the national assessment.
In addition, the National Agency for Fiscal Administration is required to immediately send a report of suspicious transactions to the Office when applying Regulation (EC) no. 1.889 / 2005 regarding the control of cash entering or exiting the European Union and which it knows, or suspects or has reasonable reasons to suspect that the goods/funds come from the commission of offences or related to the financing of terrorism.
The reporting entities as described above have the strict obligation to report to the Office transactions in cash, whose minimum limit represents the equivalent in RON of 10,000 EUR whether in Ron or foreign currency. Credit institutions and financial institutions defined in accordance with this law will submit online reports on external transfers to and from accounts where the minimum limit represents the equivalent in RON of EUR 15,000.
Customer awareness measures for Reporting entities now impose an obligation to keep in written or electronic format all the records applying these measures. These can be copies of the identification documents, the verification documentation of a transaction, including information obtained through the means necessary to comply with the know your client principal imposed on businesses. This information must be retained for a period of 5 years from the date of termination of the business relationship with the client or from the date of the transaction.
The criminal investigation bodies will communicate to the Office annually the stage of resolving the information transmitted, as well as the amount of the amounts in the accounts of the natural or legal persons for whom the blocking was ordered, as a result of the suspensions carried out or of the insurance measures ordered.
The Know your Client measures are divided, according to the law, in standard measures, simplified measures and additional measures, depending on the degree of risk of the client. The reporting entities must apply the standard measures of Know the client in the case of entities from which they receive funds greater than the equivalent in RON of EUR 1,000.
Another change is the one related to the politically exposed persons. Not included in this legislation are references to presidential and state councillors but now are introduced members of the governing bodies of the political parties.
The Sanctions under the legislation have also been increased. They range between 25,000 RON to 120,000 RON in certain cases.
For legal entities, breaches of certain provisions can be sanctioned with a warning or with the fine with a maximum amount of 10% of the total incomes reported for the last fiscal period. The sanctions can be applied to the members of the board of management and to other people who are responsible for breaking the law.
In the event that any of contraventions committed by a financial institution, other than those supervised by the National Bank of Romania, and if the breach is serious, repeated, systematic or a combination the upper limits of the fines are for legal persons with RON 5,000,000 and for individuals RON 50,000.
Each company who is liable to supply reports and notifications must designate one or more persons with responsibilities in respect of the law. The communication of the designated person’s identity will be made to ONPCSB only in electronic format. The obligation to appoint a person does not apply to individuals who have the status of a reporting entity.
All reporting entities whether individual or corporate should establish internal policies and rules for managing the risks of money laundering and financing terrorism. These should include policies in respect of the following (i) know your client, (ii) rules applicable to reporting, keeping records and all documents in accordance with the law, (iii) internal controls, risk assessment and compliance management and communication,(iv) protection of employees in the process and periodic training and evaluation of employees.
Depending on the size and nature of the company it is required to have an independent audit function for the purpose of testing policies, internal rules, mechanisms and procedures and monitoring these policies, internal rules, mechanisms and procedures.
The application of the above measures imposes the obligation to keep for a period of 5 years from the date of termination of the business relationship or from the date of the transaction in hard copy/electronic format all records obtained through the application of the measures including copies of identification documents. This can include identification information obtained electronically.
If it is necessary to extend the period of keeping the documents in order to prevent, detect or investigate money laundering or terrorist financing activities, the reporting entity is obliged to extend the period for a further period indicated by the authorities.
At the expiration of any retention period, there is an obligation to delete personal data, except when other legal provisions require the retention of the data.
All the above will impose more administration on business both small and large. Our advice is to confront the problem now before issues arise. Money spent now in dealing with this issue will help resolve any problems which may arise in the future.
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