Moldova ranks 105th out of 180 in Transparency International’s 2021 Corruption Perceptions Index, indicating that high-levels of corruption are perceived to take place in Moldova. After a drastic fall in 2016, its overall score on the Index has been on the rise since 20191 – indicating improvement. Moldova ranks 87 out of 128 on the Basel Institute’s Anti-Money Laundering Index 2022, indicating a moderate risk of money laundering.2
Under the last two presidents (Nicolae Timofi and Igor Dodon), Moldova saw massive corruption at the highest government levels. Acts of corruption were de facto facilitated by the Moldovan state through some of its institutions, destroying the country’s fragile credibility before its international partners and its own citizens.3 Once acclaimed as the Eastern Partnership good student, holding “the highest mark for deep and sustainable democracy”,4 Moldova became a captured state and a regional security threat for the EU.5
Although corruption was and is widespread in Moldova, two cases in particular shocked the Moldovan public and severely damaged the country’s image and credibility: the Russian Laundromat and the USD 1 billion bank theft. These acts of grand corruption turned the country towards kleptocracy, and heralded a dramatic backslide in democratic standards, freedom of expression, freedom of the mass media, freedom of assembly and especially peaceful protest.
The 2021 parliamentary elections, however, gave the Pro-European PAS (Party of Action and Solidarity) a majority, after a campaign with a strong focus on the fight against corruption. This change has been seen by international organisations and local civil society as an encouraging sign to curb the widespread corruption in official bodies.6
2021 also saw the establishment of the Independent Anti-Corruption Advisory Committee (CCIA) by a presidential decree, which was financed both by the European Union and the U.S. and whose role is to analyse systemic corruption across the country, provide recommendations, and improve their implementation.7 This Committee recently warned that the war in Ukraine is a breeding ground for corruption and called for vigilance.8
Asset recovery in Moldova
Moldova and the Russian Laundromat
Moldova was a central piece in the Russian Laundromat – a massive money laundering operation in EU jurisdictions between 2010 and 2014,9 originating in Russia.10 Moldovan judges overnight legitimized fake debts of Russian companies in favour of fictitious companies registered in the EU, with Moldovan citizens acting as proxies (sometimes without suspecting it). The involvement of Moldovan citizens allowed the “debts” to be processed by the Moldovan court system. The total amount of the money laundering operation is believed to be over USD 80 billion. USD 22 billion passed through the Moldovan scheme alone. 16 Moldovan judges were involved in the laundromat and while all of them were briefly detained for one month in 2016, they were subsequently released. Most of the judges resigned or were suspended.10
In 2021, a banker from the “European Express” bank was sentenced to nine years in jail and ordered to pay a fine of USD 13,574 for allowing the money to be transferred through his bank to other countries.11
The Billion Dollar Bank Theft
In 2014, approximately one billion USD disappeared overnight from three Moldovan banks acting in unison (Unibank, Banca Socială and Banca de Economii), all owned by Ilan Shor either directly or through proxies.12 The National Bank of Moldova (NBM) acted quickly to bail out the three banks by allocating money from the national foreign currency reserves. At the time, the NBM currency reserves were around USD 2.8 billion. A third of the Central Bank currency reserves were loaned to the Ministry of Finance which used the funds to cover the hole within the banking system. Despite the bailout, the banks went bankrupt anyway. Two years later, without any wider consultations, the Government approved legislation according to which the theft will be covered by the taxpayer in the course of the next 25 years.13
The main criticism towards this decision was the lack of a credible investigation, the lack of asset recovery and the fact that no one was punished for the crime. The publishing of the Kroll-2 report14 by an independent auditing company revealed that politicians in power at the time of the theft and their business partners were also suspected as being the main beneficiaries of this crime, namely Vladimir Plahotniuc, Vlad Filat and Ilan Shor.15 A parliamentary committee report conducted in 2019 led to similar conclusions and pointed out the undermining of investigations by the General Prosecutor’s Office in the period 2015-2019.16
14% of GDP was stolen overnight and the immensity of the crime outraged the population. Although some charges were raised, no one has been convicted. The trial of the MP Ilan Shor, who fled the country to Israel, has been ongoingly postponed, while a few of his alleged accomplices and members of the Moldovan Parliament were freed from criminal investigation by the Moldovan General Prosecutor on October 2nd, 2020.17 He is the leader of the Shor Party, a populist opposition party still represented in the Moldovan parliament and at the origin of protests in the capital to ask for the resignation of the current government, which were categorized as “Pro-Russian” by the latter.18
Since the Russian invasion of Ukraine, Vladimir Plahotniuc and Ilan Shor have been targeted by U.S. sanctions, respectively for acts of corruption and acts of collusion with Russia to control Moldova’s political scene.19 In 2021, the UK returned GBP 456,068.38 to Moldova, which had been confiscated following proceedings against Luca Filat, the son of Vlad Filat. These funds are being used for social assistance projects.20
In 2022, Moldovan officials seized EUR 75 million worth of assets belonging to Ilan Shor21 and French authorities seized Plahotniuc’s real estate in the city of Sciez, estimated to EUR 4.2 million.22 Both criminal prosecutions are still ongoing.
International Institutional Engagement
Moldova is a member of the FATF associated anti-money laundering committee “Moneyval” in the framework of the Council of Europe.23 Commitments on anti-money laundering, anti-corruption and asset recovery are also included in the framework of the EU Association Agreement and negotiations for EU membership.24
Moldova’s 2019 Evaluation under Moneyval found that the size of the banking sector (70%) of GDP was a particular concern for financial crime, as well as risks around money laundering stemming from the prevalence of the use of cash, the existence of opaque beneficial ownership structures and the existence of shell companies. It also highlighted that corruption is recognized as a major problem in the country.25
Moldova is part of the OECD Anti-Corruption Network for Eastern Europe and Central Asia (OECD/ACN) and joined in 2021 its Integrity Programme for the Eastern Partnership, which resulted in the production of a large-scale reporting on its anti-corruption policies.26 Moldova is also an observer State to the Camden Asset Recovery Inter-Agency Network (CARIN).
Our national study assessing the impact of international sanctions on asset recovery in Moldova
Our report with the Frierich Ebert Foundation on opportunities and challenges for civil society in asset recovery
Previous country profiles
- Transparency International, Corruption Perceptions Index 2021, https://www.transparency.org/en/cpi/2021/index/mda [accessed on the 15/11/22].
- Basel Institute, Anti-Money Laundering Index 2022, https://index.baselgovernance.org/ranking [accessed on the 15/11/22].
- Credible opinion polls such as the Barometer of Public Opinion suggest over 75% of the population do not trust the state: http://ipp.md/old/lib.php?l=ro&idc=156
- International Renaissance Foundation, European Integration Index for Eastern Partnership Countries, 2013, https://eap-csf.eu/wp-content/uploads/European-Integration-Index_2013.pdf
- Gherasimov, Ch., “Moldova: The Captured State on Europe’s Edge”, 2017, Chatham House, https://www.chathamhouse.org/expert/comment/moldova-captured-state-europe-s-edge
- Jenkins, M., Merkle, O., “Moldova: Overview of corruption”. Bergen: U4 Anti-Corruption Resource Centre, 2022, Chr. Michelsen Institute, https://www.u4.no/publications/moldova-overview-of-corruption [accessed on the 15/11/22]
- CCIA,”About Us”, 2022, https://ccia.md/en/about-us/ [accessed on the 16/11/22]
- Wahl T., “Moldova: Report Assessed Factors of Large-Scale Corruption”, Eucrim, 12 September 2022, retrieved from: https://eucrim.eu/news/moldova-report-assessed-factors-of-large-scale-corruption/ [accessed on the 16/11/2022]
- OCCRP, “The Russian Laundromat”, 2014, https://www.occrp.org/en/laundromat/russian-laundromat/ [accessed on the 16/11/22]
- Harding L.,“Global Laundromat: how did it work and who benefited”, The Guardian, 20 March 2017, https://www.theguardian.com/world/2017/mar/20/the-global-laundromat-how-did-it-work-and-who-benefited
- Klein D., “Moscow Court Sentences Banker in Russian Laundromat Case”, OCCRP, 18 March 2021, retrieved from: https://www.occrp.org/en/daily/14073-moscow-court-sentences-banker-in-russian-laundromat-case, [accessed on the 16/11/2022]
- OCCRP, “Grand Theft Moldova” 2015, https://www.occrp.org/en/investigations/4203-grand-theft-moldova
- DW, “The Filip Government is enslaving its citizens – it has put the stolen billion on their shoulders”, 27 September 2016, https://www.dw.com/ro/guvernul-filip-%C3%AE%C8%99i-%C3%AEnrobe%C8%99te-cet%C4%83%C8%9Benii-a-pus-miliardul-furat-pe-spatele-am%C4%83r%C3%A2%C8%9Bilor/a-35902157
- Kroll-2 report gives a detailed overview of a vast network of beneficiaries directly affiliated to governing politicians and companies registered under their names.
- TV8, “Kroll 2 report uncensored. Information that has been hidden about the theft of the billion” 06 July 2019, https://tv8.md/2019/07/06/doc-raportul-kroll-2-fara-cenzura-ce-informatii-au-fost-ascunse-in-raportul-publicat-despre-furtul-miliardului /, RFI, “Plahotniuc, Filat and Shor, beneficiaries of the bank fraud in Moldova”, 2019, https://www.rfi.ro/politica-115210-plahotniuc-filat-si-sor-principalii-beneficiari-ai-fraudei-bancare-din-rmoldova,
- TV8 “The published report of the parliamentary committee on the bank fraud”, 17 October 2019 https://tv8.md/2019/10/17/doc-raportul-comisiei-parlamentare-privind-frauda-bancara-a-fost-publicat-deputatii-mai-vor-o-comisie-de-ancheta/
- Ziarul de Gardă. “Tauber and Apostolova freed from criminal investigation in the bank fraud case”, 02 October 2020, https://www.zdg.md/stiri/stiri-justitie/ultima-ora-tauber-si-apostolova-scoase-de-sub-urmarire-penala-in-dosarul-privind-frauda-bancara/
- DW, “Ministrul Justiției declanșează mecanismul de interzicere a partidului „Șor”, 08 November 2022, https://www.dw.com/ro/ministrul-justi%C8%9Biei-declan%C8%99eaz%C4%83-mecanismul-de-interzicere-a-partidului-%C8%99or/a-63682592 [accessed on the 30/11/2022]
- U.S. Department of the Treasury, ‘Treasury Targets Corruption and the Kremlin’s Malign Influence Operations in Moldova’, October 26 2022, https://home.treasury.gov/news/press-releases/jy1049 [accessed on the 16/11/22].
- UK Home Office, Return of funds forfeited by the National Crime Agency (Luca Filat): agreement between UK and Moldova, https://www.gov.uk/government/publications/return-of-funds-forfeited-by-the-national-crime-agency-luca-filat-agreement-between-uk-and-moldova [accessed 6 November 2022]; Madalin Necsutu, Britain Sends Back Illicit Cash Seized from Moldovan Ex-PM’s Son, 22 September 2021, https://balkaninsight.com/2021/09/22/britain-sends-back-illicit-cash-seized-from-moldovan-ex-pms-son/ [accessed 6 December 2022].
- Necsutu M., ‘Moldova Seizes €75 Million in Assets from Fugitive Oligarch’, BalkanInsight, June 14 2022, https://balkaninsight.com/2022/06/14/moldova-seizes-e75-million-in-assets-from-fugitive-oligarch/ [accessed on the 16/11/22]
- National Anticorruption Center, ‘At the request of the prosecutors and the CARA of the NAC from Moldova, the French magistrates seized a real estate estimated at 83 million lei’, August 18 2022, https://www.cna.md/print.php?l=en&idc=5&id=4156 [accessed on the 16/11/22]
- See in particular Article 18 of the 2013 EU Association Agreement: “The Parties shall cooperate in order to prevent the use of their financial and relevant non-financial systems to launder the proceeds of criminal activities, as well as for the purpose of terrorism financing. This cooperation extends to the recovery of assets or funds derived from the proceeds of crime.” https://eur-lex.europa.eu/legal-content/ro/TXT/?uri=uriserv:OJ.L_.2014.260.01.0004.01.ENG
- Council of Europe, Moneyval, ‘Republic of Moldova: Fifth round Mutual Evaluation Report – Executive Summary, 2019
- OECD, Anti-Corruption Reforms in Moldova: Pilot 5th Round of Monitoring under the OECD Istanbul Anti-Corruption Action Plan, 2022, https://read.oecd-ilibrary.org/governance/anti-corruption-reforms-in-moldova_9bb0367e-en#page4 [accessed on the 16/11/22]Top of Form