Recently, the website of the National Office for the Prevention and Control of Money Laundering (the Office) published a bill on the prevention and control of money laundering and terrorist financing, transposing into domestic legislation (EU) Directive 2015/849, the fourth directive addressing the threat of money laundering (AMLD4). With the adoption and entry into force of the bill, this law will become the primary regulation in the area of the prevention and control of money laundering and terrorist financing, and the current law governing the field (Law No. 656/2002) will be repealed. At the same time, the legislative framework will be supplemented by a regulation for the implementation of the new law, which the Office must submit to the Government for approval within 60 days of its entry into force.
The bill establishes a domestic mechanism aimed at preventing and controlling money laundering and terrorist financing and will have a major impact on the activity of certain entities operating in various sectors, the gambling industry included.
The first major amendment is the extension of the scope to all providers of gambling services. Until the entry into force of the bill, Law No. 656/2002 covered mainly just casinos, while other operators fell under its scope only if they carried out operations with cash sums of a minimum of the equivalent in RON of EUR 15,000.
Below is a brief presentation of three of the main envisaged amendments and the attached obligations, which will soon shape the activity of gambling operators to a considerable extent.
1. Reporting Obligation
Operators will have the obligation to provide the Office with a report on suspicious activities, if they are aware, suspect or have reasonable reason to suspect that: a) goods/funds, irrespective of the amount, come from the perpetration of offences or are related to terrorist financing; b) an individual or their proxy/representative/agent are not who they claim to be; or c) information they hold may be relevant to the investigation of an offence. Operators will also have to report to the Office transactions in cash, RON or foreign currency, whose minimum amount is the equivalent in RON of EUR 10,000.
The above reports will be submitted to the Office in electronic form only, in observance of the other rules on reporting provided under the bill.
2. Know-Your-Customer Measures
Currently, Law No. 656/2002 includes provisions on know-your-customer measures; however, the bill regulates these in much more detail. In addition, it changes the thresholds above which the implementation of know-your-customer measures becomes mandatory.
Gambling operators will have to implement standard know-your-customer measures in certain general applicable cases, concerning all relevant entities, such as: upon establishing a business relationship; upon conducting an occasional transaction worth at least the equivalent in RON of EUR 15,000 or representing a transfer of funds, according to (EU) Regulation 2015/847 (for instance, transfers made using a payment card, an electronic money instrument, a mobile phone, or any other digital or IT prepaid or post-paid device with similar characteristics) in excess of EUR 1,000; when money laundering or terrorist financing is suspected; and if there are doubts about the accuracy or sufficiency of the identification details already known about the customer or real beneficiary.
In addition to such general cases, the bill also addresses a particular case, applicable to gambling operators: they shall be bound to implement standard know-your-customer measures upon the collection of returns, the placing of bets, the purchase or exchange of chips, and in all other cases which involve transactions whose minimum value is the equivalent in RON of EUR 2,000, irrespective of whether the transaction is performed via one, or several operations that appear to be connected.
At the same time, operators will have to keep individual records of transactions for each customer and by reference to their identification details, to be able to demonstrate the fulfilment of such obligations before authorities with control duties or self-regulatory bodies.
Operators will have to implement the standard know-your-customer measures not only with new customers, but existing customers as well, depending on the risk, at appropriate times.
Equally, there are simplified and additional know-your-customer measures that the operators may, or must, as applicable, enforce, under the conditions set forth by the bill.
3. Document Keeping
An important amendment brought by the bill that will have a major impact on the gambling industry addresses document keeping obligation.
Gambling operators, upon implementing the know-your-customer measures, will have the obligation to keep both on paper, and in electronic form, under the same conditions as those on paper, in a form permitted by legal proceedings, all records obtained by implementing the measures, such as copies of the identification documents, surveys and checks conducted, including information obtained via electronic identification means, for five years after the end of a business relationship with their customer or after the date of an occasional transaction.
We consider the requirement to keep the records both on paper and electronically excessive, per se; nevertheless, the requirement to keep them in a form permitted by legal proceedings (which entails, based on the provisions of the Civil Procedure Code, that copies be certified as true to the original) is likely to have a major negative impact on the gambling industry, insofar as the implementation regulation will set forth F2F player identification requirements. Consequently, it will be interesting to see whether the form in which the bill is adopted maintains these excessive requirements (considering that the wording of the Directive sets forth no obligation for records to be kept in a form permitted by legal proceedings) and how they will be implemented.
Even if we consider only the three main analysed obligations, it is beyond any doubt that the implementation of AMLD4 will have a major impact on gambling operators, which will have to swiftly adapt their activity to the new requirements.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.