Still in draft stage – this time AMLD

Thursday, 28 December 2017

By de Cosmina Simion and Andrei Cosma– NESTOR NESTOR DICULESCU KINGSTON PETERSEN

We promised in the previous article that we were going to tell you more about the possible implications for the gambling industry determined by the implementation of the fourth EU Directive on money laundering (AMLD).

It seems however that we have been a little too optimistic and in the following paragraphs we will not have the opportunity to analyze the situation in concrete terms for a very obvious reason: AMLD has not been transposed into national legislation to the date of this article and the relevant normative act is still in draft stage.

From the beginning, we would like to state that in what follows we do not intend to detail the content of the obligations and provisions of the Draft law, but rather to signal a status quo. We cannot however ignore the fact that the new legislative framework regarding money laundering and terrorism financing will impose considerably higher standards to prevent this phenomenon.

With regard to the gambling sector, a first important modification is the expansion of the category of reporting entities. Thus, if under the current law (Law no. 656/2002), only casinos are explicitly included, the new legislation expands the scope to the common category, namely to the generic category of all “gambling services providers”. Furthermore, the Draft law expressly specifies that the norms apply both to traditional gambling operators as well as to online gambling operators.

At the same time, we cannot fail to notice the modifications regarding know-your-customer measures or those applicable to keeping documents. Under the future normative provisions, gambling operators will need to run the process of identification and knowledge of the players by reference to a multitude of criteria and risk factors, being also obliged to keep the documents and information obtained in this sense on paper and in digital format, in a form that is admitted in judicial proceedings. Without dissecting the interpretation that can arise regarding these obligations, we can anticipate even now that the impact felt by operators will be a significant one.

Beyond the date that the Draft law will see the light of the Official Gazzette (it should be reminded that the deadline for transposing the Directive in national legislation was 26th of June 2017), a few substantial issues remain unclear. More specifically, by corroborating the provisions of the gambling legislation with those in the Draft law, it cannot be established with certainty if the new national law in the AML field will be applicable to non-resident online gambling operators that operate in Romania and offer services to local players on the basis of the license and authorization granted by the National Gambling Office (NOG) or if these non-resident gambling operators will be subject to the AML legislation in the country of their establishment only. This problem is not simply a theoretical issue, on the contrary, by reading the list published by NOG on their official internet page, one can notice that the overwhelming majority of the licensed operators is made up of nonresident entities.

With the desire to clarify this inconsistency, we looked for the official point of view of the regulatory authority, namely the National Office for Preventing and Combating Money Laundering (NOPCML). The position expressed during conferences as well as their written answers were, however, unclear and somewhat confusing, since NOPCML specified that the solution should be given by the NOG, as the authority that granted licenses to nonresident operators. Certainly, NOG’s powers cannot extend to issues regarding AML legislation, whose observance and interpretation are the responsibility of another regulatory authority, an aspect that NOG also confirmed.

It seems, however that subsequently, NOPCML identified an answer to our question, through the voice of Ms Steluța Oncică, who, during the last edition of the Reunion of Gambling Professionals organized on the 7th of December 2017, specified clearly and concisely that nonresident online gambling operators who benefit from a license and authorization from the NOG are not subject to the reporting obligations that will be imposed by the new national legislation in the AML field, but that they will report the necessary information and transactions to the relevant authority from their state of residence.

We hope that the above represents NOPCML’s point of view and we will not end up in a situation where, at the moment of implementation, non-resident operators licensed in Romania will learn that they still have reporting obligations also towards the Romanian State or, even worse, are sanctioned for non-compliance.

The situation of these operators is still uncertain under the current Law no. 656/2002 (which implemented the third directive in the anti-money laundering field). In this case, it appears once again that NOPCML’ opinion has changed during time. Initially, non-resident operators licensed in Romania have been imposed with the reporting obligations established by Law no. 656/2002, but subsequently, the authority’s opinion has changed and they represented that the Romanian legislation in this field is not applicable for this category of operators.

The sequence of official and unofficial interpretations, expressed either in writing or publicly during conferences is difficult to follow even for us. From a regulatory perspective, there are no risks for these operators since they opted to over-report, even though (apparently) this was not necessary…or was it?

The implementation process seems to be far from being over, and the Draft law may still suffer amendments. Regarding certain estimates made by NOPCML representatives, the Draft law will enter into force in February 2018, but the secondary legislation is yet to be expected at the earliest at the end of next year.

Place your bets!

Author: Editor

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