The Chairman of the National Office for Prevention and Control of Money Laundering (O.N.P.C.S.B.), Mr. Daniel Staicu, was kind enough to sit with us for an exclusive interview to give the readers of Casino Inside an insight into the transposition of Directive (EU) 2015/849 into the Romanian legislation. Moreover, in this very interesting interview you will learn more about the stage of the regulatory process this Bill is undergoing, how this regulatory act is likely to affect the day-to-day activity of gambling companies or the way in which our industry is perceived in terms of risk level with regard to the measures for fighting against and preventing money laundering, along with many more.
You have been at the helm of the National Office for Prevention and Control of Money Laundering for a rather short period. Please tell us something about you and your professional background.
After I graduated from the Faculty of Law of the “Al.I. Cuza” Police Academy in 1998, I worked as an investigator with the Romanian Police units, in implementation as well as in management positions.
My expertise comes from an activity of over 20 years carried out solely within specialized structures competent to investigate economic fraud, such as, without limitation, tax evasion, social engineering fraud, bank fraud, insurance fraud, securities fraud, money laundering, obviously, as well as the field of financial investigations and identification and recovery of the products of crime.
My professional activity reached a peak in 2017 when I was appointed Chairman of the National Office for Prevention and Control of Money Laundering, Romanian Financial Intelligence Unit – F.I.U., as it is known worldwide. In this position, I have become involved in the coordination of risk analysis, operations and strategic analysis and the supervision of law enforcement in the field of AML/CFT (anti-money laundering and countering the financing of terrorism) and the regime of international sanctions as well as external representation activities, participating in the main reunions in this industry, such as the Egmont Group or Moneyval Committee plenaries.
Now I am acting Chairman of the FIU.NET Advisory Group formed inside EUROPOL and FIUs of the European Union and the EEA and acting as an assessor in the field of law enforcement within the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism – MONEYVAL.
Your appointment coincided with the requirement for Romania to implement Directive 2015/849 (EU). This Directive has been received in reluctance in all the sectors of our economy, on account of the great efforts to be endeavoured by the companies in terms of reporting obligations, know-your-customer measures (which often come at odds with another European Directive – the one regarding the GDPR) as well as with regard to the “document retention” actions and process. What were the main issues your institution encountered in the process of implementing the Directive in question?
Considering the obligations incumbent to Romania in light of its commitments under the Treaty on the Functioning of the European Union, the transposition of Directive (EU) 2015/849 of the European Parliament and of the Council on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC, published in the Official Journal of the European Union of 05 June 2015 into the Romanian legislation is mandatory.
By the time I assumed office, the transposition term for this European legislative act had expired, but the implementation into the Romanian legislation of the provisions of this rule had been one of my very first goals.
To this end, I conferred with all the players involved for an accurate and complete transposition of this rule. Furthermore, in compliance with the open-book obligation, we posted the Bill on the website of this Office to be available to all the parties concerned.
The Bill, which has been approved by the Romanian Government and sent to the Parliament for debate and approval, is, in our opinion, complying with all the requirements under the European rule while also representing an attempt to strike balance between the need for enhanced security, on the one hand, and the protection of the fundamental rights and economic liberties, on the other.
The main challenges encountered at the elaboration of this Bill have been the complex industry being regulated, the multitude of players involved, i.e. state authorities as well as privately-owned institutions, the civil society, and last but not least the differences of opinions between the aforementioned with respect to the provisions to be regulated.
At which stage of the legislative process is the Bill on anti-money laundering and countering the financing of terrorism, and for amending and supplementing some legislative acts regarding the transposition of Directive (EU) 2015/849? After its definitive adoption, will there be a transition period provided? What else should we know in preparation for this Law?
In May 2018, the Romanian Government adopted “the Bill on anti-money laundering and countering the financing of terrorism, and for amending and supplementing some legislative acts”, which was sent to the Romanian Parliament for debate and approval.
After its approval by the Senate in October 2018, the Chamber of Deputies, as a decision-maker, approved this Bill in its plenum and sent it to the President of Romania for promulgation. By November, a notice of unconstitutionality of the Law was submitted to be debated on by the Constitutional Court of Romania in December 2018.
The Constitutional Court of Romania found that a phrase in the Law is unconstitutional, while the remaining provisions thereof were constitutional in the light of the criticism made.
The Decision of the Constitutional Court no. 790/2018 was reasoned and published in December 2018, which is why the Law was sent back, and registered on the Senate docket, in 2019 (at specialized committees level) for re-examination.
As can be seen, the legislative process was protracted, difficult and bumpy, but we are convinced that this month the Law on anti-money laundering and countering the financing of terrorism, and for amending and supplementing some legislative acts will be made compliant with the provisions in the Decision of the Constitutional Court, and subsequently resent to the President of Romania for promulgation, followed by its publication in the Official Journal of Romania.
Of course, after this has passed and is published in the Official Journal of Romania, a 120-day transition period is granted to allow the reporting entities to adopt those measures specific to the sectors regulated by this legislative act, for the application of the internal Know Your Customer (KYC) procedures, in question being a due diligence process, obviously, for the assessment of the IT corporate systems in place, etc.
These operations may also determine, on a case-by-case basis, an updated business model relying on the money laundering and terrorist financing risks as identified within the categories of reporting entities, the understanding of these risks as well as the adoption of mitigation measures by such entities.
How is Directive (EU) 2015/849 likely to affect the gambling operators in our country? Should we be concerned? Do you believe that the day-to-day operations of the companies in this industry will be affected?
The Law on anti-money laundering and countering the financing of terrorism, and for amending and supplementing some legislative acts includes a series of duties incumbent to “the providers of gambling services”, as they are referred to; such duties, however, are not likely to raise concerns among them in terms of their operations.
I would like to mention that the current regulation – i.e. Law no. 656/2002 – also provides for this type of obligations, and here we refer to the following: reporting of suspicious transactions or cash transactions, customer identification, document retention, a customer registration database/log in place, customer monitoring, etc.
Therefore, the gambling operators are to conduct a detailed analysis on their operations to identify the risks pertaining to the business model (namely, the money laundering/terrorist financing risks they are facing); then, they must put in place the most effective internal Know Your Customer procedures that would enable them to meet the legal duties stated above.
The transposition of the EU Directive 2015/849 into the national law is likely to cause the gambling operators to incur major operational difficulties. Do you approve of certain types of gambling being exempt from the provisions of the new law on anti-money laundering and countering the financing of terrorism? Please argue your reply.
Analysing the text of the Directive (EU) 2015/849, namely Recitals no. 21 of the Preamble, it is noted that the exemption of certain categories of rapporteurs, and here we are talking strictly about the gambling industry, as legal subjects of a law of transposition may be an option, not an obligation, to that EU Member State, and shall rely on the outcome of a risk analysis conducted in the non-financial sector, as follows “Member States should be allowed to exempt certain gambling services from some or all of the requirements laid down in this Directive”, but ”the use of an exemption by a Member State should be considered only in strictly limited and justified circumstances, and where the risks of money laundering or terrorist financing are low. Such exemptions should be subject to a specific risk assessment which also considers the degree of vulnerability of the applicable transactions.”
From this perspective, the variety of technical issues pertaining to gambling will also be subject to the National Risk Assessment in the field of money laundering and terrorist financing (AML/CFT) – (NRA Romania) which should be achieved, hopefully, this year; such results may be the subject matter of a joined analysis – conducted by authorities and associations from the industry – to identify the best solutions that would secure full compliance with the legal requirements.
The Romanian gambling industry is represented by several associations from the industry. Were you able to secure the necessary support/dialog with the representatives from this industry for this Directive to be transposed most effectively into our national legislation?
I rather anticipated this question and I would like to give you an example – the conduct of a joined Office – associations from the industry to identify the best solutions/measures to reduce the AML/CFT risks faced by gambling operators, depending on business model: casinos, betting, slot machines, lotteries, etc.
Furthermore, the new law also states obligations for the authorities (such example is “the issuance of secondary regulations for specific industries, having regard to the categories of reporting entities”), to which end a permanent public-private dialog with the involvement of the associations from the industry, as you call them, is extremely useful and necessary.
Then, the regulation/adjustment of the mechanism on anti-money laundering and countering the financing of terrorism relies on the authorities’ (e.g. the prosecutors’ offices) feedback to the enforcement of the law as well as the identification of the new typologies/trends in the financial/non-financial markets, which is why the existence of a permanent dialog with the representatives from this industry will be an important item on the agenda of our financial intelligence unit.
Have there been cases reported to ONPCSB involving domestic companies operating in the gambling industry? How would you describe our industry in terms of risk level regarding the measures for fighting against and preventing money laundering?
The Report of the European Commission for the European Parliament and the Council regarding the assessment of the risks of money laundering and terrorist financing plaguing the internal markets and related to cross-border criminal activity states that certain services/products provided by the gambling industries are subject to a significant risk of money laundering.
This opinion was taken over from the S.N.R.A. – Supra National Risk Assessment conducted at the European Union level and the purpose of this assessment was not to provide an examination of a sector in its entirety, but to identify such circumstances in which the services and products such provided could be misappropriated for FT or ML purposes.
Therefore, over certain periods of economic development, the segment of gambling, such as the Romanian one, may be subject to a rather high risk of being hijacked for the placement of “dirty money”.
What punitive measures or other measures could be expected by the gambling operators breaching the money laundering legislation?
Among the significant amendments brought by Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, is the inclusion of administrative sanctions and measures, effective, proportionate and dissuasive, in the specific legislation in the domestic law.
In this context, the Law on anti-money laundering and countering the financing of terrorism, and for amending and supplementing some legislative acts aims to adjust the regime of the sanctions enforced for non-compliance with the duties arising from this legislative act to the gravity of the deeds perpetrated in the regulated industry.
In our opinion, this would also require more concurrent actions on the part of the authorities involved in the AML/CFT, such as prudent procedures for licensing and for the examination of the licensing process in the regulated industries, improvement and acceleration of the information exchange between the authorities and enhanced control procedures.
What do you expect from the domestic gambling operators for the implementation of the Law on anti-money laundering and countering the financing of terrorism transposing Directive (EU) 2015/849 into the Romanian legislation to be achieved under the best of terms?
The main subject of debate at the most recent Egmont Group plenary was the importance of Public-Private Partnerships (PPP), understood not only in terms of joined investments, but also of provisions of a public quality service through an appropriate exchange of information under the law and the existence of an actual dialog between this Office and the representatives of the industry regarding the problems emerged and their potential solutions.
With regard to the cooperation with the private sector, let us not forget the importance of the steps meant to secure the understanding of a unitary application of the law, the organization of training seminars for the employees from this industry, the cooperation with the representatives of the associations and unions from this industry, all of which would secure the receipt/request by our institution of any such data/information as may be relevant for preventing money laundering/terrorist financing, etc.
In light of the above, we believe that periodic reunions with the representatives of the reporting entities are important given they would offer predictability with respect to their compliance actions of these entities, all the more so as a unitary procedure at the level of a regulated sector – such as the gambling sector – is necessary as it would allow identification of suspicious money laundering/ terrorist financing activities, a procedure that should not generate confusion or arbitrary, nor additional de facto workload at this Office.
To conclude, I would like to thank you for taking an interest in the activity of F.I.U. Romania as well as for giving me the opportunity to talk about the activity of this unit in your magazine.