Application of the standard measures for knowledge of the client by the gambling organizers
By Nicoleta Baragan, Definitive lawyer & Theodora Luca, Definitive lawyer, Mihai Catalin LUCA Law Office
As stated in a previous article, the National Gambling Office is to issue sectoral regulations in order to apply the provisions of Law 129/2019 on preventing and combating money laundering and terrorist financing.
As the legal term provided by art. 59 expires on November 20, it is expected that the draft rules will be published on the institution’s website in the coming days, to be subject to public debates.
In accordance with the provisions of art. 5 para. 1) letter d) of the Law 129/2019, the gambling organizers have the quality of reporting entities, respectively they have obligations to monitor and report the transactions that fall under the law regarding the prevention and combating of money laundering.
The question that has attracted our attention especially in the attempt to identify punctually the obligations of the gambling organizers, even before the issuance of the sectoral regulation is the interpretation and application of the provisions of art. 13 paragraph 1) and 2) of Law 129/2019, regarding the situations that require the application of the standard measures of client knowledge by the gambling organizers.
(1) The reporting entities have the obligation to apply the standard measures to know the client in the following situations:
a) when establishing a business relationship;
b) when carrying out occasional transactions:
1. in the amount of at least the equivalent in lei of 15,000 euros, whether the transaction is carried out by a single operation or by several operations that have a connection between them;
2. which constitutes a transfer of funds, as defined by art. 3 point 9 of Regulation (EU) 2015/847 of the European Parliament and of the Council of 20 May 2015 on the information accompanying the transfers of funds and repealing Regulation (EC) no. 1.781 / 2006, worth over 1,000 euros;
c) in the case of persons trading goods, as professionals, when carrying out occasional cash transactions in the amount of at least 10,000 euros, whether the transaction is carried out by a single operation or by several operations that have a connection between them .
(2) The reporting entities provided in art. 5 paragraph (1) lit. d) have the obligation to apply the standard measures to know the client at the time of collecting the winnings, when buying or exchanging tokens when transactions are carried out whose minimum value represents the equivalent in lei of at least 2,000 euros, through a single operation.
On the one hand, through art. 2) in art. 13 of Law 129/2019, the legislator has explicitly established for the organizers of gambling, as reporting entities, the obligation to apply the standard measures to know the client when collecting the winnings, when buying or exchanging tokens when transactions are performed whose minimum value represents the equivalent in lei of at least 2,000 euros, through a single operation.
On the other hand, through para. 1 in art. 13 of the Law 129/2019, regulates the situations in which the reporting entities (by reference to the generic category) have the obligation to apply the standard measures to know the client.
In this context, the question arises whether the provisions of para. 1 in art. 13 of Law 129/2019, which establishes as a general rule the situations for applying the standard measures of client knowledge are also applicable to the gambling organizers, by including them in the generic category of the reporting entities or if they have only the obligations provided by par. 2) of the same article, respectively if its provisions establish an exception to the general rule, established by para. 1).
In a restrictive interpretation, the idea that the legislator’s intention to publish art. 13 paragraph 1) and 2) was to specifically regulate the obligations of the gambling organizers, distinct from the other categories of reporting entities, the situations in which they have the obligation to apply the standard measures of customer knowledge.
However, given that the exception is not expressly provided and given the reference in para. 1 in art. 13 of Law 129/2019 to the generic category of reporting entities, which includes the organizers of gambling, the legal texts could have been interpreted in the sense that both para. 1, as well as para. 2 of art. 13 of Law 129/2019 applies to the organizers of gambling.
In order to eliminate any possibility of interpretation contrary to the purpose envisaged by the legislator and considering the attributions of the National Office for the Prevention and Combating of Money Laundering, the elaboration of coordination and implementation of the national system of combating money laundering and financing of terrorism, we requested the issuance from a point of view regarding the interpretation of the provisions of art. 13 paragraph 1) and 2 of Law 129/2019.
Following the response sent by O.N.P.C.S.B, it became doubtless that the legislator’s intention was to establish for the gambling organizers an exception from the application of art. 13 paragraph 1) of Law 129/2019, the obligation to apply the standard measures for knowing the client, summarizing the situations set out in art. 13 paragraph 2).
In support of this interpretation, the authority revised the provisions of recital 21) of Directive 2015/849 of the European Parliament and of the Council of May 2015:
The use of gambling services to wash the proceeds of criminal activity is a cause for concern. In order to mitigate the risks related to gambling services, this Directive should provide, for gambling service providers presenting increased risks, the obligation to apply precautionary measures to customers in the case of at least individual transactions. 2,000 EUR. Member States should ensure that obliged entities apply this threshold to winnings or stakes, including the purchase or exchange of chips, or both. Providers of physical-based gambling services, such as casinos and gambling halls, should ensure that customer precautions can be linked, if applied at the point of entry, and the transactions performed by the customer in the respective office. However, in situations of proven low risk, Member States should be allowed to exempt certain gambling services from some or all of the requirements set out in this Directive. The use of an exemption by a Member State should only be considered under strictly limited and justified conditions and where the risk of money laundering or terrorist financing is low. Such exceptions should be subject to a specific risk assessment that also takes into account the degree of vulnerability of the applicable transactions. These exemptions should be notified to the Commission. In assessing risks, Member States should indicate how they have taken into account any relevant findings from the reports prepared by the Commission in the risk assessment carried out at the supranational level.
In this context, the provisions of para. 2 of art. 13 of Law 129/2019 are special in character and derogate from the general rule established according to art. 13 paragraph 1.
Given that the sectoral regulation, to be issued by the National Gambling Office, is subsidiary to Law 129/2019, it is expected that the rules will confirm the point of view issued by O.N.P.C.S.B. and contain provisions regarding the effective implementation of the gambling obligation.