The practice of gambling in 2021
The story of the salt block in the activity of gambling in Romania to prevent and combat money laundering and terrorist financing
Article from the series “Gambling practice“, by Anchidim Zăgrean, President of ROMBET
The European institutions have been paying special attention to the global financial system since its inception, which it supervises and monitors, in order to prevent its use for money laundering or terrorist financing purposes. In order to achieve this objective, Directive 2015/849 was also adopted, a directive which, by transposing it into national rules, can also be applied to gambling service providers as obliged entities. Member States have established, since the beginning of the EU, in the Treaty on the Functioning of the European Union (TFEU), that a directive, adopted by the European institutions, is binding on each Member State of destination, on the result to be achieved, but competence on its transposition into national law is left to the national authorities as to the form and means used.
This directive, which is now being discussed, contains a number of additional provisions, with regard to gambling activity, as regards how to transpose it into national law, leaving it practically to the Member States to choose an appropriate solution, in order to achieve the proposed purpose, is the prevention of money laundering or terrorist financing. Thus, the Directive provides that Member States, on the basis of an appropriate risk assessment, may decide to exempt (except casinos), in whole or in part, providers of certain gambling services from the provisions of national law transposing the Directive, based on the proven low risk, represented by the nature and, where applicable, the extent of the operations related to these services.
Among the factors to be taken into account when assessing the risks by the authorities of the Member States are the degree of vulnerability of the applicable transactions as well as the payment methods used in the activity carried out, each state having to indicate how they took into account any relevant findings. from reports prepared by the EU Commission.
The decision on the total or partial exemption of the providers of certain gambling services from the provisions of national law, stating the reasons, may be taken at any time and subsequently it may be decided to withdraw this decision, if circumstances change, but with the obligation to notify these decisions to the EU Commission, which shall in turn communicate these decisions to the other Member States.
As a result of these special mentions in the Directive, for gambling activity, a number of 12 states, out of the 27, respectively: Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, Germany, Hungary, Ireland, the Netherlands, Slovenia , Sweden, notified the EU Commission, by July 2020, that they had taken the decision to totally or partially exempt gambling from the transposition of the directive.
The Romanian authorities, with their eyes on the “salt shaker”, although they have taken measures for the special regulation of gambling and have set up a single specialized body with competences in terms of monitoring, supervision and control of gambling activities, have decided, probably out of convenience but mainly as a result of ignoring the principle of the active role of those who managed the transposition of the Directive, to fully transform this industry into a subject of administrative acts and measures, huge costs, both for the state and for the economic operators in the field.
Starting from the TFEU, which explicitly states that the transposition of the directive is achieved by adopting an internal rule, but leaving it to the Romanian state the freedom to choose an appropriate solution to achieve the proposed goal, in our case the goal is to prevent money laundering or terrorist financing. gambling activity, a series of questions arise, in connection with the chosen transposition formula:
1. Why was there no collaboration between the state authorities responsible for transposing the directive, on the one hand, and ONJN, on the other hand, to clearly establish the degree of vulnerability of the applicable transactions and the payment methods used, good luck, in order to amend the specific legislation, to remove, where appropriate, these suspicions of specific operations, but which could be used for the purpose of money laundering or terrorist financing?
2. Why are there, even at this time, concrete examples of operations considered vulnerable, the way and especially the means used for money laundering or terrorist financing, for various types of gambling, to take appropriate measures, through special regulation, in order to prevent their occurrence?
3. If there are no risk analyzes in Romania, specific to this activity – although we have a specialized body that should have carried them out and made them public – why risk analyzes are not made available to Romanian gambling organizers, carried out by other states or those held by the EU Commission and which formed the basis of the decision adopted by the Directive to ensure that gambling service providers become obligated persons?
4. If the Directive provides that: “each Member State must take appropriate measures to identify, assess, understand and mitigate the risks of money laundering and terrorist financing to which it is exposed, as well as any data protection concerns, in this regard; context and that the Member State shall update that risk assessment”; why nothing has been done in Romania regarding the analysis and evaluation of risks in the gambling activity?
5. Why was the provision of the Directive not taken into account: “Member States shall require that entities obliged to take measures proportionate to their risks, nature and size so that their employees are aware of the provisions adopted pursuant to this Directive, including the relevant requirements for data protection. Member States ensure that obliged entities have access to up-to-date information on money laundering and terrorist financing practices and on evidence leading to the recognition of suspicious transactions”?
The conclusion that can be formulated is that the Romanian institutions, responsible for transposing the directive, have chosen the simplest way, namely to completely transform this industry into a bureaucratic body for registration, collection, storage, etc. of operations and personal data, without being able to demonstrate that this achieves the proposed purpose and objectives, transforming virtually all gambling operators into agents for the provision of irrelevant statistical data.
To support this conclusion, below is an excerpt from the Commission’s 2019 Report, Gambling Sector:
“The exposure of certain gambling products to the risk of money laundering is considered significant. In the case of betting in agencies and poker games that do not take place on online platforms, this seems to be the result of ineffective controls. For online gambling, the risk exposure is high due to a very large number of transaction flows and the lack of direct interaction. Although casinos are inherently high in risk, their inclusion in the 2005 anti-money laundering / anti-terrorist financing framework has had a risk mitigation effect. Lotteries and gaming machines (outside casinos) have a moderate level of risk of money laundering/terrorist financing. For the former, certain controls have been put in place, in particular to address the risks associated with large gains. Indoor bingo services are considered to be at low risk of money laundering / terrorist financing due to the relatively low stakes and winnings involved.”
We return, in the following issues of the magazine, with other opinions on the activity of gambling …