International sanctions regime and consequences for non-compliance by operators 61p4g

The gambling industry is among the most regulated fields of activity in the Romanian economic market. The aspects regulated by the law start from the legal requirements of licensing and authorization to legally carry out the activity and go up to obligations in related areas, such as the protection of personal data or the prevention and fighting against money laundering, which are of particular importance and whose non-compliance can lead to significant penalties. 475jr

Petrus Partene, Senior Associate 2o630

Radu Ionita- Associate

Where Law 129/2019 for the prevention and fighting against money laundering and terrorist financing together

with the secondary normative istrative acts – Order 37/2021 on the approval of the Norms for the application of the provisions of Law no. 129/2019 issued by the National Office for Preventing and Fighting against Money Laundering, as well as Order 370/2021 for the approval of the Instructions on preventing and fighting against money laundering and terrorist financing in the field of gambling in Romania – form the main legislative framework in this area, these being also the ones which operators pay the greatest attention to in order to ensure compliance with the requirements found in this normative act, we aim through this article to bring to the attention of operators a number of additional obligations that are also rooted in the prevention and fight against money laundering and terrorist financing, but are circumscribed to the broad meaning of this concept, as we will show below.

We aim to present the regime of international sanctions and the consequences for non-compliance by operators and to briefly answer the following questions: (i) what is the main normative act governing this field? (ii) to whom are the obligations set forth by this normative act applicable? (iii) what are the specific obligations to be respected? and, (iv) what are the penalties that can be imposed on operators in the event of non-compliance with the obligations imposed by law?

Legislative framework. The main legislative act regulating the regime of international sanctions is Government Emergency Ordinance No. 202/2008 (“GEO 202/2008“), approved by Law No. 217/2009 and most recently amended by Government Emergency Ordinance No. 135/2024.

The issues regulated in GEO 202/2008 concern the manner of implementation of international sanctions that are ordered by the European Union or the United Nations and other international organizations. While, in the case of the first two, they are, as a rule, directly applicable, in the case of international sanctions applied by other international organizations, it is also necessary to adopt a domestic legislative act to transpose them, according to art. 4 para. (4) of GEO 202/2008. Moreover, an important aspect is art. 4 para. (7) of GEO 202/2008, which sets forth that the provisions of the normative acts imposing sanctions or transposing them for the purpose of their application are also applicable to contracts concluded before their entry into force.

International sanctions regime

To whom are the provisions of GEO 202/2008 applicable? The scope of application is a general one, hence we cannot exclude the incidence of these requirements in the field of gambling, especially since one of the national competent authorities indicated by GEO 202/2008 is the National Gambling Office (for issues related to the supervision of the implementation of international sanctions freezing funds or economic resources by the reporting entities under its supervision).

What are the obligations to be respected by gambling organizers? There are a multitude of obligations that gambling organizers must comply with to ensure compliance with the legal framework in question. The main obligations imposed on gambling organizers are listed below by way of example:

• The implementation of international sanctions imposed by UN or EU acts of direct applicability, but also by normative acts transposing sanctions imposed by acts that do not have direct applicability in internal law. Specifically, in the field of gambling, this obligation may materialize through the freezing of funds, an operation defined by art. 2 para. (1) letter g) of GEO 202/2008 as any action aimed at preventing the circulation, transfer, alteration, use of, access to or dealing with funds, which may result in a change in their volume, value, location, ownership, possession, nature or destination or any other change that would enable the use of funds, including portfolio management. The notion of funds is defined as follows according to art. 2 para. (1) letter f) of GEO 202/2008 – financial means and benefits of any kind, including, but not limited to: cash, cheques, cash claims, bills of exchange, promissory notes and other payment instruments; deposits with financial institutions or other entities, balances on s, claims and debt instruments; publicly and privately traded securities and debt instruments, including stocks and shares, certificates representing securities, bonds, promissory notes, guarantees, unsecured bonds and derivative contracts; interest, dividends or other income on or value accruing from or generated by assets; credit, right of set-off, guarantees, performance bonds or other financial commitments, including insurance and reinsurance; letters of credit, bills of lading, bills of sale; shares in funds or economic resources, and documents evidencing title to such funds or economic resources;
• Obligation to inform the competent national authority. In the case of the gambling industry the competent national authority is, as mentioned above, the National Gambling Office.   What is important to point out is that the law extensively regulates this obligation, imposing on any person in possession of information and data on persons, goods, transactions or operations subject to international sanctions the obligation to notify the competent national authority.
• The obligation to communicate to the competent national authority, at its request and within the period prescribed by it, all documents requested by the competent national authorities relating to the goods, transactions, operations or services concerned, including other circumstances relating thereto or to persons connected in any way with those goods.
• The obligation to adopt procedures, processes and monitoring systems to ensure compliance with international sanctions.

What are the penalties? Failure to comply with the obligations imposed by GEO 202/2008 can result in fines ranging from 10,000 lei to 100,000 lei. However, in addition to the fine, the following can also be ordered:

(a) suspension of the permit, license or authorization to carry out an activity or, where appropriate, suspension of the activity of the legal person, for a period of between one month and six months; and/or

1. b) withdrawal of the license or permit for certain operations or activities, for a period of one month to 6 months or permanently.

Another relevant aspect is that the statute of limitation for the application of the fine is, by derogation from the common regime provided by Ordinance 2/2001 on the legal regime of contraventions, 5 years from the date of the offense.

In conclusion, we believe that, despite the not very usual interference with such sanctions, organizers must pay close attention to compliance with the obligations imposed by GEO 202/2008, especially in relation to the severity of the sanctions that may be imposed.

WH Simion & Partners