MANDATORY AML AUDIT IN THE FIELD OF GAMBLING 28346z

The legal provisions regulating the activity of preventing and combating money laundering are well known to gambling operators, and in the last period, there have certainly been checks by the ONJN on this aspect and will probably follow other checks from the ONPCSB. 4c14r

by Lawyer Prof. Marius PANTEA, PhD and Cristina BĂDOI business and management consultant 193464

Cristina BĂDOI business and management consultant

Lawyer Prof. Marius PANTEA, PhD

Over the years, the ONJN has ensured, in advance most of the time, legal norms to prevent the use of

gambling games authorized on the national territory in money laundering mechanisms. The specific regulations of this industry at the national level have contained clear provisions by which gaming operators must not allow any money laundering activity through gambling, such as the prohibition to issue documents attesting to the winnings from gambling (which seems to have been forgotten by the legislator at this point in time in the last legislative amendment) and the like.

Of interest, in addition to the compliance with all the aspects stipulated by the Order of the President of the ONJN 370/2021 for the approval of the Instructions on preventing and combating money laundering and terrorist financing in the field of gambling in Romania, is the obligation to ensure an independent audit function, in order to test at least every 2 years the effectiveness and concrete ways of implementing the policies, internal rules, mechanisms, information systems and procedures for managing the risk of money laundering and terrorist financing, including risk assessments and the methodology for their realization and updating.

We dare with this article to recall, the legal obligation of AML auditing, provided by Article 24 paragraph (2) of Law No. 129/2019 on preventing and combating money laundering and terrorist financing, as well as amending and supplementing some normative acts which stipulates “Depending on the size and nature of the activity, reporting entities are required to provide an independent audit function for the purpose of testing policies, internal rules, mechanisms and procedures”.

We emphasize that the AML audit obligation is met when licensed gambling operators in the last completed financial year exceed at least two of the following criteria:

1. a) Total Assets – 16 mil. lei;
2. b) Net Turnover – 32 mil. lei;
3. c) Average number of employees during the financial year – 50

The results of the tests performed through the independent auditing process must be made available to the ONJN, at the request of the DGSC inspectors or ONPCSB officials, in accordance with the provisions of Article 27 paragraph (6) of the Instructions of December 21, 2021 on preventing and combating money laundering and terrorist financing in the field of gambling in Romania. As such, this activity is mandatory and failure to perform it may create problems for the management of gambling operators.

AML audit

Also, one has to take into their own risk assessments based on specific gambling indicators, namely: complicity of employers, crediting of players, existence of cash payments, anonymity of customers, granting fictitious winnings, lack of know-your-customer policies and participation in games through intermediaries. Know-your-customer and monitoring activities are also of great importance (for winnings, buying/changing chips worth at least 2,000 euro, equivalent in lei), the preparation of record sheets (in letter or computerized system depending on the type of game – traditional or remote) and the observance of the way of analyzing data and information of the type:

(a) the value of transactions of at least EUR 2,000, RON equivalent, carried out by the customer;

1. b) volume of transactions;
2. c) frequency of transactions of at least EUR 2,000, RON equivalent, carried out by the customer;
3. d) complexity of transactions;
4. e) transactions that do not fit the economic, commercial and legal purpose, from the point of view of the activity carried out by the customer in the gaming room, his occupation and the declared source of funds;
5. f) the customer’s usual transactional pattern;
6. g) elements of transactional analysis outside the customer’s usual transactional pattern;
7. h) elements of the customer’s social behavior in the gaming room with the potential for suspicion;
8. i) information on the customer’s profile (nationality, residence, place of birth, domicile/residence/other addresses where the customer lives, occupation, source of the customer’s funds/assets, data on the beneficial owner of the customer’s funds and/or winnings, level of risk allocated to the customer);
9. j) information received by the gambling service provider from the authorities regarding the customer;
10. k) additional information obtained from independent and open external sources;
11. l) indicators or typologies of suspicious transactions publicly reported by the authority.

In of AML gambling operators must have internal policies and rules, internal control mechanisms that include at least the following elements:

– Know-your-customer measures;

– Mechanisms for determining suspicious transactions;

– Record keeping;

– Procedures for prompt reporting and provision of data to the authorities;

– Applicable internal control measures;

– Measures to protect own staff applying anti-money laundering procedures;

– Staff hiring and vetting standards;

– Procedures for keeping and maintaining records and all documents and procedures for accessing such documents;

– Internal self-verification processes;

– Other procedures required by these instructions;

money laundering

In fact, it is easy to see that gambling operators have complied with the latest legislative changes and in 2023 they rank second (after banks) as reporting entities for cash transactions over €10,000 with 3,030 reports submitted. Previously, gaming operators submitted to the ONPCSB 2,632 reports in 2021 and 4,096 reports in 2022, according to the ONPCSB’s 2023 Activity Report . It is true that gaming operators have not been submitting suspicious transaction reports much, but certainly this is also under scrutiny and to the extent that this activity is identified it will be reported to the Office.

The concrete activities and modalities of implementation of policies, internal rules, mechanisms, information systems and procedures for managing the risk of money laundering and terrorist financing, including risk assessments and the methodology for conducting and updating them, together with the training and regular evaluation of employees (which at this point can be done through e-learning platforms such as https://profesio.ro/ro/ ) are legal obligations to be implemented by traditional and remote gambling operators.

Given the provisions of the specific regulations as well as the common principles underpinning the audit functions, we recommend that gambling operators identify a specialized Auditor (or a gambling business and management consultant) who can provide more details on the framework and possible recommendations for compliance with the AML legislation in force.