Tomasz Makaruk

Responsibilities of the lottery organizer under the AML act

On July 13, 2018 the act of March 1, 2018 on counteracting money laundering and terrorism financing entered into force (Journal of Laws 2018 item 723) – hereinafter “act” and “AML act”, specifying that lottery organizers (entities running an economical activity in the field of chance games, mutual betting, card games and slot machine games) within the meaning of the act of November 19, 2009 on gambling games (Journal of Laws of 2018 items 165, 650 and 723) are obligated institutions, which have a number of duties. The most important of them are: the obligation to apply financial security measures to its clients, recognizing and documenting the risk of money laundering and the financing of terrorism related to economic relations or an occasional transaction, and also to assess the level of an identified risk.

 The financial security measures include: 

  1. customer identification and verification of its identity;
  2. identification of the actual beneficiary and taking reasonable steps in order to verify his identity and determine the ownership structure and control – in the case of a client who is a legal person or an organizational unit without legal personality;
  3. assessment of economic relations and, as appropriate, obtaining information on their purpose and intended nature;
  4. ongoing monitoring of the client’s business relationships, including analysis of transactions conducted as part of business relationships to ensure that these transactions are compliant with the knowledge of the obligated institution about the client, type and scope of his business and compliant with the risk of money laundering and the financing of terrorism related to this client, investigation of the source of property values at the customer’s disposal – in cases justified by circumstances, ensuring that existing documents, data or information on business relationships are constantly updated.

Lottery organizers are obligated to apply financial security measures in case of: 

  1. establishing economic relations;
  2. conducting an occasional transaction equivalent to EUR 15,000 or more or a cash transfer for an amount exceeding the equivalent of EUR 1,000;
  3. making an occasional cash transaction equivalent to EUR 10,000 or more;
  4. placing bets and collecting winnings equivalent to EUR 2,000 or more;
  5. suspected money laundering and terrorism financing;
  6. doubts as to the authenticity or completeness of the customer identification data obtained so far.

The act concerns business entities grouped in 25 categories, each of which has its own different functional characteristics. A bank as well as a real estate agency, a foundation to the extent that it accepts or makes cash payments with a value equal to or exceeding the equivalent of EUR 10,000 or just the lottery organizer are obliged institutions. As a consequence, applying the provisions of the act in everyday life involves many challenges. As far as the range of financial security measures to be used is mentioned explicitly and leaves no doubt, this is an analysis of the cases in which it should be applied causes difficulties and raises a number of doubts and imposes obligations which didn’t exist until now on lottery organizers. For example, the award in the lottery in the form of a pre-paid card with a sum of more than PLN 8,000 (the exact amount depends on the EUR / PLN rate), commonly used in lotteries, fulfils the definition of “collection of winnings equivalent to EUR 2,000”.

To comply with the provisions of the act, lottery organizers are obliged to: introduce an internal procedure in the field of counteracting money laundering and financing of terrorism, called “internal procedure of the obligated institution”, ensure participation of persons performing duties related to counteracting money laundering and financing of terrorism in training programs regarding the implementation of these duties, develop and implement an internal procedure of anonymous reporting by employees or other persons performing activities for the benefit of the obligated institution of actual or potential violations of regulations  in the field of counteracting money laundering and financing of terrorism, appoint a senior management responsible for performing the duties set out in the act, and in the case of an obligated institution in which the management board or other governing body operates, appoint a person, among the members of this body, responsible for implementing the obligations set out in the act or finally appoint an employee in a managerial position responsible for ensuring compliance of the obligated institution’s operations and its employees and other persons performing activities for this institution obliged to comply with the provisions on counteracting money laundering and financing of terrorism.

In case of questions regarding the application of AML’s obligations under the entity, which organizes promotional and audiotex lotteries, please contact me directly at the address  tomasz.makaruk@i360.com.pl

 

dr Tomasz Makaruk
Chairman of the Board i360 Sp. z o.o.
Warschau, July 17, 2018

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About the author

Hello, My name is Tomasz Makaruk, I am an economist from graduation. On the blog I describe the most interesting and the most difficult issues, which I encounter daily when creating and leading loyalty programs and promotional and audiotex lotteries. I share only specific, deep analysis, that I trust will be useful for you in your professional work.

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