O'Sullivan was on Friday suspended by the club after the game's governing body advised he was being investigated and faced deregistration.
"Peter O'Sullivan has been issued with a notice of intention to cancel his registration," an NRL spokesman said on Friday.
"The proposal to cancel his registration related to alleged breaches of the NRL rules.
"Mr O'Sullivan has been given the opportunity to respond to the notice and the NRL will make no further comment at this time."
The Roosters said while O'Sullivan, considered one of the top recruiters in the country, was stood down, he was entitled to procedural fairness and was weighing up an appeal.
O'Sullivan was named as one of the major players in the Melbourne salary cap scandal during his time at the Storm but escaped sanction.
He was found to have covered up third-party payments and concealed the true amount paid to players, but legal advice prevented the NRL standing him down from his position at the Roosters.
O'Sullivan's suspension on Friday has nothing to do with the Storm salary cap scandal.