CORRESPONDING BANKS FEELING UIGEA PRESSURE?

27 July 2007

Banks alleged to be clamping down on gaming companies

The Antiguan Sun carried the alarming but as yet unconfirmed news this week that the Unlawful Internet Gambling Enforcement Act, which makes US financial transactions with online gambling companies illegal is already having a knock-on effect on non-US financial institutions.

The article reports that although the specific UIGEA regulations have yet to be promulgated, the effects are already being felt on Antigua and Barbuda’s online gambling industry.

Writer Patricia Campbell claims that in Antigua and Barbuda, the US legislation led to the widespread withdrawal of public gaming operators from the market. She quotes former Antiguan director of gaming Ron Maginley in making the claim, reporting that he told her: “I was informed by a couple of gaming companies that some jurisdictions have already started to close gaming accounts."

Maginley noted that the Isle of Man recently gave notice to gaming companies that it intends to close all gaming-related accounts.

“Already, some companies here have been given notice," Maginley said. "Under the law here, gaming companies are required to put ‘gaming’ in their names and in relation to getting accounts, certainly the local banks here are showing reluctance to offer new accounts, even to companies registered here.

"That is made even worse internationally where a number of banks are simply refusing to either continue providing or to provide new accounts to gaming companies.”

Maginley told the Antigua Sun journalist that several months ago local banks were given notice by corresponding banks overseas that there were concerns about domestic gaming accounts.

“Because the US legislation makes US banks criminally liable for facilitating gaming companies, you can have a situation where even domestic banks, because thy are concerned about the loss of corresponding accounts, are forced to close local gaming accounts,” Maginley told the newspaper.

Maginley added that the magnitude of the current challenge becomes clear when one considers that a gaming company cannot function or continue to exist if it cannot maintain a bank account for the purpose of remitting cash.

He said under a worst case scenario, gaming companies might find themselves licensed in Antigua and Barbuda, but unable to get an account to meet payroll or local operational expenses.

However, there was no confirmation from the current head of gaming in Antigua on the story. When contacted by the Antiguan Sun, Director of Gaming Kay McDonald said that she was unaware that local banks are displaying reluctance to open or maintain accounts for Internet gaming companies. This was subsequently borne out when in a further statement Maginley explained that he had been referring to the Neteller issue when talking about the Isle of Man.

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