Neteller Goes Cold On Turkey...And Canada!
Isle of Man e-wallet announces new online gambling
geographic bans due to "regulatory risks" Canadian and
Turkish online gamblers will have to find alternative
e-wallets to process their action following an announcement
Monday that the Isle of Man based Neteller third party cash
processor is imposing a ban on these regions. Reuters
reports that the British online payment processor will no
longer process transfers related to online gambling sites
for Canadian or Turkish residents due to regulatory risks.
"Recent actions by regulators, payment processors, and
online gaming operators have increased the uncertainty
around certain activities related to online gambling in some
jurisdictions," the firm said in a statement.
"The risk to the group's ongoing business in Canada
and Turkey has increased in the light of such developments.
The board has therefore concluded that the group will no
longer process transfers related to online gambling sites on
behalf of Canada or Turkey resident customers."
Neteller is currently in the throes of negotiations with US
Department of Justice officials who arrested two of the
e-wallet's founders in January whilst they were on U.S.
soil. The subjugation of Neteller is being hailed in
enforcement circles as an important success for the
application of the Unlawful Internet Gambling Enforcement
Act enacted late last year by the US Congress and targeted
on disrupting financial channels for online gambling sites.
The company froze all Neteller US accounts, withholding
money from many thousands of US players, a situation that
persists to this day. Neteller's press release contains
more detailed information, and is likely to be criticised
for its short notice to players. It announces: "The Board
of Directors of the company reached a decision, on 25 March
2007, that the risk to the group's ongoing business in
Canada and Turkey has increased in the light of such [legal
and regulatory] developments. The Board has therefore
concluded that the group will no longer process transfers
related to online gambling sites on behalf of Canada or
Turkey resident customers.
Canada
"Cessation of Canadian transfers to gambling merchants: the
group will cease processing online gambling related
transactions for Canada-resident customers with effect from
12.01 AM MST Monday 9 April 2007.
"Suspension of InstaCASH transactions: As of today Monday 26
March 2007, at 12:01 AM MST, Canada-resident customers were
no longer able to deposit funds using Neteller's instaCASH
service either directly or from any online gambling site.
"Non-gambling services continue: Canada-resident customers
will continue to be able to use their e-wallet accounts for
non-gambling transactions, including peer-to-peer and
pre-paid debit transactions. (Editorial comment: it is
understood that these represent a very small percentage of
Neteller's business.) Customer funds "Available
customer funds: Customer funds, including those of Canadian
residents, are held in a pooled, segregated trust account
and will be available for withdrawal by customers, on
demand. Canadian customers continue to be able to use their
e-wallet accounts for non-gambling transactions.
Turkey excluded
"In light of recent legislation passed in Turkey on 28
February 2007, which prohibits certain forms of online
gambling to be offered by any "unauthorised" domestic or
foreign company to citizens in Turkey, Neteller has decided
to implement a voluntary phased withdrawal of the payment
services related to online gambling that it offers customers
to the Turkish market.
"Withdrawal of local bank funding options: Local bank
deposit options for Turkey-resident customers were withdrawn
on Friday 9 March 2007.
"Cessation of Turkish transfers to and from online gambling
merchants: The Group has ceased processing online gambling
related transactions for Turkey-resident customers with
effect from 6.01 AM GMT Monday 26 March 2007.
"Non-gambling related services continue: Turkey-resident
customers will be able to continue to use their Neteller
e-wallet account for any non-gambling related money
transfers and withdrawals. Customers located in other parts
of the world are not affected by this change, and Neteller
continues to service these customers in the normal manner."
Financial impact and staff situation Clearly
anticipating some disappointing financial news for
investors, Neteller, who's shares remain suspended, says
that the Canadian business of the Neteller Group would
likely have contributed significantly to its revenue and
profitability during 2007 and the loss of this business is
now likely to have a material negative impact on group
results for the full year ending 31 December 2007.
"The Turkish business of the Group does not represent a
material proportion of the Group's overall customer base,
revenue or profitability," it adds.
The e-wallet, which has already made significant staff
reductions as a result of the US situation, does not
anticipate making further "significant" cuts in staff as a
result of these service changes as the Board believes that
its Calgary-based operations are appropriately sized to
handle the remaining non-North American business of the
Group.
"The Group will continue to focus on the growth markets of
Europe and Asia," the announcement says, but its shares will
continue to be suspended from trading on AIM "...in view of
the continuing uncertainties the Group faces. Further
announcements will be made as appropriate."
Clarification on US player funds
The announcement ends rather ominously with a clarification
of an earlier release US players that it would soon announce
a plan for the payout of their frozen funds:
"The company would, in light of recent press comment
concerning its announcement of 21 March 2007, like to make
clear that the 75 day period referred to in that
announcement was for agreement of a plan of distribution
with the United States Attorney's Office. It would remain to
be determined, as part of that plan, the precise timing of
the distribution of funds to US customers." This is cold
comfort to US players, who's monies have been frozen since
January. Posted: March 27, 2007
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