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DUTCH BANKERS AGAINST UIGEA-STYLE PROPOSAL

Dutch Justice Minister Hirsch Ballin is locking horns with the country's bankers again regarding his impractical proposal to coerce the banking industry into enforcing a Dutch-style UIGEA - an initiative which involves the banks refusing to process financial transactions with online gambling companies.
 
Minister Ballin's proposed Online Gambling Act has been raising political hackles since January this year, when he proposed a temporary license for the online operations of the state's monopolist Holland Casino (a proposed

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exclusive three year license proposal was rejected by the Dutch Senate).  In introducing his Online Gambling Act, Ballin also gave notice that the Ministry of Justice should begin targeting financial institutions involved in 'illegal' financial transactions with unlicensed Internet gambling companies.
 
The Minister disclosed a plan to in-span financial companies and even ISPs in an attempt to keep online competition out of the Netherlands, and at the end of January 2008, the Ministry issued a press release stating that it would ‘take a firm line’ against financial institutions dealing with unlicensed gaming operators. However, whether there is a law backing the Minister's actions, which were based on the precept that facilitating payment services is illegal, is arguable. The Minister claimed that article 1 of the 1964 Gaming Act could be extended to support his initiative, but there was widespread disagreement with this position from legal experts.
 
The Senate debate caused something of an uproar in the local media and triggered critical reactions from the Dutch Banking Association (NVB) and ‘Currence’, the operator of the leading Dutch ISP, which was unwilling to collaborate on an untested and possibly controversial interpretation of the law.
 
Several weeks later, in March, Ballin sent a letter to the Dutch Senate formally advising his intention to tackle the banks in his crusade against online gambling. The earlier public outcry has been interpreted as giving Ballin pause for thought; certainly the content and tone of his intentions had calmed by March, with a milder proposal that only the provision of bank accounts to remote gaming operators would be considered illegal. Ballin further acknowledged that there could be internal Dutch monitoring and blocking problems associated with his proposal. The Minister also specifically mentioned PayPal, an e-cash processor licensed in Luxembourg and outside the jurisdiction of the Dutch government.
 
The Minister had his officials construct a list of 30 Dutch-facing online gambling operators, which has been issued to the Dutch Banking Association to further the Minister's intentions. The Ministry issued a press release threatening possible legal action against non-compliant companies, but legal experts like Van Mens & Wisselink pointed out that the Ministry itself has no mandate or authority to indict either individuals or companies. The Ministry can only lay a complaint with the public prosecution department, which holds the necessary authority to decide whether to prosecute or not.
 
This week, the Netherlands Bankers Association (NVB) advised Ballin that his plans were impossible to implement and unworkable in a practical sense, setting the scene for further debate. Adding another layer of controversy to the issue is the Dutch membership of the European Union, which in general supports the principle of free movement of goods and services between EU member nations. The Dutch government is already on notice from the European Commission that it could face a European Court of Justice appearance if it continues to exclude competition from other member nations.



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