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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.
__________________
"Many of life's failures are people who did not realize how
close they were to success when they gave up"
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