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Dutch Bankers Against UIGEA-Style Proposal

November 24, 2008 (InfoPowa News) — 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 that 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 exclusive, three-year license proposal was rejected by the Dutch Senate — see previous report).  
In introducing his Online Gambling Act, Ballin also gave notice that the Ministry of Justice intended 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, his Ministry issued a press release threatening that it would ‘take a firm line’ against financial institutions dealing with unlicensed gaming operators.
However, it is arguable whether there is a law backing the Minister's actions, which were based on the precept that facilitating payment services is illegal. 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 a judicially 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 significantly 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 had 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. Coinciding with this, the Ministry issued another press release threatening possible legal action against non-compliant companies. This caused legal experts like Van Mens & Wisselink to point 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) formally advised Ballin that his plans were impossible to implement and unworkable in a practical sense. The NVB told the Minister that his plan to use Dutch financial institutions to police online poker and Internet gambling sites is neither practical nor legal, and that the role of policeman is not part of the banking industry's responsibilities.  
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.
The banks are concerned that European law could be breached by the unilateral implementation of the Dutch minister's initiative and his interpretation of the law, which remains untested in judicial courts. Ballin, however, is adamant that the banks should obey his instructions as companies operating under Dutch law.
These statements appear out of step with a recent statement made by Ballin to the Permanent Committee on Justice in the Dutch Parliament, in which he advised that a further examination of the Dutch legislation was necessary in light of the Senate's rejection of his proposals on Holland Casino, the Reasoned Opinion of the European Commission (which went against Dutch monopolistic practices) and questions raised by the country's judiciary for guidance. In his statement, Ballin said such a re-examination and a possible revision of his original proposals was required " … to ensure consistency and coherence with European law."
In what appears to be a tacit admission that events were overtaking his Ministry, Ballin told the Committee that his new "harmonization" of gambling laws would probably be delayed, along with the creation of a gaming authority independent of his Ministry and a specific ban on foreign Internet gambling companies operating in the Dutch market.  
The scene seems set for political and legislative fireworks in the near future.