Neteller to forfeit a further US$76m 18/07/2007

Jake Pollard

Neteller has admitted to operating an “unlicensed money transmitting business” and participating in the promotion of “unlawful transactions” between gaming operators and their customers in the US.

The news came as the company announced the resolution of the investigations into the company on the part of the US attorney’s office (USAO) for the southern district of New York.

As part of the deal the company has agreed to forfeit US$136m. The sum includes US$60m already seized by the US authorities. In return, the USAO has agreed to defer the prosecution of any federal charges. As a consequence, the company will not be convicted of any federal crime.

Neteller has also agreed it will “cooperate fully with the US authorities in all matters relating to the ongoing investigations by the USAO”.

Neteller shares will resume trading on the Alternative Investment Market (AIM) as soon as its results for 2006 have been published. The company has also said it will attempt to fulfil withdrawal requests from US customers by no later than 30 July.

According to a release to the London Stock exchange today, the company has entered into a deferred prosecution agreement (DPA) with the US authorities. Under the terms of the DPA the company has consented to the filing of any criminal information relating to transactions between online gambling merchants and persons located in the US.

Under the terms of the DPA Neteller has admitted it operated in the US an “unlicensed money transmitting business and had participated in the performance of financial transactions for the purpose of promoting unlawful transactions between internet gambling merchants and persons located in the US.”

Industry insiders suggested the news that Neteller would cooperate fully with ongoing investigations meant the company was going to “sing like a canary”. “They will be handing over a whole lot of information,” he added.

Neteller said the money seizure represents “certain profits received by Neteller from the activities described in the statement of admitted facts". A sum of US$40m will be paid on or before 15 October this year with the remaining balance of US$36m to be paid on or before 17 January.

Neteller added that recent legal developments in Israel had increased the uncertainty regarding the legality around certain activities related to online gambling in the Israeli market. "The company has therefore concluded that the group will no longer process transfers related to online gambling sites on behalf of Israeli resident customers," it said. Neteller will cease processing all online gaming transactions form 12.01am GMT on Thursday 19 July. 

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Posted: 18/07/2007