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Kevin Smith

Isle of Man Official Denies Reports of 'Preferential Treatment'

11 December 2001

Despite a recent published report out of the Isle of Man, a top government official there says all plans are progressing according to schedule as the jurisdiction prepares to welcome online gaming.

Last week the Isle of Man online news service reported that the government was facing criticism from the country's clearing banks for giving "preferential" treatment to three gaming companies.

In September the Isle of Man's Department of Home Affairs office awarded licenses to Littlewoods Leisure, MGM MIRAGE, and SunOnline Ltd., a division of Sun International Hotels Ltd.

"What does preferential treatment mean? If that is somebody's view, I don't know. But the department and the gaming commissioners are acting on the instruction of the Council of Ministers."
-David Killip
Department of Home Affairs

Since that time various regulatory bodies within the isle's governmental structure have been working to put proper procedures in place for the Island's newest industry. David Killip, the CEO of the Department of Home Affairs admits the process isn't an easy one, but he feels any conflicts that have arisen have been blown out of proportion.

While gambling regulations are handled by the Gambling Commission, the Financial Supervision Commission , which regulates all financial institutions in the Isle of Man, proposed the money laundering code for the online gambling industry. Getting all these entities on the same page for setting up new standards and procedures has been a challenge, but Killip said that it's simply part of the process.

The issue of anti-money laundering controls has played a central role as the three operators get closer to launching their services.

"There are a lot of different regulatory bodies whose responsibilities are to regulate various parts of different industries," Killip said. "The issue really hinged on how anti-money laundering safeguards could be applied to the online gaming industry. The nature of the industry differs from that of terrestrial banks or insurance companies."

The Financial Supervision Commission's suggested policies were eventually taken up by the Council of Ministers, essentially the cabinet of the government, which issued its own recommendations for adapting the anti-money laundering controls to adequately cover online gambling.

The Financial Supervision Commission has in place anti-money laundering controls, but many interactive gaming companies felt those controls weren't feasible when applied to their industry.

"The proposals they had were felt to be inconsistent with effectively operating the online gaming industry," Killip said. "As a result the Council of Ministers had a range of views put to them on a range of issues and have determined a stance accordingly."

Killip was surprised to hear of any rumblings of preferential treatment; he said all the proper boards were being consulted in the process. He felt the report was probably coming from a small minority.

"I don't purpose to comment on that," he said. "What does preferential treatment mean? If that is somebody's view, I don't know. But the department and the gaming commissioners are acting on the instruction of the Council of Ministers."

The code is expecting to be completed within a month after a few more administrative hurdles are cleared.

"The anti-money laundering code for the online gaming business is being prepared right now," he said. "There will be guidelines accompanying it and the law offices of the Island's, the staff of the Attorney General, are very much involved in that."

Killip acknowledged that some in the traditional banking sector may look unfavorably on the online gambling codes, but added that all circumstances must be considered before criticism is raised.

"It is true that some of the specifics of the anti-money laundering controls, which will apply to the online gaming industry, will differ from those in place for terrestrial banks in the Isle," he said. "But they are still being applied in a way that is seen as being consistent and safe with online gaming. There maybe those that say the same regulations that apply to banks should apply to the online gaming sector. Maybe that is what they mean by preferential treatment. The bottom line is that anti-money laundering controls are being applied to online gaming."

As the process moves closer to completion, Killip reiterated that to his knowledge the process has moved through the regulatory bodies with very little tension among individuals.

"I know of no difficulty that was, or is, involved in creation of the anti-money laundering code," he said.

Isle of Man Official Denies Reports of 'Preferential Treatment' is republished from
Kevin Smith
Kevin Smith