NETeller ceases online gambling transactions from U.S. customers

As of 12:01 a.m. (GMT) today, NETeller has immediately stopped processing all transactions between online gambling sites and U.S. customers. Citing restrictive legislation in the United States and uncertainty about those regulations as reasons, the move also came just days after the arrest of the company's founders on charges of funneling billions of dollars to illegal overseas gambling operations.

The change was effective immediately. U.S. customers will still have access to their e-wallets at NETeller, but they will no longer be able to use them to transfer funds to or from online poker or casino sites.

The company has also temporarily suspended the creation of new accounts by U.S. customers.

According to the press release, the decision stems from a series of deliberations over recent months by NETeller's board, which believes the company's position in the U.S. market isn't sustainable since the passage of the Unlawful Internet Gambling Act (UIGEA).

"Since the passing of the Act, the company has been working diligently on a program of operational and technical measures and procedures to allow implementation of any such decision at the earliest opportunity," NETeller said.

Some of the steps NETeller has taken over the past few months to get to this point include the development of country blocking and instant funds transfer restriction enhancements to the software platform.

The restriction enhancements to the software were created specifically to prepare for the need to automatically block transfers to online gambling sites from U.S. residents. Those features became fully deployed today.

The company also reiterated that its shares would remain suspended until the legal situation surrounding the arrest of its two founders in the United States is clarified.

John Lefebvre was arrested in Malibu, Calif., and Stephen Lawrence was arrested in the U.S. Virgin Islands Saturday based on an indictment by a grand jury in New York.

They are charged with conspiring to transfer billions of dollars to promote illegal gambling.

Both men, who are Canadian residents, founded NETeller in 1999 in the Isle of Man and were previously directors of the company. According to NETeller, they no longer have an active role in the company other than as shareholders.

NETeller acts as a secure, online money transfer firm. It began processing Internet gambling transactions in 2000 and became a publicly traded company in 2004.

Prosecutors in the case against the founders have cited NETeller's annual report from 2005 which shows that the company provided payment services to more than 80% of worldwide online gaming merchants.

It is their assertion that Lefebvre and Lawrence allowed the company to provide that service, which processed more than $7.3 billion in transactions in 2005 alone, of which 95% came from Internet gambling transfers.

Lefebvre and Lawrence have both been released after posting the $5 million bail that was set for them. They are expected to appear in a New York court next week to face the charges.

courtesy of Sarah Polson

News Added: 19 January, 2007

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