The idiocy that is American law & the Internet

The arrests of the two founders of Neteller in the US is sending chills through the spines of the millions who play a part in the online gambling industry.

As this story reports that has extracts from the arrest report, law enforcement officers, with the aid of a "co-operating witness" opened a Neteller online payment account. Funds were then transferred into the account whilst the US resident was in the USA. NEITHER OF THESE ACTIONS ARE ILLEGAL.

The Co-operating Witness then transferred their money on Neteller to several online gambling ventures that operated in locations outside of the US on several occasions between September 2006 and December 2006.

Neteller is an Isle of Man domiciled entity, listed in London on the AIM market. It is authorised and regulated by the Financial Services Authority in the United Kingdom as an e-money issuer (FSA Register Number: 229737).

"Since in or about June 2006, the Federal Bureau of Investigation ("FBI") has been conducting an investigation of Neteller PLC, a company that is based in Isle of Man and is publicly-traded in the United Kingdom. The investigation has revealed that Neteller PLC conducts and facilitates illegal
financial transactions between gambling customers in the United States and numerous offshore online gambling businesses."

So, a US law agency has deemed that it has jurisdiction over the actions of a UK regulated entity.
Things I find most objectional here are
As the Mercury News reports from Kansas

U.S. Attorney Michael Garcia said the men knew when they took their company public that its activities were illegal.

FBI Assistant Director Mark J. Mershon, assistant director of the U.S. Federal Bureau of Investigation, said the multibillion-dollar online gambling industry is ``a colossal criminal enterprise masquerading as legitimate business.''

They joined in 1999 to found Neteller, which is based in the Isle of Man. Lawrence left the company's board of directors in October and Lefebvre left in December 2005, prosecutors said.

Neteller's shares were suspended and it announced today to the London Stock Exchange that it is ceasing to handle gambling transactions from U.S. customers because of restrictive legislation and uncertainties about regulations.

If the US thinks gambling is morally wrong and wants to ban it, then it should legislate accordingly and close all US gambling businesses and criminalise US citizens who gamble. Extending its legislative reach to businesses outside America and seeking to impose a moral view on those who have no democratic ability to change this situation is simply wrong.

Furthermore, as is reported here, the legislation has some convenient loopholes

The Unlawful Internet Gambling Enforcement Act of 2006 requires banking institutions to monitor internet gambling transactions. The banking sector has claimed they do not have the necessary means to do so. The law was tacked onto a Port Security Act and written hastily by politicians with what many believe to be ulterior motives (i.e. horse racing was exempt from the new law as were state lotteries).

If only UK politicians had the spine to do something about this injustice, such as impose equally mindless laws on that affect US businesses e.g. against the law to buy online goods from a US owned business (thereby scuppering Asda which is owned by Wallmart; or making it illegal to download music from iTunes). Then when dear Mr Jobs & Co happen to pop through Heathrow, they too could be arrested - perhaps this is the only way to draw light on this situation, because you can bet (or perhaps you can't if you are a US resident) that US politicians would be screaming trade sanctions at this point......


posted by John Wilson @ 5:41 PM Permanent Link newsvine reddit


At 8:46 AM, Blogger Hawkeye said...

I fully support your suggestion that we should attempt to get our politicians actively doing something to make the US realise that their behaviour is completely unacceptable. Here is a suggestion: Use your Blog to get a petition going to urge our government to take action.


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