Published On: Wed, Mar 20th, 2019

Banks kick lottery companies out

Robbie's Lottery Head Office St. Maarten

PHILIPSBURG — The Windward Islands Bank (WIB) in St. Maarten and Maduro & Curiel’s Bank (MCB) in Curacao do not have to maintain their banking relationships any longer with Robbie’s Lottery and five associated entities, the Court in First Instance in Curacao ruled in summery proceedings. The banks want to end these relationships per March 31.

Affected by the ruling are Administratiekantoor Dollar N.V. in Curacao (the entity that does business as Robbie’s Lottery), Jamaroma Lotteries N.V. and The Money Game N.V. (Robbie’s Lottery and Smartplay) both in St. Maarten and three entities established in Tortola in the Britisch Virgin Islands: TMF Management Services Ltd., Caribbean Investment Group Ltd. and L&G Universal Ltd.

The lottery companies filed lawsuits against the two banks on February 8, after the WIB and MCB notified towards the end of last year that they were no longer wanted as clients.

“Your business segment is high risk and is no longer within our risk appetite,” MCB wrote in a letter dated November 21, 2018, to Dos Santos. The bank furthermore wrote that its policies and international correspondent relationships require periodic assessments of its clients’ risk profile.

The WIB wrote on December 17, 2018, to Jamaroma c.s. that it would terminate the banking relationship “as your business derives its income from the lottery business which is no longer within our risk appetite.”

Attempts by the lottery companies to make the banks change their minds failed, though they postponed the termination date from December 31, 2018 to March 31, 2019.

The banks base their decision on a changed assessment of the integrity risks associated with the lottery branch in general, with a reference to stricter guidelines from their own organization, the Central Bank, other supervisors, their Canadian shareholder and their foreign correspondent banks.

But the main reason for the banks’ decisions was the criminal conviction of Dollar, Dos Santos, Jamaroma and The Money Game in 2016 for tax evasion, money laundering and forgery. All these crimes were linked to illegal lotteries.

The banks also referred to the Cymbal money laundering case wherein Dos Santos allegedly gave dirty money to CPG Wolrdwide, a bogus lingerie business of the Grynsztein family from Amsterdam. CPG sold this money based on forged invoices to Venezuelans who made their profits with it in the black currency market in Venezuela.

The court set the Cymbal-accusations against Dos Santos aside because the banks did not present detailed information about it.

However, the court notes in its ruling that the accusations in the Cymbal-case generated again negative publicity about Dos Santos. “It is plausible that this contributes to the reputation-risk MCB and the WIB fear.”

Another grief against the lottery companies is that they have failed to provide  their KYC (Know Your Client)-information for the past two years.

The court took notice of the irrevocable conviction of the lottery companies for fraud that shafted the former Netherlands Antilles and the countries Curacao and St. Maarten for approximately 50 million guilders ($27.9 million). The relevant court rulings show that the companies used bank accounts at MCB and the WIB for their fraudulent activities.

The question the court had to answer was therefore whether the banks can be obliged to continue doing business with people and entities from the lottery branch that have a criminal conviction to their name.

“With these convictions the cases at hand clearly differ from the casino cases in St. Maarten and Aruba,” the court ruled. In 2017, the court in St. Maarten denied RBC bank the right to end its relationship with Rouge et Noir Casino and two other casinos. In 2013 RBC attempted to end its relationship with the casino companies of Francesco Corallo, but the court also blocked this, saying that the interest of the client prevailed over the interest of the bank.

But in the case of the lottery companies the ruling went in favor of the banks, basically based on the recent criminal convictions against Dos Santos, Dollar, Jamaroma and The Money Game. “The nature and the scope of the criminal behavior make it plausible that continuing the banking relationships leads to reputation-risks,” the court ruled. “These risks can be disadvantageous for their (international) business operations and they could be at odds with internal and external requirements in the field of financial integrity.”

The court ruled that the interest of the banks in this case have to prevail over the interest of the lottery companies, “Also if it has to be assumed that the companies are not welcome at any other bank in Curacao and St. Maarten.” The ruling states that the banks contest this and that the lottery companies have not offered proof that all other banks refuse to accept them as clients.

That Robbie dos Santos in the meantime has stepped down to leave the management of his companies to his daughter Stephanie – and that she has professionalized the business and improved the relationship with the supervisor – does not change anything in the court’s opinion: “The lottery business is still being operated by criminally convicted people and entities with whom MCB and WIB do not have to continue doing business against their will.”