Banks continue to de-risk and drop casinos and gambling companies as customers.

1. Alan Pedley
Governance Associates Ltd
AML Governance Associates Pty Ltd
www.associates.ag
Casinos and banks, cont’d
Court prevents RBC from closing casinos’ accounts
2016-05-03
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Court prevents RBC from closing casinos’ accounts
Details
03 May 2016
PHILIPSBURG--The Court of First Instance on Friday ordered RBC Royal Bank to continue its
banking relationship with the management companies of Casino Rouge et Noir and of Jump Up
and Hollywood Casinos and to refrain from closing the companies’ bank accounts, pending the
outcome of the main case on this matter.

2. Holding company of Jump Up Casino International Race/Sports Consult N.V., Funtime N.V. for
Casino Rouge et Noir and Dutch Caribbean Resorts N.V. for Hollywood Casino filed an injunction
on March 29, after RBC had informed by letter of February 8 that it wanted to terminate its
longstanding relationships with the casinos “as a result of changed risk profiles which no longer fit
our risk appetite” and that it would close their accounts held with RBC.
Since 2013, RBC is using a so-called Risked Based Approach (RBA) to give each client a “risk label,”
based on which the bank decides whether a client should be intensely monitored or not.
Based on the RBA, the three companies were advised to seek alternative banking arrangements
until May 2 at the latest. However, considering that the companies had approached other banks
on the island without any results, the casinos received some respite from the bank with a new
termination date set for September 1.
The holding companies are running three casinos in St. Maarten for the past 34 years, during
which they have been doing business with RBC and its legal predecessors.
In the injunction, which was heard on April 15, the casinos called upon the Court to order RBC to
continue all banking relations with them and to attach penalties in case of non-compliance
pending the outcome of the main case, which was filed on March 24.
The casinos sought penalties of US $250,000 for every closed bank account, and $5,000 for every
other banking service the bank would decline to provide in violation of the Court order, and also
called upon the Court to order RBC to pay the cost of the legal proceedings.
According to the casinos, which were represented by attorney-at-law Jelmer Snow, RBC was
“unreasonable” and “inequitable” in its desire to terminate the banking relations.
In doing business, casinos depend heavily on bank accounts. They need to be able to make cash
payments, accept cashless credit entries, make booking orders, have credit card facilities, and be
able to pay out salaries into the bank accounts of 160 employees. In addition, the casinos have
provided guarantees to many employees for personal loans with RBC, their lawyer said.
RBC said it fears “reputation damage” as the casinos are considered high-risk clients due to their
ties with Ilario Legnaro. A Court in Milan, Italy, sentenced Legnaro in 1996 to eight years and four
months for involvement in mafia-related activities, RBC claimed.
The Italian may not be the direct owner of the casinos or a board member, but he would have
factual ownership, RBC said, adding that Legnaro could be linked with mafia organisation Cosa
Nostra, as well as with St. Maarten casino owner Francesco Corallo.
The casinos refuted these statements, which they said were based on “uncontrolled” media
reports. They said there is no legal documentation on Legnaro known with the judicial authorities
in Italy and Switzerland.
The bank’s fear of “reputational damage” is not justified, as there are no suspicious facts or
transactions, and not one single report to support any damage claim, the casinos stated.
The Court confirmed that the bank is allowed to make a risk analysis of its clients’ portfolios and
agreed that the bank cannot allow that account holders, or persons and legal entities connected
with these accounts, carry out illegal activities as a result of which the bank’s reputation may be
harmed or be at risk of getting fined.
The Court, however, agreed with the casinos that it was unclear how reliable the content of the
publications provided by RBC was. Besides, these documents could not be used as proof that
Legnaro was the person “controlling” the casinos, that he was convicted by a court of law, or have
ties with the Italian mafia, and or with Corallo.
The judge stated that whereas the bank is entitled to terminate a long-standing business
relationship, the casinos also have an interest in the continuation of their banking relations. As the
case stands now, the Court said the casinos’ interests should weigh more heavily than RBC’s
desire to terminate the relations.
“Termination may have far-reaching consequences for the banks, while a (temporary)
continuation of the banking relations does not have such consequences,” the Court stated.
RBC was ordered to continue its existing banking relations with the casinos as usual until the
Court has decided on the main case, against payment of the requested fines, in case of non-
compliance. The bank was also ordered to pay the legal costs, estimated at NAf. 1,746.50.
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