Minister of Curaçao: The risk of market exits will not prevent us from raising standards – Regulation
Curacao Finance Minister Javier Silvania has “no problem” with the island’s planned gambling overhaul which will see operators removed from the jurisdiction, saying those who do not comply with his new standards will not be missed.
Speaking to the iGB, Silvania explained the rationale and background behind Curacao’s plans to radically reform its gambling laws.
Among the changes will be the introduction of the Curacao Gambling Authority (CGA), a body that will oversee licensing and enforcement.
The CGA will replace the current system, in which four private entities hold master licenses from the government and offer sublicenses to operators with little or no government oversight.
Silvania noted that under the current system there had been a number of “gaps and challenges” and that the master license system was “not an ideal situation”.
“The new bill ensures that surveillance is under government control,” he told the iGB. “It’s important that the government knows who has licenses because at this stage it’s not always clear who has one.”
Mario Galea – the former chief executive of the Malta Gaming Authority who worked as a consultant on the process – said the whole process was built around creating a more “responsible” framework.
Furthermore, Galea noted that under the current rules, the government does not even know the number of existing licensees, although it estimates it to be between 500 and 900, with a total number of “skins “offered by the thousands.
The new licenses will come with stricter rules in areas such as money laundering, equity and local presence on the island, unlike the previous system which offered little control.
While existing operators will initially be grandfathered into the new system via transitional 12-month licenses, things may change regarding the number of operators beyond this point. Silvania said the exit of operators who found the new system unviable would not be a great loss for the island, as currently the government sees very little benefit from the presence of most.
“I have no problem with companies leaving Curacao because right now Curacao isn’t making a lot of money for them,” he said. “It is the licensed teachers who earn the most money; the government hardly does any. If businesses want to move, that’s fine.
Silvania pointed to companies with unfair terms or insufficient anti-money laundering safeguards as those that would not be breached.
“The companies we want to stay are bona fide companies that play by the rules because we have to abide by the rules to prevent money laundering. If the companies give out a prize, it ultimately has to be paid – that’s is the kind of business we want in Curacao.
Galea added that while some operators can get out, others who had avoided the island due to “connotations”, might find it now makes sense to move there.
Galea, however, noted that the fact that the CGA could easily enforce existing rules with powers such as revoking licenses, as the current system clouded liability, would be even more important than the new money laundering rules. silver.
“The AML regulation already exists, but until now it was basically the responsibility of other people, which created a sleight of hand situation,” he said. “Now there is going to be real authority. You must report.
“If you put up a speed camera, people will see it, but if you don’t get a ticket, it doesn’t make sense to have a speed camera. There is law enforcement behind it, and that is what will change things. »
The reforms also come at a time when supply point jurisdictions have come under increased scrutiny from international bodies for their anti-money laundering rules and practices. Last year, Malta was on the “grey list” of the global anti-money laundering body, the Financial Action Task Force (FATF), meaning it was subject to a “increased surveillance”. The country was finally dropped from the list last month, but Gibraltar was added at the same time.
Galea noted that the fact that the CGA could easily enforce existing rules with powers such as revoking licenses would be even more important than the new money laundering rules. It was unclear where the power to revoke licenses currently lay, he said.
In terms of local presence, licensees must have at least three employees in “key positions” working in Curacao. Silvania described the requirement as “essential” to him and said he would not back down from suggestions to relax the requirements.
“What’s important for the government is that businesses set up shop in Curacao, even if it doesn’t raise a lot of taxes,” Silvania said. “The fact is that when businesses have substance in Curacao, it will benefit the economy.”
“What I don’t want is companies setting up shop in Curacao on paper, but adding zero point zero to our funds,” he said.
Ultimately, Galea said the introduction of a real license issued by a government body would provide a sense of certainty and legitimacy to the market which he believes should increase the value of businesses.
“The biggest change is that just because you have a license in Curacao, the value of your business will increase,” he said. “Right now the value of businesses in Curacao is a very small multiple of their EBITDA, but once you have the proper license in a proper jurisdiction that will change.”
The Dutch government played a role in influencing the reforms, as Curaçao is a constituent country of the Netherlands. In particular, some of this pressure was around the issue of going after operators based on the island but targeting Dutch customers.
However, Galea dismissed the idea that targeting the Netherlands was a widespread practice in Curacao, noting that the most notable companies forced out of the Dutch market last year were all based in Malta.
The Dutch government has tied Covid aid for the island to sector reform demands, although Galea noted that when the Curacao government began drawing up plans to implement a new system it found that the reform was beneficial for the island itself.
“The Dutch government said, ‘We’ll give you money if you do something about the game’ and the Curacao government said, ‘Very well, we’ll do something,'” Galea said. “But they actually realized that if they did something, they would make more money even without Dutch support.”