RBC Bank not allowed to cut ties with casinos

POSTED: 05/9/16 12:25 PM

 

wwwHollywood Casino

The Hollywood Casino remains a client at RBC Royal Bank, just like the Jump Up Casino and Casino Rouge et Noir. Photo google.com

No proof for ties with Italian mafia”

St. Maarten News – RBC Royal Bank is not allowed to terminate its business relationship with the companies that operate Jump Up Casino, Casino Rouge et Noir and Hollywood Casino, the Court in First Instance ruled in summary proceedings. The court ordered the bank to continue its relationship with the casinos until there is a final decision in a regular court procedure. The court imposed a penalty of $250,000 for every bank account the bank closes in violation of the court ruling; a second penalty of $5,000 applies to every other banking service RBC refuses to execute for the three casinos.

The casinos have been operating in St. Maarten for 34 years and they have always done their banking business with RBC Royal Bank and its predecessors.

In 2013, RBC introduced its Risk Based Approach, a policy that provides every client with a risk label. Depending on this label the bank monitor’s the client’s banking activities intensive or less intensive.

On February 8, the bank sent the casinos a letter about their risk assessment. The letter contained the following lines: “Regretfully we are left with no choice but to end longstanding relationships as a result of changed risk profiles which no longer fit our risk appetite. After careful consideration, we advise that we are not in a position to maintain our banking relationship with you and accordingly, the following accounts held with RBC Royal Bank will be closed.”

The bank gave the casinos until May 2 to find “alternative banking arrangements.”

The court ruling states that the casinos approached several banks in St. Maarten after the February 8 letter with the request to accept them as a client. All banks refused, after which RBC extended the termination date to September 1.

The casinos took the bank to court, demanding that it continues the relationship or face penalties of $250,000 for each account it closes down and $5,000 for every other banking service it refuses to provide.

The casinos argued that their interests carry more weight than that of the bank, because they need bank accounts and banking facilities to operate their businesses. Part of those services is the payment of salaries into the bank accounts of their 160 employees.

RBC’s most important reason for terminating the relationships was its fear for damage to its reputation. The bank said according to the court ruling that the casinos are high risk clients “because they are controlled by Ilario Legnaro. On paper he cannot be found directly as the owner or the director of the casinos, but he actually controls the casinos. His son-in-law, Antoine Akl, and his daughters are directors of these casinos.”

The bank furthermore noted that doing business with Legnaro is an unacceptable risk “because the court in Milan sentenced him in 1996 to 8 years and 4 months of imprisonment for involvement with mafia-related activities. Furthermore, Legnaro can be linked to the mafia organization Cosa Nostra and to Mr. Corallo.”

To substantiate its position, the bank submitted to the court several undated internet-reports – translated with Google translator from English and Italian into Dutch. The information stems from the websites of Notizie Liquida, The Daily and Il Fatto Quotidiano.

The casinos contested in court that Legnaro is the owner of the casinos or that he controls them. They also pointed out that the internet-reports are partially incomprehensible. More importantly, the casinos provided the court with written reports from the justice departments in Italy and Switzerland that support the notion that Lagnaro’s name does not appear in their judicial documentation. “The name of Corallo may be well-known or notorious – correct or not – but nobody here knows the name Legnaro.”

Based on these arguments, the casinos said, there should be no fear for reputation damages. “There is not a single suspicious fact or suspicious transaction, not a single report that concretely substantiates a basis for reputation risks that makes that the banking relationship can be terminated like this,” the court ruling states.

The court ruled that the bank is within its rights to safeguard its financial integrity and that it is allowed to make a risk analysis of its client portfolio for this purpose. Undisputed is also that RBC cannot permit its accountholders to execute illegal activities that could put her reputation at risk and whereby the bank risks heavy fines.

However, the court ruled, the reliability of the internet-publications submitted by RBC, is for the time being unclear. “Based on these documents it cannot be established that Legnaro controls the casinos, that he has been sentenced for a crime, has ties with the Italian mafia or with Corallo,” the court ruled.

The court rejected the bank’s arguments and noted that there is currently sufficient reason to assume that the casinos will win the regular court procedure as well.

The court furthermore established that the interests of the casinos carry more weight than those of the bank. “Termination could have irreversible consequences for the casinos while the (temporary) continuation of the relationship does not have such far-reaching consequences.”

The court ordered the bank to pay the 450 guilders court fee and 1,000 guilders for the salary of the attorney of the casinos, Jelmer Snow.

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