Should you dump a student in case you think he will use martial arts for a bad purpose?

I teach students on a personal basis mainly. I have one new student who does some boxing, and is pushing hard to know when he will grade and how long before using more advanced skills. Well as most of you know who train in MA, even the most basic skills can be deadly in the wrong hands. Usually I have consultations with prospective students to see how they are, if I think I can work with them I take them on. This student though gives me cause for concern and I am not sure it is justified. He has said he wanted to take punches from me but I told him he needed to grade before even light sparring could begin. He would not be able to withstand even a light punch from me so I think his ego must be tame before I can teach him more. Should I pursue with him or not? Just in all my years teaching I have'nt met anyone, 1-2-1 who gave me a worry they would use the skills taught for ill. But for him, I am not sure. Any advice is welcome thanks.