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Unlawful Internet Gambling Enforcement Compliance Delayed

Lora Bentley

The Federal Reserve and the U.S. Treasury Department have delayed compliance deadlines that would have required financial institutions to implement policies "reasonably designed" to prevent payments to illegal gambling Web sites by Tuesday, Dec. 1. Bloomberg reports required compliance will pushed back to June 1.

 

The rules, which were adopted in November 2008 under the Unlawful Internet Gambling Enforcement Act, were intended to "limit the use of payment systems" for online gambling. Apparently, however, they do not differentiate enough between illegal online gambling and legal online gambling, such as the purchase of lottery tickets, or in some states, betting on horse races or dog races.

 

As such, industry groups such as the National Thoroughbred Racing Association and the Poker Players Alliance, among others, have been pushing for a compliance delay, and House Financial Services Committee Chair Barney Frank agrees. In a statement last week, he praised the agencies for suspending the regulations, which he said would "pose unrealistic burdens on the entire financial community."

 

According to an American Bankers' Association compliance overview, because the act does not specifically define unlawful gambling, banks are required to do their part by "preventing unlawful Internet gambling businesses from benefitting from the payment system by denying them the opportunity to open bank accounts from which to receive payments." To that end, banks are required to screen commercial customers before opening a new account, and must inform commercial customers of the act's prohibitions.


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