The U.S. Department of the Treasury and the Federal Reserve System have released proposed rules that would require credit card companies and banks to have policies in place to prevent payments for illegal gambling transactions.
The proposed rule would implement the Unlawful Internet Gambling Enforcement Act passed by Congress last year. The law prohibits payments made for illegal gambling through U.S.-based financial institutions, including payments made via credit cards, electronic funds transfers and checks.
The rule gives examples of the policies and procedures the financial institutions should put in place, However, the proposed rule doesn't spell out what illegal gambling activities or transactions are, because the act relies on underlying federal and state laws to determine those issues.
For example, under the proposed rule, credit-card companies and money-transmitting businesses are expected to put procedures into place to monitor and analyze payment patterns of individuals to detect suspicious activity.
Public comment on the proposed rule is due by December 12.
Earlier this year, Rep. Barney Frank (D-Mass.) introduced a bill that would make it legal for people living in the U.S. to gamble online. Frank's bill, The Internet Gambling Regulation and Enforcement Act of 2007, would allow licenced companies to accept bets from U.S. residents to the extent permitted by individual states, Indian tribes and sports leagues.
The bill would exempt operators of gambling sites from restrictions on online gambling under the Unlawful Internet Gambling Enforcement Act, including the provision that prevents U.S. banks and credit card companies from processing payments to online gambling sites.
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