Banks Will Not be Held Liable for Failing to Stop Online Gaming Transactions

by Lou on March 12, 2008

Criminal liability for banks that are unable to stop online gambling transactions was removed by a US Supreme Court Judge in a decision that is unlikely to be appealed. This came about when an independent trade organization,, challenged the enforcement provisions of the Unlawful Internet Gambling Enforcement Act (UIGEA).

Most experts are of the opinion that the US Government will not appeal the decision that banks should be held criminally liable for something the industry insists they have no control over.
An 11-page letter drafted by the American Banking Association (ABA) and submitted to the US Treasury in December states: “ABA believes that the proposal, in large part due to the nature of the statute itself, will fail to create a practical process for intercepting prohibited conduct that maintains an efficiently functioning payments system.”

The letter also said that “….UIGEA will in the end catch more banks in a compliance trap and do greater damage to the competitiveness of the American payments system, than it will stop gambling enterprises from profiting on illegal wagering.”

iMEGA insisted all along that this unfunded mandate was viewed as “deputizing” the banking institutions as a means of policing online gambling, but without providing the weapons to do so.

The document asserts: “In other words, in the view of the drafters of the legislation, all the sophistication of the FBI, Secret Service, and other police computerized detection systems and investigative expertise devoted to fighting terrorism and financial crime are inadequate to the task of apprehending the unlawful gambling business or confiscating its revenues. ABA believes that punting this obligation to the participants in the US payment system is an unprecedented delegation of governmental responsibility with no prospect of practical success in exchange for all the burden it imposes.”
The US Government, when asked to comment on the decision last week, responded that they would not be doing so.
Meanwhile, Congressman Barney Frank’s Internet Gambling Regulation and Enforcement Act, which was introduced early last year, will go to a committee hearing in Congress this spring.

According to a spokesperson for Frank (pictured left), a hearing in the House Financial Services Committee had been scheduled for early April. This news comes as Congressman Jim McDermott announced the reintroduction of a taxation bill for legalized internet gambling.

Michael Waxman, of the Washington based lobby group Safe and Secure Internet Gambling Initiative said that the legislation, which is designed to accompany Frank’s bill, is the result of a long-term plan to introduce a taxation regime that PriceWaterhouseCoopers estimates could bring in revenues of between $8 billion and $42 billion.
Waxman said: “It is a similar bill to last year’s, and McDermott has taken some of what he has learned in the last year and put it into this bill. The most important thing is that this is a powerful statement and will educate members of Congress in why regulated internet gambling is the way forward.”

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