[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2143 Referred in Senate (RFS)]
1st Session
H. R. 2143
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 11, 2003
Received; read twice and referred to the Committee on Banking, Housing,
and Urban Affairs
_______________________________________________________________________
AN ACT
To prevent the use of certain bank instruments for unlawful Internet
gambling, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Unlawful Internet Gambling Funding
Prohibition Act''.
SEC. 2. FINDINGS.
The Congress finds as follows:
(1) Internet gambling is primarily funded through personal
use of bank instruments, including credit cards and wire
transfers.
(2) The National Gambling Impact Study Commission in 1999
recommended the passage of legislation to prohibit wire
transfers to Internet gambling sites or the banks which
represent them.
(3) Internet gambling is a major cause of debt collection
problems for insured depository institutions and the consumer
credit industry.
(4) Internet gambling conducted through offshore
jurisdictions has been identified by United States law
enforcement officials as a significant money laundering
vulnerability.
SEC. 3. POLICIES AND PROCEDURES REQUIRED TO PREVENT PAYMENTS FOR
UNLAWFUL INTERNET GAMBLING.
(a) Regulations.--Before the end of the 6-month period beginning on
the date of the enactment of this Act, the Federal functional
regulators shall prescribe regulations requiring any designated payment
system to establish policies and procedures reasonably designed to
identify and prevent restricted transactions in any of the following
ways:
(1) The establishment of policies and procedures that--
(A) allow the payment system and any person
involved in the payment system to identify restricted
transactions by means of codes in authorization
messages or by other means; and
(B) block restricted transactions identified as a
result of the policies and procedures developed
pursuant to subparagraph (A).
(2) The establishment of policies and procedures that
prevent the acceptance of the products or services of the
payment system in connection with a restricted transaction.
(b) Requirements for Policies and Procedures.--In prescribing
regulations pursuant to subsection (a), the Federal functional
regulators shall--
(1) identify types of policies and procedures, including
nonexclusive examples, which would be deemed to be ``reasonably
designed to identify'' and ``reasonably designed to block'' or
to ``prevent the acceptance of the products or services'' with
respect to each type of transaction, such as, should credit
card transactions be so designated, identifying transactions by
a code or codes in the authorization message and denying
authorization of a credit card transaction in response to an
authorization message;
(2) to the extent practical, permit any participant in a
payment system to choose among alternative means of identifying
and blocking, or otherwise preventing the acceptance of the
products or services of the payment system or participant in
connection with, restricted transactions; and
(3) consider exempting restricted transactions from any
requirement under subsection (a) if the Federal functional
regulators find that it is not reasonably practical to identify
and block, or otherwise prevent, such transactions.
(c) Compliance With Payment System Policies and Procedures.--A
creditor, credit card issuer, financial institution, operator of a
terminal at which an electronic fund transfer may be initiated, money
transmitting business, or international, national, regional, or local
network utilized to effect a credit transaction, electronic fund
transfer, or money transmitting service, or a participant in such
network, meets the requirement of subsection (a) if--
(1) such person relies on and complies with the policies
and procedures of a designated payment system of which it is a
member or participant to--
(A) identify and block restricted transactions; or
(B) otherwise prevent the acceptance of the
products or services of the payment system, member, or
participant in connection with restricted transactions;
and
(2) such policies and procedures of the designated payment
system comply with the requirements of regulations prescribed
under subsection (a).
(d) Enforcement.--
(1) In general.--This section shall be enforced by the
Federal functional regulators and the Federal Trade Commission
under applicable law in the manner provided in section 505(a)
of the Gramm-Leach-Bliley Act.
(2) Factors to be considered.--In considering any
enforcement action under this subsection against any payment
system, or any participant in a payment system that is a
creditor, credit card issuer, financial institution, operator
of a terminal at which an electronic fund transfer may be
initiated, money transmitting business, or international,
national, regional, or local network utilized to effect a
credit transaction, electronic fund transfer, or money
transmitting service, or a participant in such network, the
Federal functional regulators and the Federal Trade Commission
shall consider the following factors:
(A) The extent to which such person is extending
credit or transmitting funds knowing the transaction is
in connection with unlawful Internet gambling.
(B) The history of such person in extending credit
or transmitting funds knowing the transaction is in
connection with unlawful Internet gambling.
(C) The extent to which such person has established
and is maintaining policies and procedures in
compliance with regulations prescribed under this
subsection.
(D) The feasibility that any specific remedy
prescribed can be implemented by such person without
substantial deviation from normal business practice.
(E) The costs and burdens the specific remedy will
have on such person.
SEC. 4. DEFINITIONS.
For purposes of this Act, the following definitions shall apply:
(1) Restricted transaction.--The term ``restricted
transaction'' means any transaction or transmittal to any
person engaged in the business of betting or wagering, in
connection with the participation of another person in unlawful
Internet gambling, of--
(A) credit, or the proceeds of credit, extended to
or on behalf of such other person (including credit
extended through the use of a credit card);
(B) an electronic fund transfer or funds
transmitted by or through a money transmitting
business, or the proceeds of an electronic fund
transfer or money transmitting service, from or on
behalf of the other person;
(C) any check, draft, or similar instrument which
is drawn by or on behalf of the other person and is
drawn on or payable at or through any financial
institution; or
(D) the proceeds of any other form of financial
transaction as the Federal functional regulators may
prescribe by regulation which involves a financial
institution as a payor or financial intermediary on
behalf of or for the benefit of the other person.
(2) Bets or wagers.--The term ``bets or wagers''--
(A) means the staking or risking by any person of
something of value upon the outcome of a contest of
others, a sporting event, or a game subject to chance,
upon an agreement or understanding that the person or
another person will receive something of greater value
than the amount staked or risked in the event of a
certain outcome;
(B) includes the purchase of a chance or
opportunity to win a lottery or other prize (which
opportunity to win is predominantly subject to chance);
(C) includes any scheme of a type described in
section 3702 of title 28, United States Code;
(D) includes any instructions or information
pertaining to the establishment or movement of funds in
an account by the bettor or customer with the business
of betting or wagering; and
(E) does not include--
(i) any activity governed by the securities
laws (as that term is defined in section
3(a)(47) of the Securities Exchange Act of
1934) for the purchase or sale of securities
(as that term is defined in section 3(a)(10) of
such Act);
(ii) any transaction conducted on or
subject to the rules of a registered entity or
exempt board of trade pursuant to the Commodity
Exchange Act;
(iii) any over-the-counter derivative
instrument;
(iv) any other transaction that--
(I) is excluded or exempt from
regulation under the Commodity Exchange
Act; or
(II) is exempt from State gaming or
bucket shop laws under section 12(e) of
the Commodity Exchange Act or section
28(a) of the Securities Exchange Act of
1934;
(v) any contract of indemnity or guarantee;
(vi) any contract for insurance;
(vii) any deposit or other transaction with
a depository institution (as defined in section
3(c) of the Federal Deposit Insurance Act);
(viii) any participation in a simulation
sports game or an educational game or contest
that--
(I) is not dependent solely on the
outcome of any single sporting event or
nonparticipant's singular individual
performance in any single sporting
event;
(II) has an outcome that reflects
the relative knowledge and skill of the
participants with such outcome
determined predominantly by accumulated
statistical results of sporting events;
and
(III) offers a prize or award to a
participant that is established in
advance of the game or contest and is
not determined by the number of
participants or the amount of any fees
paid by those participants; and
(ix) any lawful transaction with a business
licensed or authorized by a State.
(3) Designated payment system defined.--The term
``designated payment system'' means any system utilized by any
creditor, credit card issuer, financial institution, operator
of a terminal at which an electronic fund transfer may be
initiated, money transmitting business, or international,
national, regional, or local network utilized to effect a
credit transaction, electronic fund transfer, or money
transmitting service, or any participant in such network, that
the Federal functional regulators determine, by regulation or
order, could be utilized in connection with, or to facilitate,
any restricted transaction.
(4) Federal functional regulator.--The term ``Federal
functional regulator'' has the same meaning as in section
509(2) of the Gramm-Leach-Bliley Act.
(5) Internet.--The term ``Internet'' means the
international computer network of interoperable packet switched
data networks.
(6) Unlawful internet gambling.--The term ``unlawful
Internet gambling'' means to place, receive, or otherwise
transmit a bet or wager by any means which involves the use, at
least in part, of the Internet where such bet or wager is
unlawful under any applicable Federal or State law in the State
in which the bet or wager is initiated, received, or otherwise
made.
(7) Other terms.--
(A) Credit; creditor; and credit card.--The terms
``credit'', ``creditor'', and ``credit card'' have the
meanings given such terms in section 103 of the Truth
in Lending Act.
(B) Electronic fund transfer.--The term
``electronic fund transfer''--
(i) has the meaning given such term in
section 903 of the Electronic Fund Transfer
Act; and
(ii) includes any fund transfer covered by
Article 4A of the Uniform Commercial Code, as
in effect in any State.
(C) Financial institution.--The term ``financial
institution''--
(i) has the meaning given such term in
section 903 of the Electronic Fund Transfer
Act; and
(ii) includes any financial institution, as
defined in section 509(3) of the Gramm-Leach-
Bliley Act.
(D) Money transmitting business and money
transmitting service.--The terms ``money transmitting
business'' and ``money transmitting service'' have the
meanings given such terms in section 5330(d) of title
31, United States Code.
SEC. 5. COMMON SENSE RULE OF CONSTRUCTION.
No provision of this Act shall be construed as altering, limiting,
extending, changing the status of, or otherwise affecting any law
relating to, affecting, or regulating gambling within the United
States.
Passed the House of Representatives June 10, 2003.
Attest:
JEFF TRANDAHL,
Clerk.