US BANKS VOICE DISQUIET OVER ONLINE GAMBLING BAN IMPLEMENTATION

(198) (31-jul-06)

Bankers again stress that anti-online gambling moves will over-burden their operations

News agencies in the USA report that the Independent Community Bankers of America (ICBA) has again called on Congress to re-examine provisions in the Internet Gambling Prohibition and Enforcement Act (H.R. 4411) recently passed by the House of Representatives that require banks and other financial institutions to assist in halting the flow of gambling deposits to online gambling venues. 

ICBA spokesmen said that the measure could greatly over-burden the nation's payment system....and monitoring the payments made to gambling interests may be impossible.

"ICBA recognizes the concerns that some of your colleagues have raised about Internet gambling," ICBA wrote in a letter to Senate Banking Committee Chairman Richard Shelby and Senate Judiciary Chairman Arlen Specter . "We urge Congress to recognize that the nation's banks have already taken on major responsibilities to help detect and prevent terrorist financing and illegal money laundering. Attempting to monitor and block gambling transactions, particularly given the limits of the current payment technology, could detract from those efforts."

The letter, which is available to the public at www.icba.org , goes on to protest that the proposed law creates an impossible compliance burden for "uncoded" transactions. Unlike credit card transactions, which include a code that identifies the type of business receiving payment, uncoded transactions (electronic payments and personal checks) don't provide this information. While it's possible to monitor and block certain types of credit card transactions, a bank cannot do so with uncoded transactions.

ICBA is also concerned that the law appears to threaten to subject banks and electronic processors to potential criminal liability for routine processing of financial transactions - their core business operation, and that it could subject banks to inconsistent state and national standards.

Through the USA Patriot Act and Bank Secrecy Act ICBA has cooperated in confirming the identity of bank customers while documenting and reporting suspicious transactions, and the banks prefer to continue to focus resources where risks to national safety and financial soundness are greatest.

The communication concludes by pointing out that the burden of regulation and compliance created by H.R. 4411 is substantial, and if enacted, would require banks to identify and block transactions between bank customers and Internet gaming companies on a system not designed for this purpose.