Carl
3rd October 2001, 07:20.34 PM
This is an excerpt from a bill introduced by Rep. James Leach R-Iowa which includes a section targeting Internet gambling payment transactions in an anti-terrorism bill:
Section 303. Prohibition on Acceptance of Any Bank Instrument for Unlawful Internet Gambling
Internet gambling serves as a haven for money laundering activities. FBI representatives have told Committee staff that a huge potential exists for offshore gambling sites to be used to launder money. The FBI currently has two pending cases involving Internet gambling as a conduit for money laundering, as well as a number of pending cases linking Internet gambling to organized crime.
This section prohibits a gambling business from accepting bank instruments in connection with unlawful Internet gambling. Covered instruments include credit cards, electronic fund transfers, and checks.
Subsection (b) defines the term "bets or wagers" as 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 predominantly subject to chance with the agreement that the winner will receive something of greater value than the amount staked or risked. This subsection clarifies that "bets or wagers" does not include a bona fide business transaction governed by the securities laws; a transaction subject to the Commodity Exchange Act; an over-the-counter derivative instrument; a contract of indemnity or guarantee; a contract for life, health, or accident insurance; a deposit with a depository institution; or certain participation in a simulation sports game or education game. The subsection also clarifies that "business of betting or wagering" does not generally include any financial intermediary (creditor, credit card issuer, insured depository institution, transmitter of an electric fund transfer, money transmitting business, or network used to effect a credit transaction, electronic fund transfer, stored value product transaction, or money transmitting service, or any participant in such network). Subsection (b) also defines the terms "Internet" and "unlawful Internet gambling."
Subsection (c) authorizes civil remedies, including a preliminary injunction or injunction, against any person to prevent or restrain a violation of this section, including expedited proceedings in exigent circumstances. The subsection authorizes such proceedings to be brought by the U.S. Attorney General, or the attorney general of a State or other appropriate State official. The subsection clarifies that this section should not be construed as altering, superseding, or otherwise affecting the application of the Indian Gaming Regulatory Act. The subsection requires that, before any proceeding under this subsection is initiated against an insured depository institution, notification must be made to the appropriate Federal banking agency and such agency must be allowed a reasonable time to issue the appropriate regulatory order.
Subsection (d) authorizes criminal penalties, including fines or imprisonment for not more than five years, or both. The subsection also authorizes a permanent injunction against a person convicted under this subsection, enjoining such person from placing, receiving, or otherwise making bets or wagers or sending, receiving, or inviting information assisting in the placing of bets or wagers.
Subsection (e) provides that the safe harbor provided to a financial intermediary (creditor, credit card issuer, financial institution, operator of a terminal at which an electronic fund transfer may be initiated, money transmitting business, or national, regional, or local network) under subsection (b)(2) does not apply to a financial intermediary that operates, manages, supervises, or directs an Internet website at which unlawful bets or wagers are or may be placed, received, or otherwise made; or is owned or controlled by any person who operates, manages, supervises, or directs such an Internet website.
Subsection (f) allows the appropriate Federal banking agency to prohibit an insured depository institution from extending credit, or facilitating an extension of credit, electronic fund transfer, or money transmitting service, or from paying, transferring, or collecting on any check, draft, or other instrument drawn on any depository institution, where the institution has actual knowledge that a person is violating this section in connection with such activities. This subsection, in conjunction with subsections (b)(2) and (e), is intended to ensure that a financial intermediary is not held liable for a violation of this section solely based on the unknowing and unintentional involvement of the intermediary through the use of the facilities of such intermediary in an unlawful Internet gambling transaction, unless the intermediary acted as an agent of a gambling business and had: (1) actual knowledge that the specific transaction is an unlawful Internet gambling transaction; and (2) the intent to engage in the business of submitting into the payment system Internet gambling transactions prohibited by this section.
Section 304. Internet Gambling in or through Foreign Jurisdictions
This section provides that, in deliberations between the U.S. Government and any other country on money laundering, corruption, and crime issues, the U.S. Government should encourage cooperation by foreign governments in identifying whether Internet gambling operations are being used for money laundering, corruption, or other crimes, advance policies that promote the cooperation by foreign governments in the enforcement of this Act, and encourage the Financial Action Task Force on Money Laundering to study the extent to which Internet gambling operations are being used for money laundering.
Section 303. Prohibition on Acceptance of Any Bank Instrument for Unlawful Internet Gambling
Internet gambling serves as a haven for money laundering activities. FBI representatives have told Committee staff that a huge potential exists for offshore gambling sites to be used to launder money. The FBI currently has two pending cases involving Internet gambling as a conduit for money laundering, as well as a number of pending cases linking Internet gambling to organized crime.
This section prohibits a gambling business from accepting bank instruments in connection with unlawful Internet gambling. Covered instruments include credit cards, electronic fund transfers, and checks.
Subsection (b) defines the term "bets or wagers" as 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 predominantly subject to chance with the agreement that the winner will receive something of greater value than the amount staked or risked. This subsection clarifies that "bets or wagers" does not include a bona fide business transaction governed by the securities laws; a transaction subject to the Commodity Exchange Act; an over-the-counter derivative instrument; a contract of indemnity or guarantee; a contract for life, health, or accident insurance; a deposit with a depository institution; or certain participation in a simulation sports game or education game. The subsection also clarifies that "business of betting or wagering" does not generally include any financial intermediary (creditor, credit card issuer, insured depository institution, transmitter of an electric fund transfer, money transmitting business, or network used to effect a credit transaction, electronic fund transfer, stored value product transaction, or money transmitting service, or any participant in such network). Subsection (b) also defines the terms "Internet" and "unlawful Internet gambling."
Subsection (c) authorizes civil remedies, including a preliminary injunction or injunction, against any person to prevent or restrain a violation of this section, including expedited proceedings in exigent circumstances. The subsection authorizes such proceedings to be brought by the U.S. Attorney General, or the attorney general of a State or other appropriate State official. The subsection clarifies that this section should not be construed as altering, superseding, or otherwise affecting the application of the Indian Gaming Regulatory Act. The subsection requires that, before any proceeding under this subsection is initiated against an insured depository institution, notification must be made to the appropriate Federal banking agency and such agency must be allowed a reasonable time to issue the appropriate regulatory order.
Subsection (d) authorizes criminal penalties, including fines or imprisonment for not more than five years, or both. The subsection also authorizes a permanent injunction against a person convicted under this subsection, enjoining such person from placing, receiving, or otherwise making bets or wagers or sending, receiving, or inviting information assisting in the placing of bets or wagers.
Subsection (e) provides that the safe harbor provided to a financial intermediary (creditor, credit card issuer, financial institution, operator of a terminal at which an electronic fund transfer may be initiated, money transmitting business, or national, regional, or local network) under subsection (b)(2) does not apply to a financial intermediary that operates, manages, supervises, or directs an Internet website at which unlawful bets or wagers are or may be placed, received, or otherwise made; or is owned or controlled by any person who operates, manages, supervises, or directs such an Internet website.
Subsection (f) allows the appropriate Federal banking agency to prohibit an insured depository institution from extending credit, or facilitating an extension of credit, electronic fund transfer, or money transmitting service, or from paying, transferring, or collecting on any check, draft, or other instrument drawn on any depository institution, where the institution has actual knowledge that a person is violating this section in connection with such activities. This subsection, in conjunction with subsections (b)(2) and (e), is intended to ensure that a financial intermediary is not held liable for a violation of this section solely based on the unknowing and unintentional involvement of the intermediary through the use of the facilities of such intermediary in an unlawful Internet gambling transaction, unless the intermediary acted as an agent of a gambling business and had: (1) actual knowledge that the specific transaction is an unlawful Internet gambling transaction; and (2) the intent to engage in the business of submitting into the payment system Internet gambling transactions prohibited by this section.
Section 304. Internet Gambling in or through Foreign Jurisdictions
This section provides that, in deliberations between the U.S. Government and any other country on money laundering, corruption, and crime issues, the U.S. Government should encourage cooperation by foreign governments in identifying whether Internet gambling operations are being used for money laundering, corruption, or other crimes, advance policies that promote the cooperation by foreign governments in the enforcement of this Act, and encourage the Financial Action Task Force on Money Laundering to study the extent to which Internet gambling operations are being used for money laundering.