Financial organizations submit UIGEA views

The Credit Union National Association and the Independent Community Bankers of America submitted comments to the Treasury Department and Federal Reserve Board last week in regards to the proposed Unlawful Internet Gambling Enforcement Act regulations.

While the CUNA argued that the plans should be shelved for now, the ICBA applauded the "narrow and reasonable" proposed regulations.

According to the CUNA, credit union compliance with the proposed rules to crack down on illegal online gambling would be difficult if not impossible.

"The law passed by Congress has commendable objectives, but is difficult to implement," said the CUNA in its comment letter to the Treasury Department and Federal Reserve Board.

"We feel that rather than continue with implementation of the current proposal, which raises a range of problematic issues, the regulators should work together with Congress to develop an approach that will meet public policy goals in a clearly understood manner and without inflicting undue hardships on the financial institution sector in the process."

According to the CUNA, the problems with the proposed UIGEA regulations include:

  • An unclear definition of "unlawful" Internet gambling
  • The need to expand the "Policies and Procedures" explanations
  • The "safe harbor" should be enlarged
  • The need to clarify enforcement provisions
  • The effective date should be extended

The group's comment letter also pointed out that President/CEO Dan Mica recently communicated the group's concerns about the UIGEA to Rep. Barney Frank, who has already proposed legislation that would reverse the UIGEA.

In the letter to Frank, Mica urged that action on the UIGEA be stopped until "a more reasonable approach can be considered by Congress and the regulators."

The ICBA had a different outlook on the proposed UIGEA regulations, however.

"ICBA applauds the agencies for proposing regulations that fulfill the law's requirements without imposing undue new burden on all payment system participants," said Viveca Ware, ICBA director of payments and technology policy.

"We particularly appreciate the agencies' use of the law's authority to exempt certain transactions where transaction tracking and blocking is not practical."

The organization approved of the Treasury Department and Federal Reserve Board's approach to place the burden on payment system participants to decide whether an entity is engaged in unlawful Internet gambling and to identify and block restricted online gambling transactions.

For example, the bank that has the customer relationship with the Internet gambling company will be responsible for monitoring the transactions.

"Community bankers believe that it is critical that their resources be focused where risks to our national safety and financial soundness are greatest," Ware said.

"ICBA is deeply concerned when our nation's payment systems are used to track, analyze and block individual payment transactions given the potential for such requirements to undermine payment systems' efficiency. Payment systems were not designed for this function."

Despite its outward support, the ICBA did have some concerns about the proposed regulations that it addressed in the comment letter as well, including clarification of terms and phrases to better define what the rules are intended for.

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