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Senators send letter questioning UIGEA
Senators John Sununu (R-N.H.) and Pete Domenici (R-N.H.) recently sent a letter to the U.S. Treasury Department and the Federal Reserve System criticizing the Unlawful Internet Gambling Enforcement Act.
The letter was addressed to U.S. Treasury Secretary Henry Paulson and Federal Reserve System Board of Governors Chairman Ben Bernanke. In it, the two senators express their concerns that the regulations being set up constitute too onerous a burden on the banks that would have to implement the ban on online gambling transactions.
Their letter reads as follows:
Dear Secretary Paulson and Chairman Bernanke,
The effectiveness of any law is reliant on sound implementation. Federal regulations are intended to provide clarity and guidance for those subjected to their reach. The value of such regulations is to prevent non-compliance while minimizing wasted effort, time, and cost by those being regulated. Clear rules also promote interstate commerce by facilitating uniform enforcement.
In this spirit, your agencies have an opportunity to provide additional guidance in the implementation of the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA). While the October Notice of Proposed Rulemaking contains certain guidance for the regulated community, it leaves sufficient ambiguity as to what sort of transactions are to be blocked. In failing to provide more detail, the proposed rules would inordinately burden every bank, credit union, credit card company, money transmitting business and payment system in the country, leading to non-uniform compliance and confusion. This issue is particularly important, as most federal and state gambling laws predate the Internet, and are less than specific as to their application to particular practices or circumstances.
The extensive public comments received on this issue highlight the likelihood that risk-averse financial institutions will simply choose to block every transaction that may be interpreted [as] or could resemble gambling, whether legal or not. Knowing that this is not your intention, we write to urge that any final rules contain a list of restricted transactions and instances that are covered by the law and the corresponding rules.
As an alternative, we suggest you consider separating the rules into those forms of activities for which there is settled federal law (i.e., defined by the Professional and Amateur Sports Protection Act (PASPA and those that are not. This would allow immediate implementation for known activities, while providing greater time to determine what other transactions are to be captured.
We thank you in advance for your consideration.
Sen. John E. Sununu [R-NH]
Sen. Pete Domenici [R-NM]
The Unlawful Internet Gambling Enforcement Act makes it illegal for people to transfer money from banks and other financial institutions to online gambling sites, essentially tightening restrictions on the online gambling industry in the United States.
The UIGEA was passed in 2006 and has since been in the implementation process as the Treasury and Federal Reserve work together to create regulations and guidelines for the law.