Cost Of Online Gambling Financial Attack?
Published: Tuesday, October 03, 2006 Online-Casinos.com
WHAT IS ONLINE GAMBLING FINANCIAL ATTACK GOING TO COST
Key question for the financial institutions that will be involved in enforcement
The costs of policing a new U.S. Internet gambling financial ban for banks and credit card companies will be determined by regulators in the coming months, industry officials have told Reuters news reporters.
In the wake of the new US law attacking the online gambling financial channels, government officials are expected to propose a "coding-and-blocking" system that will identify and stop payment to online gambling sites, experts said. Many banks and credit card companies have already been voluntarily blocking Internet gambling transactions for some time using such a system.
The Treasury Department and Federal Reserve Board have nine months to draft regulations after the new law, included in a package of port security measures passed by Congress on Friday and expected to be signed into law by President George W. Bush.
U.S. banks and credit card companies are optimistic that officials will prepare a workable system.
"If the Treasury (department) and the Fed can come up with reasonable rules here, it shouldn't be that bad," said Oliver Ireland, a lawyer who works with several financial services payment providers, including Visa.
"The way they built [the new law], gives us a chance to work with the regulators in a constructive way to come up with a system," said Greg Mesack, director of government relations for industry trade group America's Community Bankers.
Some banking industry officials had worried that the new law would make them responsible for blocking payments by cheque as well as credit card payments, a requirement they had said would be unworkable. But those concerns were allayed when lawmakers agreed to a provision allowing the Treasury and the Fed to exempt cheques from the requirement.
Experts said the system would not be fool-proof, but would bar the vast majority of bettors.
"I suspect some smart enterprising person out there will find a way to get around it. But for your average person who wants to get out there and bet on college football, you're not going to do it," said one lobbyist.
Ireland agreed. "I think this puts in place a broader blocking system that's going to be harder to get past for the Internet (gambling) sites," he said
The Internet gambling legislation passed late last week by the U.S. Congress remains a concern to the U.S. banking industry but isn't as burdensome as feared.
"We got some language in the bill that looks like it protects the financial services industry," said Steve Verdier, director of congressional relations for the Independent Community Bankers of America, which represents almost 5,000 banks in the United States. "It could have been a lot worse."
The legislation is designed to prohibit U.S. banks and credit card companies from processing payments for illegal online gambling. Financial services companies and the U.S. Chamber of Commerce had expressed concerns about the compliance burdens that would be imposed, such as tracking and blocking potentially millions of transactions.
Under the legislation as passed, "If you are acting as a normal bank, and you're not in some sort of conspiracy with a betting house, then you are not going to be held liable," Verdier said.
In addition, the legislation will be guided and enforced by regulations written by the Federal Reserve and the U.S. Treasury Department. "If they find that the banks just don't have the technology to track and block these transactions, then we don't have to," Verdier said. "The Fed and Treasury are not supposed to ask us to do the impossible."
