Regulation Requirements and Resources

The Unlawful Internet Gambling Enforcement Act (UIGEA) was intended to restrict unlawful Internet gambling wagers. However, due to the impracticality of identifying lawful versus unlawful gambling (particularly in that the regulation does not define either), the final rule appears to focus on preventing the Internet gambling businesses from benefiting from the payment system by denying them the opportunity to open an account.

Regulation GG has a mandatory compliance date of 6/01/10 and has the following general requirements for banks:

• 1) To adopt a UIGEA compliance policy;
• 2) To develop a due diligence process at account opening to determine whether a commercial customer presents anything more than a minimal risk of engaging in Internet gambling;
• 3) To provide notice to existing commercial customers;
• 4) To obtain any necessary notice of compliance from a designated payment system (cards); and
• 5) To develop procedures (by payment system) for responding when your bank becomes aware of restricted transactions.

The following link to the ABA website can provide additional information and guidance on complying with the regulation.

ABA - Unlawful Internet Gambling Act Resources

ABA Compliance

The ABA Compliance link (summarized below) outlines the policies, procedures, and processes your bank will need to have in place by the December 1^st deadline.

UIGEA Policy

The bank's UIGEA Policy and Procedures should incorporate the sections listed below. However, it is important to note that your existing procedures may be affected by this policy. For example, the bank's CDD and/or CIP policies and procedures will be affected by the screening processes for commercial customers and should be updated to reflect the bank's changes in new account opening processes.

Screening at Account Opening

Banks must have policies and procedures in place that demonstrate the methods to prevent a commercial entity operating an online casino from opening an account. This guideline states that most banks are complying with this provision by incorporating the UIGEA requirements into their existing due diligence procedures.

Restricting Card Transactions

The Final Rule recognizes the improbability of monitoring all card activity and blocking illegal gambling transactions. It allows banks to rely on their card vendors to create policies, procedures, and processes for identifying and blocking these transactions. This could be through a due diligence process or through a coding solution. Whatever the solution, banks should have a copy of their vendor's policies and procedures in hand by the December 1^st deadline.

Policies and Procedures When Restricted Transactions are Known

Banks are required to have policies and procedures in place if the bank has "actual knowledge" that a commercial account has processed a restricted transaction. According to the final rule, actual knowledge is gained when an entity knows or receives a report from a governmental entity such as a law enforcement or regulatory agency that a commercial account is processing restricted transactions. The regulation does not state what this remedial action must be, but leaves it up to the bank to decide (such as closing the account or restricting the account to a particular payment system).

Commercial Account Notice

The Final Rule also states that banks must notify their commercial customers of the UIGEA restrictions though it does not state a specific method of delivery or model language for the notice. Some banks are providing this notice to new commercial customers through updated deposit agreements. Existing customers may be notified via periodic statement notices or even through the bank's website, if it is reasonable to believe the commercial customers would see the notice.