Online Gambling Measure Passed by House Panel
Kaper, Stacy, American Banker
A House Judiciary subcommittee approved legislation Wednesday that would criminalize a financial institution's failure to police online gambling payments.
The bill would also force banks to create compliance systems to identify automated payments or checks used to pay for online gambling. The Justice Department and state attorneys general would be empowered to seek criminal prosecutions and civil penalties against banks that failed to block payments to Internet gambling companies.
Industry representatives said that the Crime, Terrorism, and Homeland Security subcommittee's bill is even more burdensome than one sponsored by Rep. Jim Leach, R- Iowa, which the House Financial Services Committee approved March 15.
"It doesn't really make Internet gambling illegal. What it does is make it illegal for the bank to make or for the site to accept the payment," said Steve Verdier, the director of congressional relations at the Independent Community Bankers of America.
"We don't want courts to have the authority to demand that banks not make check and ACH [automated clearing house] payments to Internet gambling companies. ... We don't want to make banks have to track and block these payments," he said.
While credit card payments are easy to track, banks do not routinely identify which companies are receiving checks and automated payments, and creating such systems would be expensive, industry representatives said.
"As a matter of fact, we don't think it can be done," said Floyd Stoner, the American Bankers Association's lead lobbyist. "It would be a serious regulatory burden, and in my opinion, it would be a compliance nightmare."
But the bill that finally emerges from the House may look much different.
"There's definitely room to accommodate the banking industry's concerns and still pass an Internet gambling bill," said Jaret Seiberg a financial services policy analyst with the Stanford Washington Research Group. …