Unlawful Internet Gambling Enforcement Act Policy
The Department of Treasury and the Federal Reserve Board have issued a joint final rule to implement the Unlawful Internet Gambling Enforcement Act. The Act "prohibits any person engaged in the business of betting or wagering (as defined in the Act) from knowingly accepting payments in connection with the participation of another person in unlawful Internet gambling". (Regulation GG – UIGEA)
The purpose of this policy is to prevent unlawful Internet gambling businesses from utilizing the banking system. Western Commerce Bank established this written policy and procedures to screen and prevent unlawful Interne gambling businesses (casinos and others) from opening an account at the bank. Lawful Internet gambling business will be required to provide extensive documentation at account opening.
The rule focuses on screening for unlawful Internet gambling businesses at the time of account opening. If unlawful Internet gambling businesses are prevented from accessing the banking system, then they will not be able to make or receive payments using checks, credit or debit cards, wires or ACH payments.
WCB has established a procedure to be completed at all business account openings. This procedure requires the Customer Service Representative to ask questions in regards to the regulation. This information is documented and kept on the "Commercial Account Checklist". If a businesses answers "yes" to the questions the account will not be opened and referred to the BSA Officer. At the time of Commercial Deposit Account openings all businesses are given an Account Agreement that discloses the Reg GG – UIGEA statement.
Under the rule the Bank is not required to monitor or determine whether its customer is a gamble except that it must ensure that unlawful credit and debit card transactions are blocked. It is the responsibility of the card networks to establish policies and procedures to identify and block unlawful transactions. The Bank will rely on a written notice from the network (VISA/MasterCard/etc) stating that the policies and procedures are in place to meet the UIGEA Final Rule requirements. The Bank is not required to block ACH, wire, or check payments related to unlawful Internet gambling to be in compliance with the Final Rule.
The focus of the rule falls on commercial customer accounts. The Bank's policies and procedures should demonstrate that steps have been taken during the account opening process. This procedure will be in conjunction with existing account opening processes that are already in place with the Bank Secrecy Act.
If the WCB has "actual knowledge" that one of their commercial customers is participating in restricted transactions, we may use its own judgment as to when a customer would benefit from counseling on their infractions or if it were more appropriate to deny a customer access to a payment system or even to close the account. The "actual knowledge" standard is met when a particular fact with regard to a commercial customer is known by or brought to the attention of an individual responsible for compliance functions at the WCB. For WCB this will be our BSA Officer. Also, the discovery of restricted and unlawful gambling will initiate a Suspicious Activity Report (SAR) filing with the BSA Officer.