US Banks Given A Year To Comply With UIGEA - 11-15-08

November 15 -  The U.S. Department of Treasury and Federal Reserve have announced a joint rule that will force Banks to monitor and put controls in place to stop online gambling transactions coming from their corporate customers. The rule will in effect now force the banks to implement the UIGEA by December 1, 2009.

After a lot of resistance coming from the Banks, their lobby groups, and even other government agencies, UIGEA is alive and well and this latest move at "last minute lawmaking" will have the banks reeling. The law prescribes that as of Dec. 1, 2009 they have to block online gambling transactions, including those made using credit cards, electronic funds transfers and checks. 

"For purposes of the rule, unlawful Internet gambling generally would cover the making of a bet or wager that involves use of the Internet and that is unlawful under any applicable federal or state law in the jurisdiction where the bet or wager is initiated, received, or otherwise made," the Treasury Department said in a statement.

The Rule as published by the Treasure included a comment that "about 20 commentators, almost all of them depository institutions, noted that notwithstanding the Agencies' efforts to craft a reasonable rule, the proposed regulation would be unduly burdensome and would result in compliance costs greater than any offsetting societal benefits."

"The commentators went on to state that rule would adversely affect the competitiveness of the U.S. payments system, and that the Agencies should be cognizant of the potential for the Act and similar laws to cumulatively cause capital flight and erode the U.S. dollar's status as the world's reserve currency."

The Treasury Department claims that "that flexible, risk-based due diligence procedures at account opening, such as those set out in the final rule, present the best option for balancing these two interests."

Ironically, the rule comes into effect the day before George Bush's last day in the White House.