On May 20, the Office of the Comptroller of the Currency issued interagency guidance for reviewing compliance with the joint rule promulgated by the U.S. Treasury Department and the Federal Reserve Board pursuant to the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA or Act).
The Act prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law (termed “restricted transactions” in the Act). Pursuant to the Act, Treasury and the Federal Reserve Board (in consultation with the U.S. Attorney General) promulgated regulations requiring financial institutions and certain other participants in designated payment systems to establish and implement policies and procedures reasonably designed to prevent or prohibit the processing of restricted transactions. Compliance with the rule was required as of June 1.
The rule requires certain participants in the designated payment systems to establish policies and procedures that are reasonably designed to identify and block or otherwise prevent or prohibit restricted transactions. A “participant” is defined as “an operator of a designated payment system, a financial transaction provider that is a member of, or has contracted for financial transaction services with, or is otherwise participating in, a designated payment system, or a third-party processor.” The term “participant” does not include a participant’s customer unless the customer is also a financial transaction provider participating on its own behalf in the designated payment system.
The interagency examination guidance includes an overview of the UIGEA and the joint rule (Federal Register, 73 FR 69382, November 18, 2008), a summary chart of the obligations of non-exempt participants (Appendix A), and the examination procedures (Appendix B).