WASHINGTON (AFP) - A law that bans US banks and financial companies from handling Internet gambling bets may turn out to be an enforcement nightmare, a congressional hearing was told Wednesday.
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The hearing by the House Financial Services Committee examined progress in implementing a law passed in 2006, which outlaws US banks and credit card companies from processing Internet bets.
Valerie Abend, a US Treasury official, said the agency is "making progress" but has still not come up with final rules to implement the law after numerous complaints from financial services firms during a public comment period.
"No final decisions have been made regarding any aspect of the final rule," she said. "We are committed to giving fair consideration to all relevant comments as we are working toward promulgation of a final rule."
Louise Roseman, a Federal Reserve official, said implementing the law may be complicated due to the nature of the globalized banking system.
"Given that Internet gambling is lawful in many countries where US banks have correspondent relationships, it may be particularly difficult to craft workable procedures to prevent individuals in the United States from making payments to a foreign Internet gambling company's account at a foreign bank," Roseman said.
"Moreover, commenters noted that, given the complexity of US gambling law, it is unrealistic for foreign institutions to ascertain which forms of Internet gambling are unlawful and therefore should be prevented."
The banking industry is raising a ruckus about being required to enforce the ban.
The law "takes banks beyond the role of reporting potentially or allegedly illegitimate financial activity, and makes banks and other financial institutions police, prosecutors, judges, and executing marshals in place of real law enforcement officers," said Wayne Abernathy of the American Bankers Association.
"Identifying commercial customers engaged in unlawful Internet gambling is difficult. It can be just as hard to identify those who are not so engaged ... The major problem is that the effort almost entirely depends on information obtained from the customers, which are prone to be untruthful in the case of those seeking to avoid the restrictions of the law."
The law passed in 2006 was aimed at putting teeth into a de facto ban on US residents placing online wagers in locations such as Britain, Canada, Antigua and Gibraltar.
But the US ban on Internet gambling has been challenged as an unfair trade restriction at the World Trade Organization. The WTO has ruled against the US in a complaint from Antigua.
The European Commission launched an investigation this year into whether the US gambling ban discriminates against EU firms, an action that could lead to a separate WTO case.
ADVERTISEMENT
The hearing by the House Financial Services Committee examined progress in implementing a law passed in 2006, which outlaws US banks and credit card companies from processing Internet bets.
Valerie Abend, a US Treasury official, said the agency is "making progress" but has still not come up with final rules to implement the law after numerous complaints from financial services firms during a public comment period.
"No final decisions have been made regarding any aspect of the final rule," she said. "We are committed to giving fair consideration to all relevant comments as we are working toward promulgation of a final rule."
Louise Roseman, a Federal Reserve official, said implementing the law may be complicated due to the nature of the globalized banking system.
"Given that Internet gambling is lawful in many countries where US banks have correspondent relationships, it may be particularly difficult to craft workable procedures to prevent individuals in the United States from making payments to a foreign Internet gambling company's account at a foreign bank," Roseman said.
"Moreover, commenters noted that, given the complexity of US gambling law, it is unrealistic for foreign institutions to ascertain which forms of Internet gambling are unlawful and therefore should be prevented."
The banking industry is raising a ruckus about being required to enforce the ban.
The law "takes banks beyond the role of reporting potentially or allegedly illegitimate financial activity, and makes banks and other financial institutions police, prosecutors, judges, and executing marshals in place of real law enforcement officers," said Wayne Abernathy of the American Bankers Association.
"Identifying commercial customers engaged in unlawful Internet gambling is difficult. It can be just as hard to identify those who are not so engaged ... The major problem is that the effort almost entirely depends on information obtained from the customers, which are prone to be untruthful in the case of those seeking to avoid the restrictions of the law."
The law passed in 2006 was aimed at putting teeth into a de facto ban on US residents placing online wagers in locations such as Britain, Canada, Antigua and Gibraltar.
But the US ban on Internet gambling has been challenged as an unfair trade restriction at the World Trade Organization. The WTO has ruled against the US in a complaint from Antigua.
The European Commission launched an investigation this year into whether the US gambling ban discriminates against EU firms, an action that could lead to a separate WTO case.
