Banking Reps Testify UIGEA is a Burden without Benefit

The House Financial Services Committee hearing on the Unlawful Internet Gambling Enforcement Act (UIGEA) today brought forth no surprises and reiterated what financial institutions have been saying all along, that essentially the current legislation as it is written is unworkable. The testimony of Wayne Abernathy, on behalf of the American Bankers Association, succinctly summed up the problems banks are facing:

Although banks have heavily invested in compliance programs to monitor customer acquisition and subsequent activity for suspicion of money laundering, terrorist financing or other financial crimes, the demands of UIGEA extend far beyond the normal capabilities of these Bank Secrecy Act (BSA) reporting processes. The Internet gambling legislation requires banks to do more than detect suspicious or unusual activity and report it to enforcement agencies for the decision by enforcement agencies about how to pursue the lead. In the UIGEA case, banks must make judgment calls from limited and probably conflicting information about what is unlawful under a complex legal structure of state and federal laws, evaluate the business activities of their commercial customers, and then intercept transactions or close customer accounts based on such judgments upon pain of regulatory penalties for non-compliance. By placing on banks the onus for actually interdicting unlawful Internet gambling transactions, rather than on government enforcement agencies and the court system, UIGEA imposes on banks, as they carry out their core duties to operate an efficient payments system, the impossible combined role of policeman, judge, jury, and enforcer.

One important question that remains unanswered is--what exactly was it that Ted Teruo Kitada, Senior Company Counsel for Wells Fargo & Company, was wearing around his neck? It appeared to be perhaps some newly discovered species of mutant bowtie that resembled either a toxic butterfly or a poisonous moth or maybe even the latest submission to the fungus of the month club. Obviously, dress codes in Congress are not fully enforced.