Unlawful Internet Gambling Enforcement Act Overview
The Department of the Treasury and the Federal Reserve Board (Agencies) 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 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.
The focus of the rule falls on commercial member accounts. For commercial accounts that engage in Internet gambling business, they must provide evidence of their legal authority to do so, or a legal opinion, and a third party certification of its age and location verification procedures (to ensure that restrictions on minors and geographic legalities are observed). This step places the burden of proving that that the Internet gambling entity is operating legally on the casino itself and its governing authorities.
When the credit union has "actual knowledge" that one of their commercial members is participating in restricted transactions, the credit union may use its own judgment as to when a member would benefit from counseling on their infraction or if it is more appropriate to deny a member access to a payment system or even to close the account.