The events of September 11 certainly have changed things worldwide. And apparently, the Internet casino business is not immune from such changes. The attack has brought about sweeping new laws to deal with terrorism. Many are being drafted, many are being voted on, and the U.S. Congress has passed several
Somehow, Internet gambling has been thrown into Bill HR 3004 – the Financial Anti-Terrorism Act of 2001 – that now sits in the House of Representatives Finance Committee. [Full text of the bill can be read at the House of Representatives site.] Most of the bill is designed to go after money laundering operations and suspicious financial transactions that involve terrorism. Title 18 of the U.S. Criminal Code currently covers money laundering, but amendments were made to strengthen it considerably.
Two sections of this bill, sections 303 and 304, specifically deal with Internet gambling. That part of the bill is collectively known as the “Unlawful Internet Gambling Funding Act.”
Section 303 is titled “Prohibition on acceptance of any bank instrument for unlawful Internet gambling,” while section 304 covers I-gaming in foreign jurisdictions. Both elements deal with the business end of the industry and the wording seems to indicate that the gambler himself is not liable. (The bill discusses “acceptance” of wagers, not wagering or providing a wager.)
Reasons as to why this bill came about are understandable. In dealing with most of the people in this industry, there is a fair share of honest individuals out there that operate legitimate Internet casinos, providing fair odds for games and duly paying customers their winnings.
However, there is also a negative element that exists within the industry. These few rotten apples have likely attracted the attention of the U.S. government and brought about the proposed legislation.
It appears the bill that is currently before the House is extremely weak when it comes to stopping online casino gambling run by offshore operations. The bill says that the U.S. government will ask foreign governments to (1) ensure that the offshore casinos do not launder money and (2) stop Internet gambling in their country and not to take bets from Americans.
Governments will probably assist with the money laundering aspect, but simply asking isn’t going to stop online gaming in licensed jurisdictions. Revenue from I-gaming exceeds the entire GNP in some Caribbean nations. It’s like asking the United States to stop manufacturing automobiles.
Summarized below are the major points of the Internet Toto SGP gambling portion of the bill:
· “Unlawful Internet gambling” is defined as the act of placing or transmitting a wager using the Internet where such a bet is illegal under state or federal law
· No person or business can accept any form of payment in exchange for an unlawful online bet or wager. This includes credit cards, checks, wire or electronic money transfers, 3rd party intermediary (ex. another bank). Penalty for this is a maximum or a 5-year sentence and/or the fines under Title 18 of the US Code.
· Financial Institutions are not liable for the transactions. (i.e., Visa is not liable for a credit card transaction that involves Internet gambling).
Also covered by the bill are other important points related to changes in financial crimes:
· Any offshore bank account operated by a company with a branch/office in the U.S. (i.e., HSBC Cayman Islands) will be considered a U.S. account. Any funds can also be seized from the branch/office in the U.S.
· Title 31 of the U.S. Code covers cash smuggling. Those that smuggle more than US$10,000 into the U.S. face up to a 5-year sentence, forfeiture of the money plus “any property traceable” to it.
· New verification procedures will be instituted for opening a bank account. Falsifying one’s identity will be punishable by a 5-year maximum sentence.
· A secure web site will be created within 6 months for dissemination and collection of financial information between financial institutions and the U.S. government.
· Brokers and dealers with the Securities Exchange Commission (SEC) will have new regulations to report suspicious activity (i.e., short selling). The brokers and dealers, however, are not liable for failing to report such activity.
· All of the above will be overseen by the Director of the Financial Crimes Enforcement Network, a position that was created in 1990 and is a division of the Treasury Department.
Although the bill is being debated at this time and is not law, it covers many different types of financial crimes. It will probably be changed significantly, but let’s hope that Sections 303 and 304 are deleted from the final version.