Regulations are out

[LeapFrog]

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No. Those examples are of money flowing out of the U.S.

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Unless I am missing something this seems to be referring to money coming into the US

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You have it exactly backwards. What is incoming is the requests for payment.

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In the case of incoming cross-border ACH debit and check collection transactions, the proposed rule places responsibility on the first participant in the United States that receives the incoming transaction directly from a foreign institution (i.e., an ACH debit transaction from a foreign gateway operator, foreign bank, or a foreign third-party processor or a check for collection directly from a foreign bank) to take reasonable steps to ensure that their cross-border relationship is not used to facilitate restricted transactions.


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[/ QUOTE ]FYP

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Thank you for explaining this in as prickish a way as possible.

[JPFisher55]

Skall, this point was going to be part of my comments on the regulations affecting processing of ACH's and checks. I have drafted proposed comments agreeing that a list of unlawful internet gambling busineses should not be created and a comment on the definition of unlawful internet gambling.
I am waiting for others to get up to speed before I post my comments. In the near future I plan to draft a comment about the regs that concern processing ACH's and checks which are similar in their approach. I may include my point about the difficulty with cross-border transactions or draft a separate comment about them. Maybe we should comment that all cross-border transactions should be exempt because foreign banks will not be anxious to be bound to the UIGEA.

[omgwtf]

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Skall, how would you like to represent a big bank with assets overseas? You receive an ACH from your correspondent foreign bank that you think might be restricted because it originates from an offshore online gambling site. So you decide to decline the transaction. Next the foreign correspondent bank demands that you process its transactions or face legal action in an overseas court. You respond that you are obeying your obligations under the UIGEA and its regs. Even if the originating customer of the foreign bank is a sports betting site, the foreign bank responds that you are in breach of your contract with it because the foreign bank is not bound by the UIGEA and it violates the WTO. So how much does the protection in the regs for mistakenly blocking a lawful internet gambling transaction help you. You either obey the UIGEA or face liability in a foreign court which I doubt will think much of the UIGEA and its regs.
I think that some of our future comments about ACH's and checks ought to state that a bank only has to block a transaction for which it has actual knowledge involves unlawful internet gambling and when such blocking does not violate its contracts with a foreign bank.

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Good point. Your comments made me think of another caveat.

These regs shouldn't be blocking all transactions to/from businesses involved in UIG... just to those transactions that are funding UIG. The UIGEA was never intended to prevent offshore gambling sites from doing business with US companies; it was intended to prevent US citizens from gambling online.

If the regulations prevent Party poker from paying US companies, or prevents US companies from legally competing for Party Poker's business, then the regs go beyond the intention of UIGEA.

For example, I work for a small US software company. Our software could be very useful to the various poker sites. The regulations shouldn't interfere with Party paying us should they decide to use our software.

[oldbookguy]

OK, I know and I think most all have the same opinion, but, Allyn Schulman summed things up that my help us develope a good response to comment about as follows:

Her article a CP:
http://www.cardplayer.com/poker-news...ed-regulations


Reasonably Designed Policies and Procedures

Section 6 of the proposed regulations sets forth examples of policies and procedures that could be utilized. This includes (1) due diligence, (2) remedial action, (3) monitoring, (4) coding, (5) cross-border relationships, and (6) the issue of a black list.


Due diligence: Participants should use a flexible risk-based approach in that the level of due diligence performed would match the level of risk posed by the customer. The due diligence is intended to apply to a participant who has a customer, not an entity with no direct relationship.

Remedial action: There must be policies if a participant discovers that one of its customer relationships was being used to process forbidden transactions. Such a policy could include fines, closing the account, filing a suspicious activity report, etc.

Monitoring: This includes payment patterns, monitoring websites, etc.

Coding: Business/merchant category codes will be utilized as they have been used. The Agencies suggest different codes for gambling transactions not restricted by the UIGEA.

Cross-border relationships: The Agencies recognize that offshore gaming companies are not subject to the UIGEA. The act suggests that some Internet gambling sites indicate on their website how and with whom to make a wire transfer. The Agencies suggest that: “The U.S. participant should consider whether wire-transfer services should continue.”

List of unlawful Internet gambling businesses: The UIGEA doesn’t specifically mention the creation of a blacklist, nor do the Agencies compile one. In sum, the Agencies comment that, although there is some interest in a blacklist, it is neither practical nor legally desirable given the risk of misidentification, the task of identifying what constitutes unlawful gambling in each jurisdiction, the ability of an unlawful site to change its name, and the cost associated with establishing and maintaining an accurate list.

C is the most interesting since it is suggested a different code be used for lawful Internet Gambling to distinguish between Illegal Internet Gambling, HOWEVER, the Regs DO NOT determine which is which.

obg

[TheEngineer]

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Ok I agree with waiting at least one week to submit any comments. TE, do we go with proposing a defintion of unlawful internet gambling or not. Your proposed comments seem to vary on this strategy.

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It's not really my decision to make, but I will try to make a recommendation for everyone's consideration later this week. My proposed comments really were for discussion purposes, to get us started on evaluating pros and cons of specific approaches. I don't plan to submit any comments for a few days. Based on input here and from some other folks, the second letter seems most popular so far:

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Jennifer J. Johnson
Secretary, Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, N.W.
Washington, DC 20551

Dear Secretary Johnson,

Following careful review the proposed regulations (Docket No. R-1298) implementing the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), I agree with the authors of the regulations – the regulations as proposed do have several weaknesses that are inherent to UIGEA itself. The primary risk is that of overblocking transactions to legal businesses.

I live in Kentucky. Internet horse race betting is legal here under the Interstate Horse Racing Act of 1978 (IHRA). Additionally, Internet poker is not illegal here under any state or federal law (federal case law has consistently held that the Wire Act applies only to sport betting). Despite the exclusion of the domestic horse racing industry operating under the auspices of the IHRA from the provisions of the Act, banks may choose to comply with these regulations by banning all Internet gambling transactions (as was noted in the proposed regulations themselves). I am concerned that these legal businesses will be unfairly affected by these regulations, affecting my ability to access and patronize these legal businesses.

An additional issue concerning overblocking is the risk of an illegal restraint of trade. As the United States recently lost its trade dispute (and its final appeal) with Antigua and Barbuda with regards to providing of cross-border betting services, additional restrictions via overblocking resulting from these regulations could result in either new or increased WTO penalties, especially as domestic financial transactions are largely excluded from these regulations.

I urge a revision to the proposed regulations to ensure a proactive bias towards processing of all financial transactions. To accomplish this, I propose revising the regulations to remove from the regulations all penalties for all but willful and egregious noncompliance. Also, I propose that the Monitoring section of the regulations be revised to require banks to process all lawful transactions.

The last thing our country needs is more impediments to lawful financial transactions.

Thank you for your consideration.

Sincerely,

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Later I will post some full proposed comments for review. I will not submit any comments until TE or D$D approve them. We need to have a leader in our effort and I propose TE and/or D$D because they seem to understand politics and this process.

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Thanks for the compliment. [img]/images/graemlins/grin.gif[/img]

I'd offer to approve it, but I'm not smarter than anyone else here. Perhaps we should all consider posting proposed comments here for opinions, at least until we've formed our strategy.

[Shoe]

Sorry I haven't been able to read this whole thread. Can anyone please provide the cliff notes?

[whangarei]

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Sorry I haven't been able to read this whole thread.

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Perhaps you could start now?

[JPFisher55]

TE, I think that we will accomplish more with a coordinated stratedgy and comments. If all of us submit comments on our own, they will be confusing and at cross purposes at times. Of course, anyone can submit any comment that they desire. But I think that the online poker community is best served by a coordinated effort. And I think you have the best polictical knowledge to lead this effort.
I like your post about overblocking the best and I have drafted one that proposes a formal definition of unlawful Internet gambling or some suggested examples as an alternative to a formal definition. I'll post it and my proposed comment on the list of UIG businesses tomorrow for all to review.

[TheEngineer]

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TE, I think that we will accomplish more with a coordinated stratedgy and comments. If all of us submit comments on our own, they will be confusing and at cross purposes at times. Of course, anyone can submit any comment that they desire. But I think that the online poker community is best served by a coordinated effort.

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That's why I suggested posting them here first. That way, we can all comment. Hopefully PPA will have talking points out this week. I also have other requests for comments out. With these, we should be able to determine where we aim to end up.

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And I think you have the best polictical knowledge to lead this effort.
I like your post about overblocking the best and I have drafted one that proposes a formal definition of unlawful Internet gambling or some suggested examples as an alternative to a formal definition. I'll post it and my proposed comment on the list of UIG businesses tomorrow for all to review.

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Thanks. I see overblocking as a big threat, so I wrote my comment specifically to not possibly be contrary to any other interest we may have. Hopefully we'll have more data on how best to comment on these regs soon.

I look forward to seeing your proposal.

[Shoe]

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Sorry I haven't been able to read this whole thread.

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Perhaps you could start now?

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Perhaps you could just summarize it for me?