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Union Calendar No. 68

108TH CONGRESS 

1ST SESSION H. R. 2143

[Report No. 108–133] 

To prevent the use of certain bank instruments for unlawful Internet 

gambling, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 19, 2003

Mr. BACHUS (for himself, Mr. OXLEY, and Ms. HOOLEY of Oregon) introduced the following bill; which was referred to the Committee on Financial Services 

JUNE 2, 2003 

Reported with an amendment, committed to the Committee of the Whole 

House on the State of the Union, and ordered to be printed 

[Strike out all after the enacting clause and insert the part printed in italic] 

[For text of introduced bill, see copy of bill as introduced on May 19, 2003] 

A BILL

To prevent the use of certain bank instruments for unlawful 

Internet gambling, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Unlawful Internet Gam3 bling Funding Prohibition Act’’. 

4 SEC. 2. FINDINGS. 

5 The Congress finds as follows: 

6 (1) Internet gambling is primarily funded 

7 through personal use of bank instruments, including 

8 credit cards and wire transfers. 

9 (2) The National Gambling Impact Study Com10 mission in 1999 recommended the passage of legisla11 tion to prohibit wire transfers to Internet gambling 

12 sites or the banks which represent them. 

13 (3) Internet gambling is a major cause of debt 

14 collection problems for insured depository institutions 

15 and the consumer credit industry. 

16 (4) Internet gambling conducted through offshore 

17 jurisdictions has been identified by United States law 

18 enforcement officials as a significant money laun19 dering vulnerability. 

20 SEC. 3. POLICIES AND PROCEDURES REQUIRED TO PRE21 VENT PAYMENTS FOR UNLAWFUL INTERNET 

22 GAMBLING. 

23 (a) REGULATIONS.—Before the end of the 6-month pe24 riod beginning on the date of the enactment of this Act, 

25 the Federal functional regulators shall prescribe regulations 

26 requiring any designated payment system to establish poli-
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1 cies and procedures reasonably designed to identify and 

2 prevent restricted transactions in any of the following ways: 

3 (1) The establishment of policies and procedures 

4 that—

5 (A) allow the payment system and any per6 son involved in the payment system to identify 

7 restricted transactions by means of codes in au8 thorization messages or by other means; and 

9 (B) block restricted transactions identified 

10 as a result of the policies and procedures devel11 oped pursuant to subparagraph (A).

12 (2) The establishment of policies and procedures 

13 that prevent the acceptance of the products or services 

14 of the payment system in connection with a restricted 

15 transaction. 

16 (b) REQUIREMENTS FOR POLICIES AND PROCE17 DURES.—In prescribing regulations pursuant to subsection 

18 (a), the Federal functional regulators shall—

19 (1) identify types of policies and procedures, in20 cluding nonexclusive examples, which would be 

21 deemed to be ‘‘reasonably designed to identify’’ and 

22 ‘‘reasonably designed to block’’ or to ‘‘prevent the ac23 ceptance of the products or services’’ with respect to 

24 each type of transaction, such as, should credit card 

25 transactions be so designated, identifying transactions 
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1 by a code or codes in the authorization message and 

2 denying authorization of a credit card transaction in 

3 response to an authorization message; 

4 (2) to the extent practical, permit any partici5 pant in a payment system to choose among alter6 native means of identifying and blocking, or otherwise 

7 preventing the acceptance of the products or services 

8 of the payment system or participant in connection 

9 with, restricted transactions; and 

10 (3) consider exempting restricted transactions 

11 from any requirement under subsection (a) if the Fed12 eral functional regulators find that it is not reason13 ably practical to identify and block, or otherwise pre14 vent, such transactions. 

15 (c) COMPLIANCE WITH PAYMENT SYSTEM POLICIES

16 AND PROCEDURES.—A creditor, credit card issuer, finan17 cial institution, operator of a terminal at which an elec18 tronic fund transfer may be initiated, money transmitting 

19 business, or international, national, regional, or local net20 work utilized to effect a credit transaction, electronic fund 

21 transfer, or money transmitting service, or a participant 

22 in such network, meets the requirement of subsection (a) 

23 if—
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1 (1) such person relies on and complies with the 

2 policies and procedures of a designated payment sys3 tem of which it is a member or participant to—

4 (A) identify and block restricted trans5 actions; or 

6 (B) otherwise prevent the acceptance of the 

7 products or services of the payment system, 

8 member, or participant in connection with re9 stricted transactions; and 

10 (2) such policies and procedures of the designated 

11 payment system comply with the requirements of reg12 ulations prescribed under subsection (a). 

13 (d) ENFORCEMENT.—

14 (1) IN GENERAL.—This section shall be enforced 

15 by the Federal functional regulators and the Federal 

16 Trade Commission under applicable law in the man17 ner provided in section 505(a) of the Gramm-Leach18 Bliley Act. 

19 (2) FACTORS TO BE CONSIDERED.—In consid20 ering any enforcement action under this subsection 

21 against any payment system, or any participant in 

22 a payment system that is a creditor, credit card 

23 issuer, financial institution, operator of a terminal at 

24 which an electronic fund transfer may be initiated, 

25 money transmitting business, or international, na-
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1 tional, regional, or local network utilized to effect a 

2 credit transaction, electronic fund transfer, or money 

3 transmitting service, or a participant in such net4 work, the Federal functional regulators and the Fed5 eral Trade Commission shall consider the following 

6 factors: 

7 (A) The extent to which such person is ex8 tending credit or transmitting funds knowing the 

9 transaction is in connection with unlawful 

10 Internet gambling. 

11 (B) The history of such person in extending 

12 credit or transmitting funds knowing the trans13 action is in connection with unlawful Internet 

14 gambling. 

15 (C) The extent to which such person has es16 tablished and is maintaining policies and proce17 dures in compliance with regulations prescribed 

18 under this subsection. 

19 (D) The feasibility that any specific remedy 

20 prescribed can be implemented by such person 

21 without substantial deviation from normal busi22 ness practice. 

23 (E) The costs and burdens the specific rem24 edy will have on such person. 
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1 SEC. 4. DEFINITIONS. 

2 For purposes of this Act, the following definitions shall 

3 apply: 

4 (1) RESTRICTED TRANSACTION.—The term ‘‘re5 stricted transaction’’ means any transaction or trans6 mittal to any person engaged in the business of bet7 ting or wagering, in connection with the participa8 tion of another person in unlawful Internet gambling, 

9 of—

10 (A) credit, or the proceeds of credit, ex11 tended to or on behalf of such other person (in12 cluding credit extended through the use of a cred13 it card); 

14 (B) an electronic fund transfer or funds 

15 transmitted by or through a money transmitting 

16 business, or the proceeds of an electronic fund 

17 transfer or money transmitting service, from or 

18 on behalf of the other person; 

19 (C) any check, draft, or similar instrument 

20 which is drawn by or on behalf of the other per21 son and is drawn on or payable at or through 

22 any financial institution; or 

23 (D) the proceeds of any other form of finan24 cial transaction as the Federal functional regu25 lators may prescribe by regulation which in26 volves a financial institution as a payor or fi-
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1 nancial intermediary on behalf of or for the ben2 efit of the other person. 

3 (2) BETS OR WAGERS.—The term ‘‘bets or wa4 gers’’—

5 (A) means the staking or risking by any 

6 person of something of value upon the outcome of 

7 a contest of others, a sporting event, or a game 

8 subject to chance, upon an agreement or under9 standing that the person or another person will 

10 receive something of greater value than the 

11 amount staked or risked in the event of a certain 

12 outcome; 

13 (B) includes the purchase of a chance or op14 portunity to win a lottery or other prize (which 

15 opportunity to win is predominantly subject to 

16 chance); 

17 (C) includes any scheme of a type described 

18 in section 3702 of title 28, United States Code; 

19 (D) includes any instructions or informa20 tion pertaining to the establishment or movement 

21 of funds in an account by the bettor or customer 

22 with the business of betting or wagering; and 

23 (E) does not include—

24 (i) any activity governed by the securi25 ties laws (as that term is defined in section 
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1 3(a)(47) of the Securities Exchange Act of 

2 1934) for the purchase or sale of securities 

3 (as that term is defined in section 3(a)(10) 

4 of such Act); 

5 (ii) any transaction conducted on or 

6 subject to the rules of a registered entity or 

7 exempt board of trade pursuant to the Com8 modity Exchange Act;

9 (iii) any over-the-counter derivative 

10 instrument; 

11 (iv) any other transaction that—

12 (I) is excluded or exempt from 

13 regulation under the Commodity Ex14 change Act; or 

15 (II) is exempt from State gaming 

16 or bucket shop laws under section 12(e) 

17 of the Commodity Exchange Act or sec18 tion 28(a) of the Securities Exchange 

19 Act of 1934; 

20 (v) any contract of indemnity or guar21 antee; 

22 (vi) any contract for insurance; 

23 (vii) any deposit or other transaction 

24 with a depository institution (as defined in
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1 section 3(c) of the Federal Deposit Insur2 ance Act); 

3 (viii) any participation in a simula4 tion sports game or an educational game or 

5 contest that—

6 (I) is not dependent solely on the 

7 outcome of any single sporting event or 

8 nonparticipant’s singular individual 

9 performance in any single sporting 

10 event; 

11 (II) has an outcome that reflects 

12 the relative knowledge and skill of the 

13 participants with such outcome deter14 mined predominantly by accumulated 

15 statistical results of sporting events; 

16 and 

17 (III) offers a prize or award to a 

18 participant that is established in ad19 vance of the game or contest and is not 

20 determined by the number of partici21 pants or the amount of any fees paid 

22 by those participants; and 

23 (ix) any lawful transaction with a 

24 business licensed or authorized by a State. 
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1 (3) DESIGNATED PAYMENT SYSTEM DEFINED.—

2 The term ‘‘designated payment system’’ means any 

3 system utilized by any creditor, credit card issuer, fi4 nancial institution, operator of a terminal at which 

5 an electronic fund transfer may be initiated, money 

6 transmitting business, or international, national, re7 gional, or local network utilized to effect a credit 

8 transaction, electronic fund transfer, or money trans9 mitting service, or any participant in such network, 

10 that the Federal functional regulators determine, by 

11 regulation or order, could be utilized in connection 

12 with, or to facilitate, any restricted transaction. 

13 (4) FEDERAL FUNCTIONAL REGULATOR.—The 

14 term ‘‘Federal functional regulator’’ has the same 

15 meaning as in section 509(2) of the Gramm-Leach16 Bliley Act. 

17 (5) INTERNET.—The term ‘‘Internet’’ means the 

18 international computer network of interoperable pack19 et switched data networks. 

20 (6) UNLAWFUL INTERNET GAMBLING.—The term 

21 ‘‘unlawful Internet gambling’’ means to place, receive, 

22 or otherwise transmit a bet or wager by any means 

23 which involves the use, at least in part, of the Inter24 net where such bet or wager is unlawful under any 

25 applicable Federal or State law in the State in which 
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1 the bet or wager is initiated, received, or otherwise 

2 made. 

3 (7) OTHER TERMS.—

4 (A) CREDIT; CREDITOR; AND CREDIT

5 CARD.—The terms ‘‘credit’’, ‘‘creditor’’, and 

6 ‘‘credit card’’ have the meanings given such 

7 terms in section 103 of the Truth in Lending 

8 Act. 

9 (B) ELECTRONIC FUND TRANSFER.—The 

10 term ‘‘electronic fund transfer’’—

11 (i) has the meaning given such term in 

12 section 903 of the Electronic Fund Transfer 

13 Act; and 

14 (ii) includes any fund transfer covered 

15 by Article 4A of the Uniform Commercial 

16 Code, as in effect in any State. 

17 (C) FINANCIAL INSTITUTION.—The term ‘‘fi18 nancial institution’’—

19 (i) has the meaning given such term in 

20 section 903 of the Electronic Fund Transfer 

21 Act; and 

22 (ii) includes any financial institution, 

23 as defined in section 509(3) of the Gramm24 Leach-Bliley Act. 
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1 (D) MONEY TRANSMITTING BUSINESS AND

2 MONEY TRANSMITTING SERVICE.—The terms 

3 ‘‘money transmitting business’’ and ‘‘money 

4 transmitting service’’ have the meanings given 

5 such terms in section 5330(d) of title 31, United 

6 States Code.
Union Calendar No. 68

108TH CONGRESS 

1ST SESSION H. R. 2143

[Report No. 108–133] 

A BILL

To prevent the use of certain bank instruments for 

unlawful Internet gambling, and for other purposes. 

JUNE 2, 2003

Reported with an amendment, committed to the Committee of the Whole House on the State of the Union, 

and ordered to be printed