I 

108TH CONGRESS 

1ST SESSION H. R. 21

To prevent the use of certain bank instruments for unlawful Internet 

gambling, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 7, 2003

Mr. LEACH (for himself, Mr. OXLEY, Mr. ROGERS of Michigan, Mr. PICKERING, Mr. NORWOOD, Mr. GOODLATTE, Mr. BACHUS, Mrs. KELLY, Mr. 

WOLF, Mr. SPRATT, Mr. OSBORNE, Mr. PITTS, Mr. BERRY, and Mr. 

GILLMOR) introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committee on the 

Judiciary, for a period to be subsequently determined by the Speaker, in 

each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

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,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Unlawful Internet 

5 Gambling Funding Prohibition Act’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds as follows: 
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1 (1) Internet gambling is primarily funded 

2 through personal use of bank instruments, including 

3 credit cards and wire transfers. 

4 (2) The National Gambling Impact Study Com5 mission in 1999 recommended the passage of legisla6 tion to prohibit wire transfers to Internet gambling 

7 sites or the banks which represent them. 

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

9 collection problems for insured depository institu10 tions and the consumer credit industry. 

11 (4) Internet gambling conducted through off12 shore jurisdictions has been identified by United 

13 States law enforcement officials as a significant 

14 money laundering vulnerability. 

15 SEC. 3. PROHIBITION ON ACCEPTANCE OF ANY BANK IN16 STRUMENT FOR UNLAWFUL INTERNET GAM17 BLING. 

18 (a) IN GENERAL.—No person engaged in the busi19 ness of betting or wagering may knowingly accept, in con20 nection with the participation of another person in unlaw21 ful Internet gambling—

22 (1) credit, or the proceeds of credit, extended to 

23 or on behalf of such other person (including credit 

24 extended through the use of a credit card); 
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1 (2) an electronic fund transfer or funds trans2 mitted by or through a money transmitting business, 

3 or the proceeds of an electronic fund transfer or 

4 money transmitting service, from or on behalf of the 

5 other person; 

6 (3) any check, draft, or similar instrument 

7 which is drawn by or on behalf of the other person 

8 and is drawn on or payable at or through any finan9 cial institution; or 

10 (4) the proceeds of any other form of financial 

11 transaction as the Secretary may prescribe by regu12 lation which involves a financial institution as a 

13 payor or financial intermediary on behalf of or for 

14 the benefit of the other person. 

15 (b) DEFINITIONS.—For purposes of this Act, the fol16 lowing definitions shall apply: 

17 (1) BETS OR WAGERS.—The term ‘‘bets or wa18 gers’’—

19 (A) means the staking or risking by any 

20 person of something of value upon the outcome 

21 of a contest of others, a sporting event, or a 

22 game subject to chance, upon an agreement or 

23 understanding that the person or another per24 son will receive something of greater value than 
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1 the amount staked or risked in the event of a 

2 certain outcome; 

3 (B) includes the purchase of a chance or 

4 opportunity to win a lottery or other prize 

5 (which opportunity to win is predominantly sub6 ject to chance); 

7 (C) includes any scheme of a type de8 scribed in section 3702 of title 28, United 

9 States Code; 

10 (D) includes any instructions or informa11 tion pertaining to the establishment or move12 ment of funds in an account by the bettor or 

13 customer with the business of betting or wager14 ing; and 

15 (E) does not include—

16 (i) any activity governed by the secu17 rities laws (as that term is defined in sec18 tion 3(a)(47) of the Securities Exchange 

19 Act of 1934) for the purchase or sale of se20 curities (as that term is defined in section 

21 3(a)(10) of such Act); 

22 (ii) any transaction conducted on or 

23 subject to the rules of a registered entity 

24 or exempt board of trade pursuant to the 

25 Commodity Exchange Act;
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1 (iii) any over-the-counter derivative 

2 instrument; 

3 (iv) any other transaction that—

4 (I) is excluded or exempt from 

5 regulation under the Commodity Ex6 change Act; or 

7 (II) is exempt from State gaming 

8 or bucket shop laws under section 

9 12(e) of the Commodity Exchange Act 

10 or section 28(a) of the Securities Ex11 change Act of 1934; 

12 (v) any contract of indemnity or guar13 antee; 

14 (vi) any contract for insurance; 

15 (vii) any deposit or other transaction 

16 with a depository institution (as defined in 

17 section 3(c) of the Federal Deposit Insur18 ance Act); 

19 (viii) any participation in a simulation 

20 sports game or an educational game or 

21 contest that—

22 (I) is not dependent solely on the 

23 outcome of any single sporting event 

24 or nonparticipant’s singular individual 
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1 performance in any single sporting 

2 event; 

3 (II) has an outcome that reflects 

4 the relative knowledge and skill of the 

5 participants with such outcome deter6 mined predominantly by accumulated 

7 statistical results of sporting events; 

8 and 

9 (III) offers a prize or award to a 

10 participant that is established in ad11 vance of the game or contest and is 

12 not determined by the number of par13 ticipants or the amount of any fees 

14 paid by those participants; and 

15 (ix) any lawful transaction with a 

16 business licensed or authorized by a State. 

17 (2) BUSINESS OF BETTING OR WAGERING.—

18 The term ‘‘business of betting or wagering’’ does not 

19 include, other than for purposes of subsection (e), 

20 any creditor, credit card issuer, insured depository 

21 institution, financial institution, operator of a ter22 minal at which an electronic fund transfer may be 

23 initiated, money transmitting business, or inter24 national, national, regional, or local network utilized 

25 to effect a credit transaction, electronic fund trans-
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1 fer, stored value product transaction, or money 

2 transmitting service, or any participant in such net3 work, or any interactive computer service or tele4 communications service.

5 (3) DESIGNATED PAYMENT SYSTEM DE6 FINED.—The term ‘‘designated payment system’’ 

7 means any system utilized by any creditor, credit 

8 card issuer, financial institution, operator of a ter9 minal at which an electronic fund transfer may be 

10 initiated, money transmitting business, or inter11 national, national, regional, or local network utilized 

12 to effect a credit transaction, electronic fund trans13 fer, or money transmitting service, or any partici14 pant in such network, that the Secretary, in con15 sultation with the Board of Governors of the Federal 

16 Reserve System and the Attorney General, deter17 mines, by regulation or order, could be utilized in 

18 connection with, or to facilitate, any restricted trans19 action. 

20 (4) INTERNET.—The term ‘‘Internet’’ means 

21 the international computer network of interoperable 

22 packet switched data networks. 

23 (5) INTERACTIVE COMPUTER SERVICE.—The 

24 term ‘‘interactive computer service’’ has the same 
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1 meaning as in section 230(f) of the Communications 

2 Act of 1934. 

3 (6) RESTRICTED TRANSACTION.—The term ‘‘re4 stricted transaction’’ means any transaction or 

5 transmittal involving any credit, funds, instrument, 

6 or proceeds described in any paragraph of subsection 

7 (a) which the recipient is prohibited from accepting 

8 under subsection (a). 

9 (7) UNLAWFUL INTERNET GAMBLING.—The 

10 term ‘‘unlawful Internet gambling’’ means to place, 

11 receive, or otherwise transmit a bet or wager by any 

12 means which involves the use, at least in part, of the 

13 Internet where such bet or wager is unlawful under 

14 any applicable Federal or State law in the State in 

15 which the bet or wager is initiated, received, or oth16 erwise made. 

17 (8) OTHER TERMS.—

18 (A) CREDIT; CREDITOR; AND CREDIT

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

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

21 terms in section 103 of the Truth in Lending 

22 Act. 

23 (B) ELECTRONIC FUND TRANSFER.—The 

24 term ‘‘electronic fund transfer’’—
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1 (i) has the meaning given such term 

2 in section 903 of the Electronic Fund 

3 Transfer Act; and 

4 (ii) includes any fund transfer covered 

5 by Article 4A of the Uniform Commercial 

6 Code, as in effect in any State. 

7 (C) FINANCIAL INSTITUTION.—The term 

8 ‘‘financial institution’’ has the meaning given 

9 such term in section 903 of the Electronic 

10 Fund Transfer Act. 

11 (D) MONEY TRANSMITTING BUSINESS AND

12 MONEY TRANSMITTING SERVICE.—The terms 

13 ‘‘money transmitting business’’ and ‘‘money 

14 transmitting service’’ have the meanings given 

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

16 United States Code. 

17 (E) SECRETARY.—The term ‘‘Secretary’’ 

18 means the Secretary of the Treasury. 

19 (c) CIVIL REMEDIES.—

20 (1) JURISDICTION.—The district courts of the 

21 United States shall have original and exclusive juris22 diction to prevent and restrain violations of this sec23 tion by issuing appropriate orders in accordance 

24 with this section, regardless of whether a prosecu25 tion has been initiated under this section.
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1 (2) PROCEEDINGS.—

2 (A) INSTITUTION BY FEDERAL GOVERN3 MENT.—

4 (i) IN GENERAL.—The United States, 

5 acting through the Attorney General, may 

6 institute proceedings under this subsection 

7 to prevent or restrain a violation of this 

8 section. 

9 (ii) RELIEF.—Upon application of the 

10 United States under this subparagraph, 

11 the district court may enter a preliminary 

12 injunction or an injunction against any 

13 person to prevent or restrain a violation of 

14 this section, in accordance with Rule 65 of 

15 the Federal Rules of Civil Procedure. 

16 (B) INSTITUTION BY STATE ATTORNEY

17 GENERAL.—

18 (i) IN GENERAL.—The attorney gen19 eral of a State (or other appropriate State 

20 official) in which a violation of this section 

21 allegedly has occurred or will occur may in22 stitute proceedings under this subsection to 

23 prevent or restrain the violation. 

24 (ii) RELIEF.—Upon application of the 

25 attorney general (or other appropriate 
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1 State official) of an affected State under 

2 this subparagraph, the district court may 

3 enter a preliminary injunction or an in4 junction against any person to prevent or 

5 restrain a violation of this section, in ac6 cordance with Rule 65 of the Federal 

7 Rules of Civil Procedure. 

8 (C) INDIAN LANDS.—

9 (i) IN GENERAL.—Notwithstanding 

10 subparagraphs (A) and (B), for a violation 

11 that is alleged to have occurred, or may 

12 occur, on Indian lands (as that term is de13 fined in section 4 of the Indian Gaming 

14 Regulatory Act)—

15 (I) the United States shall have 

16 the enforcement authority provided 

17 under subparagraph (A); and 

18 (II) the enforcement authorities 

19 specified in an applicable Tribal-State 

20 compact negotiated under section 11 

21 of the Indian Gaming Regulatory Act 

22 shall be carried out in accordance 

23 with that compact. 

24 (ii) RULE OF CONSTRUCTION.—No 

25 provision of this section shall be construed 
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1 as altering, superseding, or otherwise af2 fecting the application of the Indian Gam3 ing Regulatory Act. 

4 (3) EXPEDITED PROCEEDINGS.—In addition to 

5 any proceeding under paragraph (2), a district court 

6 may, in exigent circumstances, enter a temporary re7 straining order against a person alleged to be in vio8 lation of this section upon application of the United 

9 States under paragraph (2)(A), or the attorney gen10 eral (or other appropriate State official) of an af11 fected State under paragraph (2)(B), in accordance 

12 with Rule 65(b) of the Federal Rules of Civil Proce13 dure. 

14 (4) LIMITATION RELATING TO INTERACTIVE

15 COMPUTER SERVICES.—

16 (A) IN GENERAL.—Relief granted under 

17 this subsection against an interactive computer 

18 service shall—

19 (i) be limited to the removal of, or dis20 abling of access to, an online site violating 

21 this section, or a hypertext link to an on22 line site violating this section, that resides 

23 on a computer server that such service 

24 controls or operates; except this limitation 

25 shall not apply if the service is subject to 
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1 liability under this section pursuant to sub2 section (e); 

3 (ii) be available only after notice to 

4 the interactive computer service and an op5 portunity for the service to appear are pro6 vided; 

7 (iii) not impose any obligation on an 

8 interactive computer service to monitor its 

9 service or to affirmatively seek facts indi10 cating activity violating this section; 

11 (iv) specify the interactive computer 

12 service to which it applies; and 

13 (v) specifically identify the location of 

14 the online site or hypertext link to be re15 moved or access to which is to be disabled. 

16 (B) COORDINATION WITH OTHER LAW.—

17 An interactive computer service that does not 

18 violate this section shall not be liable under sec19 tion 1084 of title 18, except this limitation shall 

20 not apply if an interactive computer service has 

21 actual knowledge and control of bets and wa22 gers and—

23 (i) operates, manages, supervises, or 

24 directs an Internet website at which unlaw25 ful bets or wagers may be placed, received, 
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1 or otherwise made or at which unlawful 

2 bets or wagers are offered to be placed, re3 ceived, or otherwise made; or 

4 (ii) owns or controls, or is owned or 

5 controlled by, any person who operates, 

6 manages, supervises, or directs an Internet 

7 website at which unlawful bets or wagers 

8 may be placed, received, or otherwise made 

9 or at which unlawful bets or wagers are of10 fered to be placed, received, or otherwise 

11 made. 

12 (5) FACTORS TO BE CONSIDERED IN CERTAIN

13 CASES.—In considering granting relief under this 

14 subsection against any payment system, or any par15 ticipant in a payment system that is a creditor, cred16 it card issuer, financial institution, operator of a ter17 minal at which an electronic fund transfer may be 

18 initiated, money transmitting business, or inter19 national, national, regional, or local network utilized 

20 to effect a credit transaction, electronic fund trans21 fer, or money transmitting service, or a participant 

22 in such network, the court shall consider the fol23 lowing factors: 

24 (A) The extent to which such person is ex25 tending credit or transmitting funds knowing
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1 the transaction is in connection with unlawful 

2 Internet gambling. 

3 (B) The history of such person in extend4 ing credit or transmitting funds knowing the 

5 transaction is in connection with unlawful 

6 Internet gambling. 

7 (C) The extent to which such person has 

8 established and is maintaining policies and pro9 cedures in compliance with regulations pre10 scribed under subsection (f). 

11 (D) The feasibility that any specific rem12 edy prescribed in the order issued under this 

13 subsection can be implemented by such person 

14 without substantial deviation from normal busi15 ness practice. 

16 (E) The costs and burdens the specific 

17 remedy will have on such person. 

18 (6) NOTICE TO REGULATORS AND FINANCIAL

19 INSTITUTIONS.—Before initiating any proceeding 

20 under paragraph (2) with respect to a violation or 

21 potential violation of this section by any creditor, 

22 credit card issuer, financial institution, operator of a 

23 terminal at which an electronic fund transfer may be 

24 initiated, money transmitting business, or inter25 national, national, regional, or local network utilized 
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1 to effect a credit transaction, electronic fund trans2 fer, or money transmitting service, or any partici3 pant in such network, the Attorney General of the 

4 United States or an attorney general of a State (or 

5 other appropriate State official) shall—

6 (A) notify such person, and the appro7 priate regulatory agency (as determined in ac8 cordance with subsection (f)(5)) for such per9 son, of such violation or potential violation and 

10 the remedy to be sought in such proceeding; 

11 and 

12 (B) allow such person 30 days to imple13 ment a reasonable remedy for the violation or 

14 potential violation, consistent with the factors 

15 described in paragraph (5) and in conjunction 

16 with such action as the appropriate regulatory 

17 agency may take. 

18 (d) CRIMINAL PENALTY.—

19 (1) IN GENERAL.—Whoever violates this section 

20 shall be fined under title 18, United States Code, or 

21 imprisoned for not more than 5 years, or both. 

22 (2) PERMANENT INJUNCTION.—Upon convic23 tion of a person under this subsection, the court 

24 may enter a permanent injunction enjoining such 

25 person from placing, receiving, or otherwise making 
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1 illegal bets or wagers or sending, receiving, or invit2 ing information assisting in the placing of bets or 

3 wagers. 

4 (e) CIRCUMVENTIONS PROHIBITED.—Notwith5 standing subsection (b)(2), a creditor, credit card issuer, 

6 financial institution, operator of a terminal at which an 

7 electronic fund transfer may be initiated, money transmit8 ting business, or international, national, regional, or local 

9 network utilized to effect a credit transaction, electronic 

10 fund transfer, or money transmitting service, or any par11 ticipant in such network, or any interactive computer serv12 ice or telecommunications service, may be liable under this 

13 section if such creditor, issuer, institution, operator, busi14 ness, network, or participant has actual knowledge and 

15 control of bets and wagers and—

16 (1) operates, manages, supervises, or directs an 

17 Internet website at which unlawful bets or wagers 

18 may be placed, received, or otherwise made or at 

19 which unlawful bets or wagers are offered to be 

20 placed, received, or otherwise made; or 

21 (2) owns or controls, or is owned or controlled 

22 by, any person who operates, manages, supervises, 

23 or directs an Internet website at which unlawful bets 

24 or wagers may be placed, received, or otherwise 
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1 made or at which unlawful bets or wagers are of2 fered to be placed, received, or otherwise made.

3 (f) POLICIES AND PROCEDURES TO IDENTIFY AND

4 PREVENT RESTRICTED TRANSACTIONS IN PAYMENT FOR

5 UNLAWFUL INTERNET GAMBLING.—

6 (1) REGULATIONS.—Before the end of the 6-

7 month period beginning on the date of the enact8 ment of this Act, the Secretary of the Treasury, in 

9 consultation with the Board of Governors of the 

10 Federal Reserve System and the Attorney General, 

11 shall prescribe regulations requiring any designated 

12 payment system to establish policies and procedures 

13 reasonably designed to identify and prevent re14 stricted transactions in any of the following ways: 

15 (A) The establishment of policies and pro16 cedures that—

17 (i) allow the payment system and any 

18 person involved in the payment system to 

19 identify restricted transactions by means of 

20 codes in authorization messages or by 

21 other means; and 

22 (ii) block restricted transactions iden23 tified as a result of the policies and proce24 dures developed pursuant to clause (i).
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1 (B) The establishment of policies and pro2 cedures that prevent the acceptance of the 

3 products or services of the payment system in 

4 connection with a restricted transaction. 

5 (2) REQUIREMENTS FOR POLICIES AND PROCE6 DURES.—In prescribing regulations pursuant to 

7 paragraph (1), the Secretary shall—

8 (A) identify types of policies and proce9 dures, including nonexclusive examples, which 

10 would be deemed to be ‘‘reasonably designed to 

11 identify’’ and ‘‘reasonably designed to block’’ or 

12 to ‘‘prevent the acceptance of the products or 

13 services’’ with respect to each type of trans14 action, such as, should credit card transactions 

15 be so designated, identifying transactions by a 

16 code or codes in the authorization message and 

17 denying authorization of a credit card trans18 action in response to an authorization message; 

19 (B) to the extent practical, permit any par20 ticipant in a payment system to choose among 

21 alternative means of identifying and blocking, 

22 or otherwise preventing the acceptance of the 

23 products or services of the payment system or 

24 participant in connection with, restricted trans25 actions; and 
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1 (C) consider exempting restricted trans2 actions from any requirement under paragraph 

3 (1) if the Secretary finds that it is not reason4 ably practical to identify and block, or otherwise 

5 prevent, such transactions. 

6 (3) COMPLIANCE WITH PAYMENT SYSTEM POLI7 CIES AND PROCEDURES.—A creditor, credit card 

8 issuer, financial institution, operator of a terminal at 

9 which an electronic fund transfer may be initiated, 

10 money transmitting business, or international, na11 tional, regional, or local network utilized to effect a 

12 credit transaction, electronic fund transfer, or money 

13 transmitting service, or a participant in such net14 work, meets the requirement of paragraph (1) if—

15 (A) such person relies on and complies 

16 with the policies and procedures of a designated 

17 payment system of which it is a member or par18 ticipant to—

19 (i) identify and block restricted trans20 actions; or 

21 (ii) otherwise prevent the acceptance 

22 of the products or services of the payment 

23 system, member, or participant in connec24 tion with restricted transactions; and 
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1 (B) such policies and procedures of the 

2 designated payment system comply with the re3 quirements of regulations prescribed under 

4 paragraph (1). 

5 (4) NO LIABILITY FOR BLOCKING OR REFUSING

6 TO HONOR RESTRICTED TRANSACTIONS.—A person 

7 that is subject to a regulation prescribed or order 

8 issued under this subsection and blocks, or otherwise 

9 refuses to honor, a restricted transaction, or as a 

10 member of a designated payment system relies on 

11 the policies and procedures of the payment system, 

12 in an effort to comply with this section shall not be 

13 liable to any party for such action. 

14 (5) ENFORCEMENT.—This subsection shall be 

15 enforced by the Federal functional regulators and 

16 the Federal Trade Commission under applicable law 

17 in the manner provided in section 505(a) of the 

18 Gramm-Leach-Bliley Act. 

19 SEC. 4. INTERNET GAMBLING IN OR THROUGH FOREIGN 

20 JURISDICTIONS. 

21 (a) IN GENERAL.—In deliberations between the 

22 United States Government and any other country on 

23 money laundering, corruption, and crime issues, the 

24 United States Government should—
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1 (1) encourage cooperation by foreign govern2 ments and relevant international fora in identifying 

3 whether Internet gambling operations are being used 

4 for money laundering, corruption, or other crimes; 

5 (2) advance policies that promote the coopera6 tion of foreign governments, through information 

7 sharing or other measures, in the enforcement of 

8 this Act; and 

9 (3) encourage the Financial Action Task Force 

10 on Money Laundering, in its annual report on 

11 money laundering typologies, to study the extent to 

12 which Internet gambling operations are being used 

13 for money laundering. 

14 (b) REPORT REQUIRED.—The Secretary of the 

15 Treasury shall submit an annual report to the Congress 

16 on the deliberations between the United States and other 

17 countries on issues relating to Internet gambling. 

18 SEC. 5. AMENDMENTS TO GAMBLING PROVISIONS. 

19 (a) AMENDMENT TO DEFINITION.—Section 1081 of 

20 title 18, United States Code, is amended—

21 (1) by designating the five undesignated para22 graphs that begin with ‘‘The term’’ as paragraphs 

23 (1) through (5), respectively; and 

24 (2) in paragraph (5), as so designated—
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1 (A) by striking ‘‘wire communication’’ and 

2 inserting ‘‘communication’’; 

3 (B) by inserting ‘‘satellite, microwave,’’ 

4 after ‘‘cable,’’; and 

5 (C) by inserting ‘‘(whether fixed or mo6 bile)’’ after ‘‘connection’’. 

7 (b) INCREASE IN PENALTY FOR UNLAWFUL WIRE

8 TRANSFERS OF WAGERING INFORMATION.—Section 

9 1084(a) of title 18, United States Code, is amended by 

10 striking ‘‘two years’’ and inserting ‘‘5 years’’.

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