Yesterday, Barney Frank held hearings on the implementation of the Unlawful Internet Gaming Enforcement Act.
I was traveling, so I didn’t get to watch. But Declan McCullagh did:
Banks, credit card companies, and some Democratic members of Congress are predicting that forthcoming restrictions on Internet gambling will ensnare innocent customers and threaten the viability of e-commerce.
The criticism came at a congressional hearing on Wednesday devoted to the Unlawful Internet Gambling Enforcement Act, enacted in 2006 by a Republican Congress after pressure from social conservatives. The Federal Reserve and the Treasury Department published draft regulations last fall–which financial institutions say will disrupt perfectly legal transactions unless dramatic changes are made before the rules take effect.
The U.S. government’s “decision not to fully define unlawful Internet gambling places our members in a very difficult position,” said Leigh Williams on behalf of the Financial Services Roundtable, which counts Visa, Mastercard, Bank of America, Wells Fargo, and other banks as members. “They cannot know if a transaction is restricted unless they have in hand specifics of the transaction that in almost all instances they will not have.”
At the very least, Williams said, the U.S. government should provide a list of names of Internet gambling businesses that can be identified and blocked–something that regulators are unwilling to do. (One model that’s been suggested is the Treasury Department’s list of “specially designated” people and organizations subject to economic sanctions.)
Federal regulators have said it would be too expensive for them to create a list themselves, arguing that “the government must engage in an extensive legal analysis to determine whether the gambling Web site is used, at least in part, to place, receive or otherwise knowingly transmit unlawful bets or wagers” and that due process safeguards “would result in considerable added costs.”
So they’re just going to push those costs onto the private sector, effectively making your bank cop, prosecutor, and jury. Given that there’s no sanction for over-blocking transactions, and that there would be considerable sanctions for not doing enough to block gambling-related transfers, Congress has created a situation where the banks’ only real option is to block anything that remotely sniffs of gambling.
Meanwhile, all you need to do to get around all of this is open an account with an overseas bank. Which means they’ll probably next go after Internet Service Providers, and force them to block access to gaming sites. Quite the clusterfuck to prevent people from playing cards online.