An Analysis of HR 4419

15 May 2000
"Internet Gambling Funding Prohibition Act"
Introduced by Mr. Leach

Section by Section Analysis

A Bill to prevent the use of certain bank instruments for Internet gambling, and for other purposes

Sec. 1. Short Title

This Act may be cited as the "Internet Gambling Funding Prohibition Act."

Sec. 2. Findings

Congressional findings include (1) the role that Internet gambling funded through the use of bank instruments plays in the creation of ultimately uncollectible personal debt, and (2) the susceptibility of Internet gambling to abuse by money launderers.

Sec. 3. Prohibition on Acceptance of any Bank Instrument for Internet Gambling

A gambling business is prohibited from accepting bank instruments in connection with the placement of bets or wagers over the Internet. Covered instruments include credit cards, electronic fund transfers, and checks.

The terms "bets or wagers," "gambling business," and "Internet gambling," among others, are defined.

Civil remedies are authorized, including a temporary restraining order or injunction against violators. Criminal penalties are authorized, including fines or imprisonment for not more than five years or both.

A safe harbor from liability is established for financial intermediaries involved in providing funds used for Internet gambling, except for those that knowingly participate in an Internet gambling business.

Sec. 4. Internet Gambling in or through Foreign Jurisdictions

Expresses the sense of Congress that in deliberations between the U.S. Government and other countries on money laundering, corruption, and crime issues, the U.S. should encourage enactment and enforcement of laws in those countries to prevent Internet gambling and use of financial payment and transfer systems to facilitate Internet gambling.

Directs the Secretary of the Treasury to instruct the U.S. Executive Directors of international financial institutions to oppose any use of resources, other than to address basic human needs, for any country the Treasury Department determines (1) permits a high level of participation in, and the use of financial systems to facilitate, Internet gambling by U.S. citizens and residents, and (2) is not effectively implementing measures to limit such participation and systems use.

If the Treasury Department determines that a country permits the extensive use of its financial system to facilitate Internet gambling by U.S. citizens and residents and is not taking effective measures to limit such use, Treasury and the Federal Reserve System are authorized to limit or preclude access to the U.S. payment system by financial institutions chartered by, organized under the laws of, or having their principal places of business in such country.

The Secretary of the Treasury is required to report to the Congress annually on deliberations between the U.S. and other countries on Internet gambling issues.

Sec. 5. Enforcement Actions

The federal banking agencies are authorized to issue cease-and-desist orders against depository institutions that are found to have knowingly permitted their payment or credit facilities to be used in connection with Internet gambling activity that violates the provisions of Section 3.