he two agencies, working in conjunction with the US Department of Justice, have begun a process that will implement the Unlawful Internet Gambling Enforcement Act that was passed by Congress last year. But many banks and credit card companies have not taken any action to stop making payments to illegal sites, awaiting the rules to determine what procedures they need to have in place.
The legislation was designed to clear up any ambiguity about whether or not internet gambling is illegal. Yesterday's announcement details those rules, calling on all banks, credit card companies and automated payment system companies to have "policies and procedures that are reasonably designed to prevent payments being made to gambling businesses."
The Fed and the Treasury have kick-started a three-month consultation process on these proposed rules, with comments from affected parties to be filed by December 12. Once in place, the rules will provide a clear black and white policy for all companies involved in the gambling arena.
In the past many banks have turned a blind eye to individual state laws banning gambling. However in the past 18 months the industry has been at the top of the agenda, following a series of high-profile prosecutions of senior such as BetonSports chief executive David Carruthers and Neteller's Stephen Lawrence.
The clamp-down saw billions of pounds wiped off the value of British-quoted gaming companies such as PartyGaming, which had previously relied heavily on US citizens.
US officials argue that any bets made in the United States, even at offshore websites, violate the law. But the US ban on Internet gambling has been challenged as an unfair trade restriction at the World Trade Organization, which has ruled in favor of a complaint by Antigua & Barbuda. The US is appealing the decision.