n prepared remarks, Deputy Assistant Secretary Valerie Abend said banking regulators are focusing their efforts on banks that do business with gambling companies, as well as the interaction between US banks and foreign banks that may be tied to online gambling.
Legislation passed by US lawmakers last year required Treasury and the Fed to enact regulations aimed at preventing the flow of funds from gamblers to Internet gambling sites. Included in that legislation were exemptions for certain financial institutions where it is "not reasonably practical" to prevent illegal Internet gambling.
Abend said such exemptions would generally extend to the gambler’s bank, but not banks that do businesses with firms that offer illegal gambling. "In the case of checks, the check collection system is highly automated and it is not reasonably practical for the gambler’s bank to know whether a check presented to it for payment involves unlawful Internet gambling."
Conversely, she said, a gambling business’ bank or the first U.S. bank to receive a check under the proposed rule would be required to have policies and procedures in place to stop the processing of a check.
A public comment period on the proposed rule is scheduled to close December 12. Abend said Treasury expects a large number of responses and would provide analysis and reasons for any decisions based on the comments received.