Banks Say Gambling Prohibition Act Bad for Biz

Members of the Independent Community Bankers of America (ICBA) are trying to get the word out to Congress they do not like how the government sees the roles of banks when it comes to enforcing Internet Gambling Prohibition and Enforcement Act, if it's passed by Congress.

And they recently warned politicians that if financial institutions were responsible for monitoring and blocking transactions to gambling websites, banks would have trouble meeting their other duties, including helping provide national security.

"ICBA recognizes the concerns that some of your colleagues have raised about Internet gambling," ICBA wrote in a letter to Senate Banking Committee Chairman Richard Shelby (R-Ala.) and Senate Judiciary Chairman Arlen Specter (R-Penn.). "We urge Congress to recognize that the nation's banks have already taken on major responsibilities to help detect and prevent terrorist financing and illegal money laundering. Attempting to monitor and block gambling transactions, particularly given the limits of the current payment technology, could detract from those efforts."

Sam Vallandingham, the vice president of the First State Bank in West Virginia and a member of the ICBA, told a house judiciary subcommittee hearing just as much in May. But it doesn't seem like the politicians are listening. The subcommittee moved the Act forward and it was passed by the House of Representatives later that month, despite his concerns.

Banks would be responsible for monitoring and blocking transactions from players to online sites. The Act would also make banks criminally liable if the transactions take place.

Members of Congress will face this issue this fall. For a complete explanation of the Internet Gambling Prohibition and Enforcement Act, click here.

In the letter to the politicians, ICBA also noted additional concerns with the legislation, including:

• The bill creates an impossible compliance burden for "uncoded" transactions. Unlike credit card transactions, which include a code that identifies the type of business receiving payment, uncoded transactions (electronic payments and personal checks) don't provide this information. While it's possible to monitor and block certain types of credit card transactions, a bank cannot do so with uncoded transactions.
• The bill threatens to subject banks and electronic processors to potential criminal liability for routine processing of financial transactions - their core business operation.
• The bill could subject banks to inconsistent state and national standards.

The IBCA is made up of more than 5,000 members who run more than 17,000 locally operated banks across the country.

Click here to send your Congress member a letter to oppose the Internet Gambling Prohibition and Enforcement Act.

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