H.R. 4411: Unlawful Internet Gambling Enforcement Act of 2006

109TH CONGRESS     H. R. 4411
   2D SESSION   AN ACT
To prevent the use of certain payment instruments,
  credit cards, and fund transfers for unlawful
  Internet gambling, and for other purposes.
109TH CONGRESS      H. R. 4411
   2D SESSION




                     AN ACT
To prevent the use of certain payment instruments, credit
   cards, and fund transfers for unlawful Internet gambling,
   and for other purposes.
 1      Be it enacted by the Senate and House of Representa-
 2 tives of the United States of America in Congress assembled,
                                             2
 1   SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

2            (a) SHORT TITLE.--This Act may be cited as the
3 ``Internet Gambling Prohibition and Enforcement Act''.
 4           (b) TABLE              CONTENTS.--The table of contents is
                               OF
 5 as follows:
     Sec. 1. Short title and table of contents.

             TITLE I--MODERNIZATION OF THE WIRE ACT OF 1961

     Sec.   101.   Definitions.
     Sec.   102.   Modification of existing prohibition.
     Sec.   103.   Authorization of civil enforcement.
     Sec.   104.   Authorization of appropriations.
     Sec.   105.   Rules of construction.
     Sec.   106.   Sense of Congress.

      TITLE II--POLICIES AND PROCEDURES REQUIRED TO PREVENT
                  PAYMENTS FOR UNLAWFUL GAMBLING

     Sec. 201. Policies and procedures required to prevent payments for unlawful
                      gambling.
     Sec. 202. Technical and conforming amendment.

        TITLE III--INTERNET GAMBLING IN OR THROUGH FOREIGN
                            JURISDICTIONS

     Sec. 301. Internet gambling in or through foreign jurisdictions.

 6          TITLE I--MODERNIZATION OF
 7             THE WIRE ACT OF 1961
 8   SEC. 101. DEFINITIONS.
 9           Section 1081 of title 18, United States Code, is
10 amended--
11                   (1) by designating the five undesignated para-
12           graphs that begin with ``The term'' as paragraphs
13           (1) through (5), respectively;
14                   (2) by amending paragraph (5), as so des-
15           ignated, to read as follows:


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1            ``(5) The term `communication facility' means
2       any and all instrumentalities, personnel, and services
3       (among other things, the receipt, forwarding, or de-
4       livery of communications) used or useful in the
5       transmission of writings, signs, pictures, and sounds
6       of all kinds by aid of wire, cable, radio, or an elec-
7       tromagnetic, photoelectronic or photooptical system,
8       or other like connection (whether fixed or mobile)
9       between the points of origin and reception of such
10      transmission.''; and
11           (3) by adding at the end the following:
12           ``(6) The term `bets or wagers'--
13                 ``(A) means the staking or risking by any
14           person of something of value upon the outcome
15           of a contest of others, a sporting event, or a
16           game predominantly subject to chance, upon an
17           agreement or understanding that the person or
18           another person will receive something of value
19           in the event of a certain outcome;
20                 ``(B) includes the purchase of a chance or
21           opportunity to win a lottery or other prize
22           (which opportunity to win is predominantly sub-
23           ject to chance);
24                 ``(C) includes any scheme of a type de-
25           scribed in section 3702 of title 28; and


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1                  ``(D) does not include--
2                      ``(i) any activity governed by the secu-
3                  rities laws (as that term is defined in sec-
4                  tion 3(a)(47) of the Securities Exchange
5                  Act of 1934) for the purchase or sale of se-
6                  curities (as that term is defined in section
7                  3(a)(10) of that Act);
8                      ``(ii) any transaction conducted on or
9                  subject to the rules of a registered entity
10                 or exempt board of trade under the Com-
11                 modity Exchange Act;
12                     ``(iii) any over-the-counter derivative
13                 instrument;
14                     ``(iv) any other transaction that--
15                          ``(I) is excluded or exempt from
16                     regulation under the Commodity Ex-
17                     change Act; or
18                          ``(II) is exempt from State gam-
19                     ing or bucket shop laws under section
20                     12(e) of the Commodity Exchange Act
21                     or section 28(a) of the Securities Ex-
22                     change Act of 1934;
23                     ``(v) any contract of indemnity or
24                 guarantee;
25                     ``(vi) any contract for insurance;


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 1                     ``(vii) any deposit or other transaction
 2                 with an insured depository institution;
 3                     ``(viii) participation in any game or
 4                 contest in which participants do not stake
 5                 or risk anything of value other than--
 6                          ``(I) personal efforts of the par-
 7                     ticipants in playing the game or con-
 8                     test or obtaining access to the Inter-
 9                     net; or
10                          ``(II) points or credits that the
11                     sponsor of the game or contest pro-
12                     vides to participants free of charge
13                     and that can be used or redeemed
14                     only for participation in games or con-
15                     tests offered by the sponsor; or
16                     ``(ix) participation in any fantasy or
17                 simulation sports game or educational
18                 game or contest in which (if the game or
19                 contest involves a team or teams) no fan-
20                 tasy or simulation sports team is based on
21                 the current membership of an actual team
22                 that is a member of an amateur or profes-
23                 sional sports organization (as those terms
24                 are defined in section 3701 of title 28) and
25                 that meets the following conditions:


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 1                     ``(I) All prizes and awards of-
 2                 fered to winning participants are es-
 3                 tablished and made known to the par-
 4                 ticipants in advance of the game or
 5                 contest and their value is not deter-
 6                 mined by the number of participants
 7                 or the amount of any fees paid by
 8                 those participants.
 9                     ``(II) All winning outcomes re-
10                 flect the relative knowledge and skill
11                 of the participants and are determined
12                 predominantly by accumulated statis-
13                 tical results of the performance of in-
14                 dividuals (athletes in the case of
15                 sports events) in multiple real-world
16                 sporting or other events.
17                     ``(III) No winning outcome is
18                 based--
19                            ``(aa) on the score, point-
20                     spread, or any performance or
21                     performances of any single real-
22                     world team or any combination of
23                     such teams; or
24                            ``(bb) solely on any single
25                     performance of an individual ath-


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 1                          lete in any single real-world
 2                          sporting or other event.
 3           ``(7) The terms `credit', `creditor', `credit card',
 4      and `card issuer' have the same meanings as in sec-
 5      tion 103 of the Truth in Lending Act.
 6           ``(8) The term `electronic fund transfer'--
 7                 ``(A) has the same meaning as in section
 8           903 of the Electronic Fund Transfer Act, ex-
 9           cept that such term includes transfers that
10           would otherwise be excluded under section
11           903(6)(E) of that Act; and
12                 ``(B) includes any fund transfer covered by
13           Article 4A of the Uniform Commercial Code, as
14           in effect in any State.
15           ``(9) The term `financial institution' has the
16      same meaning as in section 903 of the Electronic
17      Fund Transfer Act, except that such term does not
18      include a casino, sports book, or other business at or
19      through which bets or wagers may be placed or re-
20      ceived.
21           ``(10) The term `financial transaction provider'
22      has the same meaning as in section 5361 of title 31
23      (as added by title II of this Act).




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1            ``(11) The term `foreign jurisdiction' means a
2       jurisdiction of a foreign country or political subdivi-
3       sion thereof.
4            ``(12) The term `gambling business' means a
5       business of betting or wagering.
6            ``(13) The term `information assisting in the
7       placing of bets or wagers' means information know-
8       ingly transmitted by an individual in a gambling
9       business that enables or facilitates a bet or wager
10      and does not include--
11                 ``(A) any posting or reporting of any edu-
12           cational information on how to make a legal bet
13           or wager or the nature of betting or wagering,
14           as long as such posting or reporting does not
15           solicit or provide information for the purpose of
16           facilitating or enabling the placing or receipt of
17           bets or wagers in a jurisdiction where such bet-
18           ting is illegal; or
19                 ``(B) advertising relating to betting or wa-
20           gering in a jurisdiction where such betting or
21           wagering is legal, as long as such advertising
22           does not solicit or provide information for the
23           purpose of facilitating or enabling the placing
24           or receipt of bets or wagers in a jurisdiction
25           where such betting is illegal.


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1            ``(14) The term `insured depository institu-
2       tion'--
3                  ``(A) has the same meaning as in section
4            3 of the Federal Deposit Insurance Act; and
5                  ``(B) includes an insured credit union (as
6            defined in section 101 of the Federal Credit
7            Union Act).
8            ``(15) The term `interactive computer service'
9       has the same meaning as in section 230(f) of the
10      Communications Act of 1934.
11           ``(16) The terms `money transmitting business'
12      and `money transmitting service' have the same
13      meanings as in section 5330(d) (determined without
14      regard to any regulations prescribed by the Sec-
15      retary thereunder).
16           ``(17) The terms `own or control' and to be
17      `owned or controlled' include circumstances within
18      the meaning of section 2(a)(2) of the Bank Holding
19      Company Act of 1956.
20           ``(18) The term `person' includes a government
21      (including any governmental entity (as defined in
22      section 3701(2) of title 28)).
23           ``(19) The term `State' means a State of the
24      United States, the District of Columbia, or a com-




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 1      monwealth, territory, or possession of the United
 2      States.
 3           ``(20) The term `tribe' or `tribal' means an In-
 4      dian tribe, as defined under section 4(5) of the In-
 5      dian Gaming Regulatory Act of 1988).
 6           ``(21) For purposes of Section 1085(b), the
 7      term `account' means--
 8                 ``(A) the unpaid balance of money or its
 9           equivalent received or held by an insured depos-
10           itory institution in the usual course of business
11           and for which it has given or is obligated to
12           give credit, either conditionally or uncondition-
13           ally, to an account, including interest credited,
14           or which is evidenced by an instrument on
15           which the depository institution is primarily lia-
16           ble; and
17                 ``(B) money received or held by an insured
18           depository institution, or the credit given for
19           money or its equivalent received or held by the
20           insured depository institution in the usual
21           course of business for a special or specific pur-
22           pose, regardless of the legal relationships estab-
23           lished thereby, including escrow funds, funds
24           held as security for securities loaned by the de-
25           pository institution, funds deposited as advance


     HR 4411 EH                11
 1            payment on subscriptions to United States Gov-
 2            ernment securities, and funds held to meet its
 3            acceptances.''.
 4   SEC. 102. MODIFICATION OF EXISTING PROHIBITION.
 5       Section 1084 of title 18, United States Code, is
 6 amended to read as follows:
 7 `` 1084. Use of a communication facility to transmit
 8                  bets or wagers; criminal penalties

 9       ``(a) Except as otherwise provided in this section,
10 whoever, being engaged in a gambling business, know-
11 ingly--
12            ``(1) uses a communication facility for the
13       transmission in interstate or foreign commerce,
14       within the special maritime and territorial jurisdic-
15       tion of the United States, or to or from any place
16       outside the jurisdiction of any nation with respect to
17       any transmission to or from the United States, of--
18                   ``(A) bets or wagers;
19                   ``(B) information assisting in the placing
20            of bets or wagers; or
21                   ``(C) a communication, which entitles the
22            recipient to receive money or credit as a result
23            of bets or wagers, or for information assisting
24            in the placing of bets or wagers; or




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1            ``(2) accepts, in connection with the trans-
2       mission of a communication in interstate or foreign
3       commerce, within the special maritime and terri-
4       torial jurisdiction of the United States, or to or from
5       any place outside the jurisdiction of any nation with
6       respect to any transmission to or from the United
7       States of bets or wagers or information assisting in
8       the placing of bets or wagers--
9                  ``(A) credit, or the proceeds of credit, ex-
10           tended to or on behalf of another (including
11           credit extended through the use of a credit
12           card);
13                 ``(B) an electronic fund transfer or funds
14           transmitted by or through a money transmit-
15           ting business, or the proceeds of an electronic
16           fund transfer or money transmitting service,
17           from or on behalf of the other person;
18                 ``(C) any check, draft, or similar instru-
19           ment which is drawn by or on behalf of the
20           other person and is drawn on or payable
21           through any financial institution; or
22                 ``(D) the proceeds of any other form of fi-
23           nancial transaction as the Secretary of the
24           Treasury and the Board of Governors of the
25           Federal Reserve System may prescribe by regu-


     HR 4411 EH               13
1            lation which involves a financial institution as a
2            payor or financial intermediary on behalf of or
3            for the benefit of the other person,
4 shall be fined under this title or imprisoned not more than
5 five years, or both.
6       ``(b) Nothing in this section prohibits--
7            ``(1) the transmission of information assisting
8       in the placing of bets or wagers for use in news re-
9       porting if such transmission does not solicit or pro-
10      vide information for the purpose of facilitating or
11      enabling the placing or receipt of bets or wagers in
12      a jurisdiction where such betting is illegal;
13           ``(2) the transmission of information assisting
14      in the placing of bets or wagers from a State or for-
15      eign country where such betting or wagering is per-
16      mitted under Federal, State, tribal, or local law into
17      a State or foreign country in which such betting on
18      the same event is permitted under Federal, State,
19      tribal, or local law; or
20           ``(3) the interstate transmission of information
21      relating to a State-specific lottery between a State or
22      foreign country where such betting or wagering is
23      permitted under Federal, State, tribal, or local law
24      and an out-of-State data center for the purposes of




     HR 4411 EH                14
1       assisting in the operation of such State-specific lot-
2       tery.
3       ``(c) Nothing in this section prohibits the use of a
4 communication facility for the transmission of bets or wa-
5 gers or information assisting in the placing of bets or wa-
6 gers, if--
7               ``(1) at the time the transmission occurs, the
8       individual or entity placing the bets or wagers or in-
9       formation assisting in the placing of bets or wagers,
10      the gambling business, and, subject to section
11      1084(b)(3), any individual or entity acting in con-
12      cert with a gambling business to process the bets or
13      wagers are physically located in the same State, and
14      for class II or class III gaming under the Indian
15      Gaming Regulatory Act, are physically located on
16      Indian lands within that State;
17              ``(2) the State or tribe has explicitly authorized
18      such bets and wagers, the State or tribal law re-
19      quires a secure and effective location and age
20      verification system to assure compliance with age
21      and location requirements, and the gambling busi-
22      ness and any individual or entity acting in concert
23      with a gambling business to process the bets or wa-
24      gers complies with such law;




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1            ``(3) the State has explicitly authorized and li-
2       censed the operation of the gambling business and
3       any individual or entity acting in concert with a
4       gambling business to process the bets and wagers
5       within its borders or the tribe has explicitly author-
6       ized and licensed the operation of the gambling busi-
7       ness and any individual or entity acting in concert
8       with a gambling business to process the bets and
9       wagers, on Indian lands within its jurisdiction;
10           ``(4) with respect to class II or class III gam-
11      ing, the game and gambling business complies with
12      the requirements of the Indian Gaming Regulatory
13      Act; and
14           ``(5) with respect to class III gaming under the
15      Indian Gaming Regulatory Act, the game is author-
16      ized under, and is conducted in accordance with, the
17      respective Tribal-State compact of the Tribe having
18      jurisdiction over the Indian lands where the indi-
19      vidual or entity placing the bets or wagers or infor-
20      mation assisting in the placing of bets or wagers, the
21      gambling business, and any individual or entity act-
22      ing in concert with a gambling business to process
23      those bets or wagers are physically located, and such
24      Tribal-State compact expressly provides that the
25      game may be conducted using a communication fa-


     HR 4411 EH              16
 1       cility to transmit bets or wagers or information as-
 2       sisting in the placing of bets or wagers.
 3 For purposes of this subsection, the intermediate routing
 4 of electronic data constituting or containing all or part of
 5 a bet or wager, or all or part of information assisting in
 6 the placing of bets or wagers, shall not determine the loca-
 7 tion or locations in which a bet or wager is transmitted,
 8 initiated, received or otherwise made; or from or to which
 9 a bet or wager, or information assisting in the placing of
10 bets or wagers, is transmitted.
11       ``(d) Nothing in this section creates immunity from
12 criminal prosecution under any laws of any State or tribe.
13       ``(e) Nothing in this section authorizes activity that
14 is prohibited under chapter 178 of title 28, United States
15 Code.
16       ``(f) When any common carrier, subject to the juris-
17 diction of the Federal Communications Commission, is no-
18 tified in writing by a Federal, State, tribal, or local law
19 enforcement agency, acting within its jurisdiction, that
20 any communication facility furnished by it is being used
21 or will be used by its subscriber for the purpose of trans-
22 mitting or receiving gambling information in interstate or
23 foreign commerce, within the special maritime and terri-
24 torial jurisdiction of the United States, or to or from any
25 place outside the jurisdiction of any nation with respect


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 1 to any transmission to or from the United States in viola-
 2 tion of Federal, State, tribal, or local law, it shall dis-
 3 continue or refuse, the leasing, furnishing, or maintaining
 4 of such facility, after reasonable notice to the subscriber,
 5 but no damages, penalty or forfeiture, civil or criminal,
 6 shall be found against any common carrier for any act
 7 done in compliance with any notice received from a law
 8 enforcement agency. Nothing in this section shall be
 9 deemed to prejudice the right of any person affected there-
10 by to secure an appropriate determination, as otherwise
11 provided by law, in a Federal court or in a State, tribal,
12 or local tribunal or agency, that such facility should not
13 be discontinued or removed, or should be restored.''.
14   SEC. 103. AUTHORIZATION OF CIVIL ENFORCEMENT.
15       Chapter 50 of title 18, United States Code, is amend-
16 ed by adding at the end the following new section:
17 `` 1085. Civil remedies
18       ``(a) JURISDICTION.--The district courts of the
19 United States (in addition to any other remedies under
20 current law) shall have original and exclusive jurisdiction
21 to prevent and restrain violations of section 1084 by
22 issuing appropriate orders in accordance with this section,
23 regardless of whether a prosecution has been initiated
24 under section 1084.
25       ``(b) PROCEEDINGS.--


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1            ``(1) The United States may institute pro-
2       ceedings under this section--
3                  ``(A) to obtain injunctive or declarative re-
4            lief, including but not limited to a temporary
5            restraining order and a preliminary injunction,
6            against any person (other than a financial
7            transaction provider) to prevent or restrain a
8            violation or a threatened violation of section
9            1084;
10                 ``(B) in the case of an insured depository
11           institution that is a financial transaction pro-
12           vider, to--
13                     ``(i) restrain an account maintained at
14                 such insured depository institution if such
15                 account is--
16                          ``(I) owned or controlled by a
17                     gambling business; and
18                          ``(II) includes proceeds of, or is
19                     used to facilitate a violation of, sec-
20                     tion 1084; or
21                     ``(ii) seize funds in an account de-
22                 scribed in subparagraph (i) if such funds--
23                          ``(I) are owned or controlled by a
24                     gambling business; and




     HR 4411 EH              19
 1                           ``(II) constitute the proceeds of,
 2                      were derived from, or facilitated, a
 3                      violation of section 1084.
 4                  ``(C) The limitation in subparagraph (A)
 5           shall not apply if the financial transaction pro-
 6           vider is a gambling business within the meaning
 7           of section 1081(12), in which case such finan-
 8           cial transaction provider shall be subject to the
 9           enforcement provisions under subparagraph
10           (A).
11           ``(2) The attorney general (or other appropriate
12      State official) of a State in which a communication
13      in violation of section 1084 allegedly has been or will
14      be initiated or received may institute proceedings
15      under this section to obtain injunctive or declarative
16      relief to prevent or restrain the violation or threat-
17      ened violation. Upon application of the attorney gen-
18      eral (or other appropriate State official) of an af-
19      fected State under this paragraph, the district court
20      may enter a temporary restraining order, a prelimi-
21      nary injunction, an injunction, or declaratory relief
22      against any person (other than a financial trans-
23      action provider) to prevent or restrain a violation or
24      threatened violation of section 1084, in accordance
25      with rule 65 of the Federal Rules of Civil Procedure.


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1            ``(3) Notwithstanding paragraphs (1) and (2),
2       for a communication in violation of section 1084
3       that allegedly has been or will be initiated or re-
4       ceived on Indian lands (as that term is defined in
5       section 4 of the Indian Gaming Regulatory Act)--
6                   ``(A) the United States shall have the en-
7            forcement authority provided under paragraph
8            (1);
9                   ``(B) the enforcement authorities specified
10           in an applicable Tribal-State compact nego-
11           tiated under section 11 of the Indian Gaming
12           Regulatory Act (25 U.S.C. 2710) shall be car-
13           ried out in accordance with that compact; and
14                  ``(C) if there is no applicable Tribal-State
15           compact, an appropriate tribal official may in-
16           stitute proceedings in the same manner as an
17           attorney general of a State.
18      No provision of this section shall be construed as al-
19      tering, superseding, or otherwise affecting the appli-
20      cation of the Indian Gaming Regulatory Act.
21           ``(4) Notwithstanding paragraph (3), no relief
22      shall be granted under this section against a finan-
23      cial transaction provider except as provided in para-
24      graph (1).




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1       ``(c) No damages, penalty, or forfeiture, civil or crimi-
2 nal, shall be found against any person or entity for any
3 act done in compliance with any notice received from a
4 law enforcement agency.
5       ``(d) Relief granted under this section against an
6 interactive computer service (as defined in section 230(f)
7 of the Communications Act of 1934) shall--
8             ``(1) be limited to the removal of, or disabling
9       of access to, an online site violating section 1084, or
10      a hypertext link to an online site violating such sec-
11      tion, that resides on a computer server that such
12      service controls or operates; except this limitation
13      shall not apply if the service is violating section
14      1084 or is in active concert with a person who is vio-
15      lating section 1084 and receives actual notice of the
16      relief;
17            ``(2) be available only after notice to the inter-
18      active computer service and an opportunity for the
19      service to appear are provided;
20            ``(3) not impose any obligation on an interactive
21      computer service to monitor its service or to affirma-
22      tively seek facts indicating activity violating section
23      1084;
24            ``(4) specify the interactive computer service to
25      which it applies; and


     HR 4411 EH               22
 1            ``(5) specifically identify the location of the on-
 2       line site or hypertext link to be removed or access
 3       to which is to be disabled.''.
 4   SEC. 104. AUTHORIZATION OF APPROPRIATIONS.
 5       In addition to any other sums authorized to be appro-
 6 priated for this purpose, there are authorized to be appro-
 7 priated to the Department of Justice for each of fiscal
 8 years 2007 through 2010 $10,000,000 for investigations
 9 and prosecutions of violations of section 1084 of title 18,
10 United States Code.
11   SEC. 105. RULES OF CONSTRUCTION.

12       (a) Nothing in this Act may be construed to prohibit
13 any activity that is allowed under Public Law 95515 as
14 amended (15 U.S.C. 3001 et seq.).
15       (b) Nothing in this Act may be construed to preempt
16 State law prohibiting gambling.
17   SEC. 106. SENSE OF CONGRESS.
18       It is the sense of Congress that this Act does not
19 change which activities related to horse racing may or may
20 not be allowed under Federal law. Section 105 is intended
21 to address concerns that this Act could have the effect
22 of changing the existing relationship between the Inter-
23 state Horseracing Act (15 U.S.C. 3001 et seq.), and other
24 Federal statutes that were in effect at the time of this
25 Act's consideration; this Act is not intended to change that


      HR 4411 EH             23
 1 relationship; and this Act is not intended to resolve any
 2 existing disagreements over how to interpret the relation-
 3 ship between the Interstate Horseracing Act and other
 4 Federal statutes.
 5   TITLE II--POLICIES AND PROCE-
 6      DURES REQUIRED TO PRE-
 7      VENT PAYMENTS FOR UNLAW-
 8      FUL GAMBLING
 9   SEC. 201. POLICIES AND PROCEDURES REQUIRED TO PRE-
10                  VENT PAYMENTS FOR UNLAWFUL GAMBLING.
11       Chapter 53 of title 31, United States Code, is amend-
12 ed by adding at the end the following new subchapter:
13 ``SUBCHAPTER IV--POLICIES AND PROCEDURES
14       REQUIRED TO PREVENT PAYMENTS FOR
15       UNLAWFUL GAMBLING
16 `` 5361. Definitions
17       ``For purposes of this subchapter, the following defi-
18 nitions shall apply:
19            ``(1) CREDIT;   CREDITOR; CREDIT CARD; AND
20       CARD ISSUER.--The    terms `credit', `creditor', `credit
21       card', and `card issuer' have the same meanings as
22       in section 103 of the Truth in Lending Act.
23            ``(2) DESIGNATED      PAYMENT     SYSTEM.--The
24       term `designated payment system' means any system
25       utilized by a financial transaction provider that the


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 1      Secretary and the Board of Governors of the Fed-
 2      eral Reserve System, in consultation with the Attor-
 3      ney General, jointly determine, by regulation or
 4      order, could be utilized in connection with, or to fa-
 5      cilitate, any restricted transaction.
 6           ``(3) ELECTRONIC      FUND TRANSFER.--The     term
 7      `electronic fund transfer'--
 8                 ``(A) has the same meaning as in section
 9           903 of the Electronic Fund Transfer Act, ex-
10           cept that such term includes transfers that
11           would otherwise be excluded under section
12           903(6)(E) of that Act; and
13                 ``(B) includes any fund transfer covered by
14           Article 4A of the Uniform Commercial Code, as
15           in effect in any State.
16           ``(4) FINANCIAL    INSTITUTION.--The     term `fi-
17      nancial institution' has the same meaning as in sec-
18      tion 903 of the Electronic Fund Transfer Act, ex-
19      cept that such term does not include a casino, sports
20      book, or other business at or through which bets or
21      wagers may be placed or received.
22           ``(5) FINANCIAL       TRANSACTION    PROVIDER.--
23      The term `financial transaction provider' means a
24      creditor, credit card issuer, financial institution, op-
25      erator of a terminal at which an electronic fund


     HR 4411 EH             25
 1      transfer may be initiated, money transmitting busi-
 2      ness, or international, national, regional, or local
 3      payment network utilized to effect a credit trans-
 4      action, electronic fund transfer, stored value product
 5      transaction, or money transmitting service, or a par-
 6      ticipant in such network, or other participant in a
 7      designated payment system.
 8           ``(6) INSURED   DEPOSITORY INSTITUTION.--The
 9      term `insured depository institution'--
10                 ``(A) has the same meaning as in section
11           3 of the Federal Deposit Insurance Act; and
12                 ``(B) includes an insured credit union (as
13           defined in section 101 of the Federal Credit
14           Union Act).
15           ``(7) MONEY     TRANSMITTING       BUSINESS   AND
16      MONEY TRANSMITTING SERVICE.--The          terms `money
17      transmitting business' and `money transmitting serv-
18      ice' have the same meanings as in section 5330(d)
19      (determined without regard to any regulations pre-
20      scribed by the Secretary thereunder).
21           ``(8) RESTRICTED     TRANSACTION.--The        term
22      `restricted transaction' means any transaction or
23      transmittal involving any credit, funds, instrument,
24      or proceeds described in any paragraph of section




     HR 4411 EH               26
 1      5362 which the recipient is prohibited from accept-
 2      ing under such section.
 3           ``(9) SECRETARY.--The term `Secretary' means
 4      the Secretary of the Treasury.
 5           ``(10) UNLAWFUL        GAMBLING.--

 6                  ``(A) IN   GENERAL.--The      term `unlawful
 7           gambling' means to place, receive, or otherwise
 8           knowingly transmit a bet or wager by any
 9           means which involves the use of a communica-
10           tion facility where such bet or wager is unlawful
11           under any applicable Federal or State law in
12           the State or tribal lands in which the bet or
13           wager is initiated, received, or otherwise made.
14                  ``(B) EXCLUSION     OF CERTAIN AUTHOR-
15           IZED     TRANSACTIONS.--The       term    `unlawful
16           gambling' does not include any intrastate or
17           intratribal transactions authorized under sec-
18           tion 1084(c) of title 18, United States Code.
19                  ``(C) INTERMEDIATE     ROUTING.--With    re-
20           spect to section 5362, the intermediate routing
21           of electronic data shall not determine the loca-
22           tion or locations in which a bet or wager is ini-
23           tiated, received, or otherwise made.
24           ``(11) OTHER       TERMS.--The       terms `bet or
25      wager', `communication facility', `gambling business',


     HR 4411 EH               27
1       `own and control', `person', `State', and `tribal' have
2       the same meanings as in section 1081 of title 18.
 3 `` 5362. Prohibition on acceptance of any financial
 4                 instrument for unlawful gambling

 5      ``No person engaged in a gambling business may
 6 knowingly accept, in connection with the participation of
 7 another person in unlawful gambling--
 8           ``(1) credit, or the proceeds of credit, extended
 9      to or on behalf of such other person (including credit
10      extended through the use of a credit card);
11           ``(2) an electronic fund transfer, or funds trans-
12      mitted by or through a money transmitting business,
13      or the proceeds of an electronic fund transfer or
14      money transmitting service, from or on behalf of
15      such other person;
16           ``(3) any check, draft, or similar instrument
17      which is drawn by or on behalf of such other person
18      and is drawn on or payable at or through any finan-
19      cial institution; or
20           ``(4) the proceeds of any other form of financial
21      transaction, as the Secretary and the Board of Gov-
22      ernors of the Federal Reserve System may jointly
23      prescribe by regulation, which involves a financial in-
24      stitution as a payor or financial intermediary on be-
25      half of or for the benefit of such other person.


     HR 4411 EH                28
 1 `` 5363. Policies and procedures to identify and pre-
 2                  vent restricted transactions

 3       ``(a) REGULATIONS.--Before the end of the 270-day
 4 period beginning on the date of the enactment of this sub-
 5 chapter, the Secretary and the Board of Governors of the
 6 Federal Reserve System, in consultation with the Attorney
 7 General, shall prescribe regulations (which the Secretary
 8 and the Board jointly determine to be appropriate) requir-
 9 ing each designated payment system, and all participants
10 therein, to identify and block or otherwise prevent or pro-
11 hibit restricted transactions through the establishment of
12 policies and procedures reasonably designed to identify
13 and block or otherwise prevent or prohibit the acceptance
14 of restricted transactions in any of the following ways:
15            ``(1) The establishment of policies and proce-
16       dures that--
17                   ``(A) allow the payment system and any
18            person involved in the payment system to iden-
19            tify restricted transactions by means of codes in
20            authorization messages or by other means; and
21                   ``(B) block restricted transactions identi-
22            fied as a result of the policies and procedures
23            developed pursuant to subparagraph (A).
24            ``(2) The establishment of policies and proce-
25       dures that prevent or prohibit the acceptance of the


      HR 4411 EH               29
1        products or services of the payment system in con-
2        nection with a restricted transaction.
 3       ``(b) REQUIREMENTS        FOR   POLICIES   AND   PROCE-
4                   prescribing regulations under subsection (a),
     DURES.--In
5 the Secretary and the Board of Governors of the Federal
6 Reserve System shall--
7              ``(1) identify types of policies and procedures,
8        including nonexclusive examples, which would be
9        deemed, as applicable, to be reasonably designed to
10       identify and block or otherwise prevent or prohibit
11       the acceptance of the products or services with re-
12       spect to each type of restricted transaction;
13             ``(2) to the extent practical, permit any partici-
14       pant in a payment system to choose among alter-
15       native means of identifying and blocking, or other-
16       wise preventing or prohibiting the acceptance of the
17       products or services of the payment system or par-
18       ticipant in connection with, restricted transactions;
19       and
20             ``(3) consider exempting certain restricted
21       transactions or designated payment systems from
22       any requirement imposed under such regulations, if
23       the Secretary and the Board jointly find that it is
24       not reasonably practical to identify and block, or




      HR 4411 EH               30
 1       otherwise prevent or prohibit the acceptance of, such
 2       transactions.
 3       ``(c) COMPLIANCE WITH PAYMENT SYSTEM POLI-
 4              PROCEDURES.--A financial transaction provider
     CIES AND
 5 shall be considered to be in compliance with the regula-
 6 tions prescribed under subsection (a), if--
 7              ``(1) such person relies on and complies with
 8       the policies and procedures of a designated payment
 9       system of which it is a member or participant to--
10                   ``(A) identify and block restricted trans-
11              actions; or
12                   ``(B) otherwise prevent or prohibit the ac-
13              ceptance of the products or services of the pay-
14              ment system, member, or participant in connec-
15              tion with restricted transactions; and
16              ``(2) such policies and procedures of the des-
17       ignated payment system comply with the require-
18       ments of regulations prescribed under subsection
19       (a).
20       ``(d) NO LIABILITY    FOR   BLOCKING   OR   REFUSING   TO
21 HONOR RESTRICTED TRANSACTIONS.--A person that
22 identifies and blocks a transaction, prevents or prohibits
23 the acceptance of its products or services in connection
24 with a transaction, or otherwise refuses to honor a trans-
25 action--


      HR 4411 EH               31
 1             ``(1) that is a restricted transaction;
 2             ``(2) that such person reasonably believes to be
 3       a restricted transaction; or
 4             ``(3) as a designated payment system or a mem-
 5       ber of a designated payment system in reliance on
 6       the policies and procedures of the payment system,
 7       in an effort to comply with regulations prescribed
 8       under subsection (a),
 9 shall not be liable to any party for such action.
10       ``(e) REGULATORY ENFORCEMENT.--The require-
11 ments of this subchapter shall be enforced exclusively by--
12             ``(1) the Federal functional regulators, with re-
13       spect to the designated payment systems and finan-
14       cial transaction providers subject to the respective
15       jurisdiction of such regulators under section 505(a)
16       of the Gramm-Leach-Bliley Act and section 5g of
17       the Commodities Exchange Act; and
18             ``(2) the Federal Trade Commission, with re-
19       spect to designated payment systems and financial
20       transaction providers not otherwise subject to the ju-
21       risdiction of any Federal functional regulators (in-
22       cluding the Commission) as described in paragraph
23       (1).''.




      HR 4411 EH                        32
 1   SEC. 202. TECHNICAL AND CONFORMING AMENDMENT.
 2         The table of sections for chapter 53 of title 31,
 3 United States Code, is amended by adding at the end the
 4 following:
        ``SUBCHAPTER    IV--POLICIES AND PROCEDURES REQUIRED TO PREVENT
                          PAYMENTS FOR UNLAWFUL GAMBLING

     ``5361. Definitions.
     ``5362. Prohibition on acceptance of any financial instrument for unlawful gam-
                       bling.
     ``5363. Policies and procedures to identify and prevent restricted transactions.''.

 5   TITLE III--INTERNET GAMBLING
 6      IN OR THROUGH FOREIGN JU-
 7      RISDICTIONS
 8   SEC. 301. INTERNET GAMBLING IN OR THROUGH FOREIGN
 9                     JURISDICTIONS.
10         (a) IN GENERAL.--In deliberations between the
11 United States Government and any other country on
12 money laundering, corruption, and crime issues, the
13 United States Government should--
14                (1) encourage cooperation by foreign govern-
15         ments and relevant international fora in identifying
16         whether Internet gambling operations are being used
17         for money laundering, corruption, or other crimes;
18                (2) advance policies that promote the coopera-
19         tion of foreign governments, through information
20         sharing or other measures, in the enforcement of
21         this Act; and



       HR 4411 EH          33
1            (3) encourage the Financial Action Task Force
2       on Money Laundering, in its annual report on
3       money laundering typologies, to study the extent to
4       which Internet gambling operations are being used
5       for money laundering purposes.
6       (b) REPORT REQUIRED.--The Secretary of the
7 Treasury shall submit an annual report to the Congress
8 on any deliberations between the United States and other
9 countries on issues relating to Internet gambling.
        Passed the House of Representatives July 11, 2006.
        Attest:




                                                       Clerk.




     HR 4411 EH
     

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