U.S. Banks Still Not Instructed How To Handle UIGEA
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Back in 2006, President Bush decided it was a good idea to sign into law the Unlawful Internet Gambling Enforcement Act. What was intended to ban online gambling, has turned into a complete mess for banks, much like many other of Bush’s decisions.
The UIGEA was put into place by the United States government to stop Internet gambling. So far, a year and a half later, the online gambling market is still flourishing, and banks are having a difficult time trying to figure out the law.
“We believe the UIGEA will in the end catch more banks in a compliance trap and do greater damage to the competitiveness of the American payments systems, than it will stop gambling enterprises from profiting on illegal wagering,” said ABA Senior Federal Council Nedda Freese, along with Director of the ABA Center for Regulatory Compliance, Richard R. Riese.
What the UIGEA has done is put the burden of making sure financial institutions on the banks themselves. While it may be the responsibility of the government to make sure the law is being followed, they have decided it is better to put that responsibility on the banks themselves.
In the end, what will most surely happen, is that banks will begin getting into legal trouble for not knowing how to police themselves. Many banks feel slighted by the Bill, claiming they do not have the resources to do the police work.
“In other words, in the view of the drafters of this legislation, all the sophistication of the FBI, Secret Service, and other police computerized detection systems and investigative expertise devoted to fighting terrorism and financial crime, are inadequate to the task of apprehending the unlawful gambling business or confiscating its revenue,” says the ABA.
The ABA goes even further to prove the point that banks should not be responsible for their own policing by saying, “…punting this obligation to the participants in the U.S. payment system is an unprecedented delegation of government responsibility with no prospect of practical success in exchange for all the burden it imposes.”
The vagueness of the law is the problem not only for banks, but for the government themselves. With no guidelines to follow, it will be nearly impossible to achieve the goal that the Bill was set out to achieve.
Once again, President Bush has put his signature on something that will lead to failure for Americans. More thought was needed to determine that regulation would have been the proper avenue to combat illegal online gambling activity.
Now, whoever succeeds Bush will have one more mess that will have to be cleaned up. More legislation that will have to be defined, and in the meantime, illegal gambling online will continue to grow and thrive.