Unlawful Internet Gambling Enforcement Act Examination Guidance

The FDIC has issued the following Financial Institution Letter:

The FDIC and the other federal banking, thrift and credit union regulatory agencies are issuing the attached guidance and examination procedures related to the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA).

Highlights:

• UIGEA was enacted to prohibit institutions from accepting payments from any person engaged in the business of betting or wagering with a business in unlawful Internet gambling.
• Provisions of UIGEA prohibit the acceptance of payments relating to bets or wagers involving use of the Internet if those activities are unlawful under applicable law.
• UIGEA defines a “participant” as “an operator of a designated payment system, a financial transaction provider that is a member of or, has contracted for financial transaction services with, or is otherwise participating in, a designated payment system, or a third-party processor.” The term “participant” does not include a participant’s customer unless the customer is also a financial transaction provider participating on its own behalf in the designated payment system.
• A joint rule issued by the U.S. Department of the Treasury (31CFR 132) and the Federal Reserve Board (12 CFR Part 233 – Regulation GG) states that the following five payment systems are covered by UIGEA: automated clearing house systems, card systems, check collection systems, money-transmitting businesses, and wire transfer systems.
• Financial institutions should develop and implement policies and procedures, as appropriate, to ensure that transactions of this nature are not accepted.
  Attached are an overview of UIGEA, a chart identifying the designated payment systems and requirements of participants, and examination procedures related to this rule.
• Compliance with the rule was required as of June 1, 2010.

You should read the attached Unlawful Internet Gambling Enforcement Act Overview document provided with the FDIC’s Financial Institution Letter.

The Financial Institution Letter was posted by the Federal Deposit Insurance Corporation (FDIC), which is an independent agency created by the Congress to maintain stability and public confidence in the nation’s financial system by:

• insuring deposits,
• examining and supervising financial institutions for safety and soundness and consumer protection, and
• managing receiverships.