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Banks balk at plan to cut off cash from net casinos

Online GamblingOnline Gambling: Banks balk at plan to cut off cash from net casinos
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A group representing 5,000 small banks is opposing a tool lawmakers hope to use to stop online gambling, posing a challenge to what is widely seen as the government's best shot at cracking down on the activity.

The Independent Community Bankers of America, whose members range from New York's Metropolitan National Bank to Colorado's First National Bank of Las Animas, is objecting to a proposal winding its way through Congress that would require financial institutions to block payments between U.S. residents and online casinos. The group fears enforcement would be burdensome — if not impossible — given the way the transactions are processed.

At issue are the electronic transfers that many gamblers use to move money between their bank accounts and offshore casinos. Such transfers, which often go through a third-party payment company, are the lifeblood of the online gambling industry. (Another aspect of the legislation, which the banking group doesn't oppose, would formalize a ban on using credit cards to fund accounts. Many banks began voluntarily blocking such transactions five years ago, at the request of regulators.)

"It's very tempting to think the banking industry can stop this kind of stuff because people pay for it through banks, but the fact is the system just wasn't really designed to do it," says Steve Verdier, a lobbyist for the ICBA, based in Washington. The group is asking the Senate, which will return from recess next week, to revise a House of Representatives version of the bill that passed in July.

The group says that, unlike credit-card payments, the electronic transfers aren't coded to show what type of business is on the receiving end. They argue the existing system used to process such payments would require a massive — and costly — overhaul to allow banks to identify transactions with online casinos amid the flood of other electronic payments that banks handle each day. The system used by the casinos is the same one used for a multitude of transactions, including direct deposits of paychecks and automated payments to utility companies.

What's more, some gamblers use physical checks to move money into gambling accounts or receive winnings. The proposed law could require banks to block those transactions, too, though banks say they have no system in place to do so.

Lawmakers have been debating for years about how to rein in offshore Internet casinos, which generated about $12 billion in revenue last year, with about half coming from Americans, according to gambling-industry research firm Christiansen Capital Advisors. Those efforts have gained momentum in recent months. In July, federal authorities arrested the chief executive of Costa Rica-based BetOnSports Plc as he changed planes in Texas during an international flight, and charged him and 10 others involved with the company with racketeering and fraud for taking bets from Americans.

The Justice Department contends the 1961 Wire Act and other federal laws make it illegal for businesses to take bets over the Web from U.S. residents. Previous congressional efforts to pass an explicit ban of online gambling have stalled, in part, because of questions about enforcement. The new measure gained steam this year, in part, as Republicans sought to distance themselves from the scandal surrounding Jack Abramoff, the lobbyist who helped kill an Internet gambling ban in 2000.

"It's the only approach I know of that has a hope of making a significant dent in Internet gambling," Rep. Jim Leach (R., Iowa), co-sponsor of the proposed Internet Gambling Prohibition and Enforcement Act, says of the effort to block money transfers. He acknowledges that the law would require greater regulation of the banking industry, but points to a provision that directs the Federal Reserve and the Treasury to come up with an implementation plan that wouldn't be overly burdensome for banks.

Sen. Jon Kyl (R., Ariz.), who has led several failed efforts in recent years to crack down on online gambling, is expected to introduce a version of the bill in the Senate. A spokesman declined to comment on the opposition from the banking group.

The American Bankers Association, which represents the nation's biggest banks, such as Wells Fargo and Bank of America, has not voiced the same level of concern that has come from the organization representing smaller banks. But Laura Fisher, a spokeswoman for the larger Washington-based group, says any decision to require the blocking of electronic payments and checks would be onerous. "You are talking about manually checking 40 billion checks a year for the payee and making an assessment of whether it's for an Internet gambling site or restaurant," she says. The U.S. Chamber of Commerce, in a recent letter to U.S. senators, said it is concerned about deputizing banks "to enforce social policy."

"This would be a huge blow" to banks, says Ellen Zimiles, chief executive of New York-based Daylight Forensic & Advisory, which advises banks on regulatory compliance. "It would be extremely challenging, and it would take their efforts away from all the other things they're trying to do right now," such as helping authorities flag terrorist financing.

Ms. Zimiles, a former assistant U.S. attorney in New York, says it is already difficult for banks to identify electronic transfers involving people and groups that are on government lists of known terrorists and drug dealers. Besides overhauling their systems to block online gambling payments, the banks would need constantly updated lists of names of known online casino operations. "If they're not given exact names to look for, it's a needle in a haystack."

Wall Street Journal

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12 comments. Last comment 10 years ago by LOTTOMIKE.
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Litebets27's avatar - power
Maryland
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Posted: August 30, 2006, 3:20 pm - IP Logged

"This would be a hugh blow" To banks, says Ellen Zimies, chief executive of New York-based Daylight Forensic & Advisory, which advises banks on regulatory compliance. "It would be extremely challenging, and it would take their efforts away from all the other things they're trying to do right now,"such as helping authorities flag terrorist financing.

Watch out for the twist that will link anyone who does not pay taxes on an online gambling win under the label as a "terrorist". l

litebets

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Come on Jackpot!!!

    cps10's avatar - Lottery-004.jpg
    The Carolinas - Charlotte
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    Posted: August 30, 2006, 4:05 pm - IP Logged

    That wouldn't surprise me a bit...sounds like the banks are opposed to a lot of this.

    The North Carolina Education Lottery - so much a joke that here are their mascots:

    Stooges

      Litebets27's avatar - power
      Maryland
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      Posted: August 30, 2006, 4:19 pm - IP Logged

      That wouldn't surprise me a bit...sounds like the banks are opposed to a lot of this.

      Yes, but you would think, as long as their customers continue to deposit monies into their accounts in these banks, that they wouldn't care where the law-abiding citizens are getting the money from.

      Sooooo, I guess you are no longer a law-abiding citizen if you gamble online.

      litebets

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      Come on Jackpot!!!

        LOTTOMIKE's avatar - cash money.jpg
        Tennessee
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        Posted: August 30, 2006, 4:27 pm - IP Logged

        what bothers me more than anything is the government uses this terrorist stuff to scare everybody into letting them pass these laws so they can "protect" us.protect us from what? they have their own agendas and use this al-qaida crap to brainwash everyone into thinking its ok to take away a few of our rights as long as bin laden is being watched and prevented from causing destruction.am i not going to be able to enjoy my freedom anymore because of this type of thing?  sometimes going to far isn't good and thats what the government is doing.they are using this to make all kinds of new laws that strip us of some of our basic rights.

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          Coastal Georgia
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          Posted: August 30, 2006, 4:41 pm - IP Logged

          what bothers me more than anything is the government uses this terrorist stuff to scare everybody into letting them pass these laws so they can "protect" us.protect us from what? they have their own agendas and use this al-qaida crap to brainwash everyone into thinking its ok to take away a few of our rights as long as bin laden is being watched and prevented from causing destruction.am i not going to be able to enjoy my freedom anymore because of this type of thing?  sometimes going to far isn't good and thats what the government is doing.they are using this to make all kinds of new laws that strip us of some of our basic rights.

          I Agree! Well said, Mike.

          Another thing: I wish they would concentrate on stopping bad PEOPLE from getting on airplanes, and not worry about THINGS we take on there.

          DD

           

                                         

                        

           

           

            Litebets27's avatar - power
            Maryland
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            Posted: August 30, 2006, 4:47 pm - IP Logged

                I Agree! absolutely!!

            litebets

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            Come on Jackpot!!!

              Tenaj's avatar - michellea
              Charlotte NC
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              Posted: August 30, 2006, 5:56 pm - IP Logged

              I think the bottom line is in the first sentence

              A group representing 5,000 small banks is opposing a tool lawmakers hope to use to stop online gambling, posing a challenge to what is widely seen as the government's best shot at cracking down on the activity.

              and especially this sentence

              The American Bankers Association, which represents the nation's biggest banks, such as Wells Fargo and Bank of America, has not voiced the same level of concern that has come from the organization representing smaller banks.

              Goodbye small banks - Hello world bank - remember the savings and loan scandal?

              I read in the Charlotte Observer that Mexico and the US are working on making it a law that immigrant workers can not send money back to Mexico without it being deposited in a Mexician Bank

              takeemtothebank

                Todd's avatar - Cylon 2.gif
                Chief Bottle Washer
                New Jersey
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                Posted: August 30, 2006, 6:41 pm - IP Logged

                I Agree! Well said, Mike.

                Another thing: I wish they would concentrate on stopping bad PEOPLE from getting on airplanes, and not worry about THINGS we take on there.

                DD

                I agree, and in fact I blogged about this subject recently.

                 

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                  Badger's avatar - adu50016 NorthAmericanBadger.jpg
                  Wisconsin
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                  March 27, 2003
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                  Posted: August 30, 2006, 7:16 pm - IP Logged

                  what bothers me more than anything is the government uses this terrorist stuff to scare everybody into letting them pass these laws so they can "protect" us.protect us from what? they have their own agendas and use this al-qaida crap to brainwash everyone into thinking its ok to take away a few of our rights as long as bin laden is being watched and prevented from causing destruction.am i not going to be able to enjoy my freedom anymore because of this type of thing?  sometimes going to far isn't good and thats what the government is doing.they are using this to make all kinds of new laws that strip us of some of our basic rights.

                  I Agree!  I said after 911 that one of the things the Muslim extremists terrorists hate about AMerica is that we have freedoms.  They want no one to have any freedom that doesn't coincide with their beliefs. And one of the ways the terrorists will win is when they have managed to reduce our freedoms.

                  Each time our govt curtails or takes away one of our freedoms to choose, the terrorists get a win.

                  ============

                  How can you tell if a politician is lying?

                  Answer: His lips are moving.

                    LOTTOMIKE's avatar - cash money.jpg
                    Tennessee
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                    Posted: August 30, 2006, 9:08 pm - IP Logged

                    we need to quit searching grandmaw and pawpaw every time they get on a plane and quit the political correctness and start searching these arabs and muslims.it will save time,money and energy.we know who is really doing all this.this is america the greatest country in the world.US Flag

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                      Delaware
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                      Posted: August 31, 2006, 12:41 am - IP Logged

                      we need to quit searching grandmaw and pawpaw every time they get on a plane and quit the political correctness and start searching these arabs and muslims.it will save time,money and energy.we know who is really doing all this.this is america the greatest country in the world.US Flag

                      Many do not realize that they tried screening railroad passengers a few years ago. They did it in New Carrollton MD and on the Shore Line East commuter rail between New Haven and New London CT. They hailed these one month pilot programs as a success. The only thing they were successful with was ensuring that people could find a parking space in the lots, because many stopped taking the trains after this. I ride Amtrak regularly to NYC and DC. If they set up an airport-style checkpoint to get on the train, I'll start driving.

                        LOTTOMIKE's avatar - cash money.jpg
                        Tennessee
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                        Posted: September 23, 2006, 3:15 am - IP Logged

                        if senator frist has his way these banks won't have a choice.they will have to.....