On April 2, Harriet May, CUNA board secretary, testified before the House Financial Services Committee Subcommittee, saying that UIGEA and regulations proposed by the Department of Treasury and the Board of Governors of the Federal Reserve System would impose a set of unreasonable policing requirements that would be difficult for financial institutions to meet.
Credit unions could be swamped by the compliance burden associated with UIGEA, May said. Under the Internet gambling law, financial institutions must establish and implement policies and procedures to identify and block restricted transactions or rely on those established by the payments system (News Now April 3).
Credit unions fear that they already are burdened with heavy policing responsibilities under the Bank Secrecy Act and Office of Foreign Asset Control rules, she added.
CUNA also is concerned that the act would pose technological limitations and statutory ambiguity. "These new burdens would without question divert credit unions from their intended purpose of providing financial services to their members," wrote CUNA President/CEO Dan Mica in the letter.
CUNA does not condone illegal Internet gambling, and does not want to see it continue or grow. However, the statute and implementing proposal represent an inappropriate and overly burdensome regulatory compliance issue that concerns CUNA, Mica added.
In the April hearing, May noted that any final rule should:
- Provide a mechanism to verify when a payment transaction is intended for illegal Internet gambling;
- Define what is meant in its directive that covered entities address "due diligence";
- Clarify what the due diligence requirements are; and
- Provide financial institutions with at least 18 months to determine how to meet the new requirements.
She also said that CUNA supports the Internet Gambling Regulation and Enforcement Act, H.R. 2046, which would require Internet gaming businesses to be licensed and pay user fees to the Finance Crimes Enforcement Network.
courtesy of cuna.org