Burden of New Rules on Banks Enough Without Internet Gaming Ban

A banking representative told Barney Frank

The House Financial Services Committee heard testimony this week about Representative Barney Frank's measure suggesting a regulatory and licensing framework for Internet gaming. While reasons to adopt Frank's bill were plenty, some of the strongest arguments came not in favor of the Frank package, but against the online gambling ban it would supersede.

Among those reasons named to abandon the UIGEA and create new Internet gambling laws is the burden suffered by financial institutions asked to police the online gaming payment processing block. A representative of the financial industry testified that, with increased regulation already looming over the everyday business of banks and credit unions, deciding which individual payments fit the rules of the ban is too much to ask.

Ed Williams, president and CEO of a Reading, Pennsylvania credit union, said the law as written creates "an inappropriate and unreasonable compliance burden which causes us great concern."

"Even if credit unions were not struggling to comply with an ever-increasing regulatory burden...which they are...it is unreasonable to assign the liability for policing Internet gambling activity to depository institutions, many of which are small, without giving them the means necessary to determine which transactions are illegal," added Williams.

Congress has just passed a bill placing new stringent requirements and regulations throughout the financial industry, in an attempt to avoid a recurrence of the economic crisis and following recession of the past two years. Banks, credit card companies, and other institutions will be faced with not only learning and complying with the intricate new regulatory system, but also deciphering which payments might possibly be on the way to one of the online gambling sites not given a free pass by the government.