LAW: Idea futures and H. R. 556: "To prevent the use of certain bank instruments..."

From: Chris Rasch (crasch@openknowledge.org)
Date: Mon Feb 26 2001 - 12:20:47 MST


Hi,

  Bad news for those interested in idea futures markets...

-------- Original Message --------
Subject: H. R. 556: "To prevent the use of certain bank instruments..."
Date: Mon, 26 Feb 2001 11:53:24 -0500
From: "R. A. Hettinga" <rah@shipwright.com>
To: Digital Bearer Settlement List <dbs@philodox.com>, dcsb@ai.mit.edu

<Pardon the .pdf/congressese. --RAH>

107TH CONGRESS
1ST SESSION
H. R. 556
To prevent the use of certain bank instruments for unlawful Internet
gambling,and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 12,2001
Mr.LEACH introduced the following bill;which was referred to the
Committee
on Financial Services,and in addition to the Committee on the Judiciary,
for a period to be subsequently determined by the Speaker,in each case
for consideration of such provisions as fall within the jurisdiction of
the
committee concerned
A BILL
To prevent the use of certain bank instruments for unlawful
Internet gambling,and for other purposes.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled,2
SECTION 1. SHORT TITLE. 3
This Act may be cited as the ''Unlawful Internet 4
Gambling Funding Prohibition Act ''.5
SEC. 2. FINDINGS. 6
The Congress finds as follows:7*2
*HR 556 IH
(1)Internet gambling is primarily funded 1
through personal use of bank instruments,including 2
credit cards and wire transfers.3
(2)The National Gambling Impact Study Com-4
mission in 1999 recommended the passage of legisla-5
tion to prohibit wire transfers to Internet gambling 6
sites or the banks which represent them.7
(3)Internet gambling is a major cause of debt 8
collection problems for insured depository institu-9
tions and the consumer credit industry.10
(4)Internet gambling conducted through off-11
shore jurisdictions has been identified by United 12
States law enforcement officials as a significant 13
money laundering vulnerability.14
SEC. 3. PROHIBITION ON ACCEPTANCE OF ANY BANK IN- 15
STRUMENT FOR UNLAWFUL INTERNET GAM- 16
BLING. 17
(a)IN GENERAL.-No person engaged in a gambling 18
business may knowingly accept,in connection with the 19
participation of another person in unlawful Internet 20
gambling -21
(1)credit,or the proceeds of credit,extended to 22
or on behalf of such other person (including credit 23
extended through the use of a credit card);24*3
*HR 556 IH
(2)an electronic fund transfer or funds trans-1
mitted by or through a money transmitting business,2
or the proceeds of an electronic fund transfer or 3
money transmitting service,from or on behalf of the 4
other person;5
(3)any check,draft,or similar instrument 6
which is drawn by or on behalf of the other person 7
and is drawn on or payable at or through any finan-8
cial institution;or 9
(4)the proceeds of any other form of financial 10
transaction as the Secretary may prescribe by regu-11
lation which involves a financial institution as a 12
payor or financial intermediary on behalf of or for 13
the benefit of the other person.14
(b)DEFINITIONS.-For purposes of this Act,the fol-15
lowing definitions shall apply:16
(1)BETS OR WAGERS.-The term ''bets or 17
wagers ''-18
(A)means the staking or risking by any 19
person of something of value upon the outcome 20
of a contest of others,a sporting event,or a 21
game predominantly subject to chance,upon an 22
agreement or understanding that the person or 23
another person will receive something of greater 24*4
*HR 556 IH
value than the amount staked or risked in the 1
event of a certain outcome;2
(B)includes the purchase of a chance or 3
opportunity to win a lottery or other prize 4
(which opportunity to win is predominantly sub-5
ject to chance);6
(C)includes any scheme of a type de-7
scribed in section 3702 of title 28;and 8
(D)does not include -9
(i)any bona fide business transaction 10
governed by the securities laws (as that 11
term is defined in section 3(a)(47)of the 12
Securities Exchange Act of 1934)for the 13
purchase or sale at a future date of securi-14
ties (as that term is defined in section 15
3(a)(10)of such Act);16
(ii)any transaction on or subject to 17
the rules of a contract market designated 18
pursuant to section 5 of the Commodity 19
Exchange Act;20
(iii)any over-the-counter derivative 21
instrument;22
(iv)any contract of indemnity or 23
guarantee;24*5
*HR 556 IH
(v)any contract for life,health,or ac-1
cident insurance;or 2
(vi)any participation in a simulation 3
sports game or an educational game or 4
contest that -5
(I)is not dependent solely on the 6
outcome of any single sporting event 7
or nonparticipant 's singular individual 8
performance in any single sporting 9
event;10
(II)has an outcome that reflects 11
the relative knowledge and skill of the 12
participants with such outcome deter-13
mined predominantly by accumulated 14
statistical results of sporting events;15
and 16
(III)offers a prize or award to a 17
participant that is established in ad-18
vance of the game or contest and is 19
not determined by the number of par-20
ticipants or the amount of any fees 21
paid by those participants.22
(2)GAMBLING BUSINESS.-The term ''gam-23
bling business ''means -24*6
*HR 556 IH
(A)a business that is conducted at a gam-1
bling establishment;2
(B)a business that -3
(i)involves -4
(I)the placing,receiving,or oth-5
erwise making of bets or wagers;or 6
(II)the offering to engage in the 7
placing,receiving,or otherwise mak-8
ing of bets or wagers;9
(ii)involves 1 or more persons who 10
conduct,finance,manage,supervise,direct,11
or own all or part of such business;and 12
(iii)has been or remains in substan-13
tially continuous operation for a period in 14
excess of 10 days or has a gross revenue 15
of $2,000 or more from such business dur-16
ing any 24-hour period;and 17
(C)any agent who knowingly solicits for a 18
business described in subparagraph (A)or (B).19
(3)INTERNET.-The term ''Internet ''means 20
the international computer network of interoperable 21
packet switched data networks.22
(4)UNLAWFUL INTERNET GAMBLING.-The 23
term ''unlawful Internet gambling ''means to place,24
receive,or otherwise make a bet or wager by any 25*7
*HR 556 IH
means which involves the use,at least in part,of the 1
Internet where such bet or wager is unlawful under 2
any applicable Federal or State law in the State in 3
which the bet or wager is initiated,received,or oth-4
erwise made.5
(5)OTHER TERMS.-6
(A)CREDIT;CREDITOR;AND CREDIT 7
CARD.-The terms ''credit '',''creditor '',and 8
''credit card ''have the meanings given such 9
terms in section 103 of the Truth in Lending 10
Act.11
(B)ELECTRONIC FUND TRANSFER.-The 12
term ''electronic fund transfer ''-13
(i)has the meaning given such term 14
in section 903 of the Electronic Fund 15
Transfer Act;and 16
(ii)includes any fund transfer covered 17
by Article 4 of the Uniform Commercial 18
Code,as in effect in any State.19
(C)FINANCIAL INSTITUTION.-The term 20
''financial institution ''has the meaning given 21
such term in section 903 of the Electronic 22
Fund Transfer Act.23
(D)MONEY TRANSMITTING BUSINESS AND 24
MONEY TRANSMITTING SERVICE.-The terms 25*8
*HR 556 IH
''money transmitting business ''and ''money 1
transmitting service ''have the meanings given 2
such terms in section 5330(d)of title 31,3
United States Code.4
(E)SECRETARY.-The term ''Secretary ''5
means the Secretary of the Treasury.6
(c)CIVIL EMEDIES.-7
(1)JURISDICTION.-The district courts of the 8
United States shall have original and exclusive juris-9
diction to prevent and restrain violations of this sec-10
tion by issuing appropriate orders in accordance 11
with this section,regardless of whether a prosecu-12
tion has been initiated under this section.13
(2)PROCEEDINGS.-14
(A)INSTITUTION BY FEDERAL GOVERN-15
MENT.-16
(i)IN GENERAL.-The United States,17
acting through the Attorney General,may 18
institute proceedings under this subsection 19
to prevent or restrain a violation of this 20
section.21
(ii)ELIEF.-Upon application of the 22
United States under this subparagraph,23
the district court may enter a preliminary 24
injunction or an injunction against any 25*9
*HR 556 IH
person to prevent or restrain a violation of 1
this section,in accordance with Rule 65 of 2
the Federal Rules of Civil Procedure.3
(B)INSTITUTION BY STATE ATTORNEY 4
GENERAL.-5
(i)IN GENERAL.-The attorney gen-6
eral of a State (or other appropriate State 7
official)in which a violation of this section 8
allegedly has occurred or will occur may in-9
stitute proceedings under this subsection to 10
prevent or restrain the violation.11
(ii)ELIEF.-Upon application of the 12
attorney general (or other appropriate 13
State official)of an affected State under 14
this subparagraph,the district court may 15
enter a preliminary injunction or an in-16
junction against any person to prevent or 17
restrain a violation of this section,in ac-18
cordance with Rule 65 of the Federal 19
Rules of Civil Procedure.20
(C)INDIAN LANDS.-Notwithstanding sub-21
paragraphs (A)and (B),for a violation that is 22
alleged to have occurred,or may occur,on In-23
dian lands (as that term is defined in section 4 24
of the Indian Gaming Regulatory Act)-25*10
*HR 556 IH
(i)the United States shall have the 1
enforcement authority provided under sub-2
paragraph (A);and 3
(ii)the enforcement authorities speci-4
fied in an applicable Tribal-State compact 5
negotiated under section 11 of the Indian 6
Gaming Regulatory Act shall be carried 7
out in accordance with that compact.8
(3)EXPEDITED PROCEEDINGS.-9
(A)IN GENERAL.-In addition to any pro-10
ceeding under paragraph (2),a district court 11
may,in exigent circumstances,enter a tem-12
porary restraining order against a person al-13
leged to be in violation of this section upon ap-14
plication of the United States under paragraph 15
(2)(A),or the attorney general (or other appro-16
priate State official)of an affected State under 17
paragraph (2)(B),in accordance with Rule 18
65(b)of the Federal Rules of Civil Procedure.19
(d)CRIMINAL PENALTY.-20
(1)IN GENERAL.-Whoever violates this section 21
shall be fined under title 18,United States Code,or 22
imprisoned for not more than 5 years,or both.23
(2)PERMANENT INJUNCTION.-Upon convic-24
tion of a person under this subsection,the court 25*11
*HR 556 IH
may enter a permanent injunction enjoining such 1
person from placing,receiving,or otherwise making 2
bets or wagers or sending,receiving,or inviting in-3
formation assisting in the placing of bets or wagers.4
(e)SAFE HARBOR FOR FINANCIAL INTER-5
MEDIARIES.-6
(1)IN GENERAL.-No creditor,credit card 7
issuer,financial institution,operator of a terminal at 8
which an electronic fund transfer may be initiated,9
money transmitting business,or national,regional,10
or local network utilized to effect a credit trans-11
action,electronic fund transfer,or money transmit-12
ting service shall be liable under this section for the 13
involvement of such person,or the use of the facili-14
ties of such person -15
(A)in any credit transaction,electronic 16
fund transfer,or money transmitting service de-17
scribed in subsection (a);or 18
(B)in drawing,paying,transferring,or 19
collecting any check,draft,or other instrument 20
described in subsection (a)or in any regulation 21
prescribed under such subsection.22
(2)EXCEPTION FOR KNOWING PARTICIPATION 23
IN A GAMBLING BUSINESS.-Paragraph (1)shall not 24
apply with respect to any person referred to in such 25*12
*HR 556 IH
paragraph which is a gambling business or which 1
knowingly participates in any activity referred to in 2
subparagraph (A)or (B)of such paragraph as an 3
agent or representative of a gambling business.4
SEC. 4. INTERNET GAMBLING IN OR THROUGH FOREIGN 5
JURISDICTIONS. 6
(a)IN GENERAL.-In deliberations between the 7
United States Government and any other country on 8
money laundering,corruption,and crime issues,the 9
United States Government should -10
(1)encourage cooperation by foreign govern-11
ments and relevant international fora in identifying 12
whether Internet gambling operations are being used 13
for money laundering,corruption,or other crimes;14
(2)advance policies that promote the coopera-15
tion of foreign governments,through information 16
sharing or other measures,in the enforcement of 17
this Act;and 18
(3)encourage the Financial Action Task Force 19
on Money Laundering,in its annual report on 20
money laundering typologies,to study the extent to 21
which Internet gambling operations are being used 22
for money laundering.23
(b)EPORT EQUIRED.-The Secretary of the 24
Treasury shall submit an annual report to the Congress 25*13
*HR 556 IH
on the deliberations between the United States and other 1
countries on issues relating to Internet gambling.2
SEC. 5. ENFORCEMENT ACTIONS. 3
Section 8 of the Federal Deposit Insurance Act (12 4
U.S.C.1818)is amended by adding at the end the fol-5
lowing new subsection:6
''(x)DEPOSITORY INSTITUTION INVOLVEMENT IN 7
INTERNET GAMBLING.-Notwithstanding section 3(e)of 8
the Unlawful Internet Gambling Funding Prohibition Act,9
if any appropriate Federal banking agency determines 10
that any insured depository institution is engaged in any 11
of the following activities,the agency may issue an order 12
to such institution prohibiting such institution from con-13
tinuing to engage in any of the following activities:14
''(1)Extending credit,or facilitating an exten-15
sion of credit,electronic fund transfer,or money 16
transmitting service with the actual knowledge that 17
any person is violating section 3(a)of the Unlawful 18
Internet Gambling Funding Prohibition Act in con-19
nection with such extension of credit,electronic fund 20
transfer,or money transmitting service.21
''(2)Paying,transferring,or collecting on any 22
check,draft,or other instrument drawn on any de-23
pository institution with the actual knowledge that 24
any person is violating section 3(a)of the Unlawful 25*14
*HR 556 IH
Internet Gambling Funding Prohibition Act in con-1
nection with such check,draft,or other instru-2
ment.''.3

-- 
-----------------
R. A. Hettinga <mailto: rah@ibuc.com>
The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'



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