1. This guide has been prepared by staff of the Board of Governors of the Federal Reserve and departmental offices of the Department of the Treasury as the Small Entity Compliance Guide pursuant to Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996, as amended (5 U.S.C. § 601 Note). The guide summarizes and explains the joint rule of the Commission and the Department of Finance, but does not replace the rule itself. Only the rule itself can provide complete and definitive information about its requirements. However, for cross-border transactions, the institution opening an Internet gambling business account will likely be located outside the U.S. and will not be subject to the Act. Therefore, no U.S. participant would be able to conduct due diligence for the foreign business customer when opening an account. The proposed rule provided examples of special procedures for participants in cheque collection and money transfer systems that received cross-border transactions from foreign counterparties, such as including as a condition in their agreement with a foreign counterparty the requirement that the foreign counterparty reasonably develop policies and procedures to ensure that the business relationship does not lead to settlement.
restricted transactions. [86] § __.5(g) U.S. offices. Some commenters asked the agencies to clarify that the scope of a final arrangement is limited to the offices of participants in certain payment systems in the United States. [63] The authorities believe that the restrictions of the law apply only to transactions that are illegal under applicable U.S. federal or state law. The definition of the “illegal Internet gambling” law makes clear that it refers to a bet or bet that is “illegal under applicable federal or state law in the state or tribal country in which the bet or bet is initiated, received, or otherwise conducted.” [64] Transactions that take place entirely outside the United States (i.e., where all parties and providers of financial transactions are located outside the United States) do not violate these laws. As noted below, while the agencies expect U.S.
participants to implement policies and procedures for specific cross-border transactions, the responsibility for implementing those policies and procedures would rest with the U.S. institution managing the cross-border transaction. To provide the clarification requested in the comments, the Final Rule includes a new § __.5(g) stating that the regulation`s requirement to establish and implement reasonably designed policies and procedures applies only in the United States. Offices of participants in certain payment systems. In response to comments on the various provisions relating to cross-border transactions, the agencies revised the provisions relating to cross-border transactions in the final regime. First, the final rule contains non-exclusive examples only with respect to cross-border debit transactions (i.e., ACH direct debits and cheque cashing), as there are no reasonably practical steps a foreign counterparty could take to prevent a U.S. institution from sending a restricted transaction to the foreign counterparty unless it completely severes the relationship. Second, the final rule provides that if a U.S. participant was sent by a U.S. government entity (e.g., its regulator or law enforcement agencies) to restricted cross-border transactions from a launch printer page 69395, the participant is expected to notify its foreign sponsor of the restricted transaction. [91] The agencies have included a model notice in the schedule to the Regulations. § __.5(e) Overblocking.
The Act requires agencies to ensure that transactions related to any activity of Start Printed Page 69391 that are excluded from the definition of “illegal Internet gambling” are not blocked or otherwise prevented or prohibited by prescribed regulations (the “blocking provision”). [57] As noted in the NPRM, this provision was implemented by the proposed Regulations by clarifying that nothing in the Regulations requires or is intended to ensure that participants block or prevent or otherwise prohibit transactions related to activities that are excluded from the definition of “illegal Internet gambling” in the Act. In the NPRM, the agencies indicated that they felt that the law did not give agencies the authority to require certain payment systems or participants in them to process gaming transactions if the system or participant chooses not to process those transactions for commercial reasons. § __.2 (o) Foreign bank branch. A new definition of the term “foreign banking entity” has been included in the Final Arrangement used in the remedies provisions of § __.6 for cross-border transactions. The definition specifies that a foreign office of a U.S. bank and a non-U.S. banking business The office of a foreign banking organization is considered a “foreign banking office” for the purposes of the final settlement.
Non-exclusive examples of reasonably designed policies and procedures include specific provisions relating to the transactions and relationships between a U.S. branch of a participant in a particular payment system and a foreign bank branch. The new term “foreign banking office” has been added to facilitate these provisions. Examples of the rule provide that the operator of a card scheme would establish and implement a system of codes, such as transaction codes and merchant/business category codes, which are necessary to accompany a transaction authorisation and to enable the card-issuing bank to identify and refuse authorisation of a transaction which may be a restricted transaction under the coding procedure (i.e. a Gambling/Business Code associated with a “Card Not Available” transaction code). The law prohibits any person engaged in betting or betting (as defined in the law) from knowingly accepting payments in connection with another person`s participation in illegal gambling on the Internet. These operations are called “restricted operations”. The law generally defines “illegal Internet gambling” as knowingly placed, receiving, or transferring a bet or bet in a manner that involves at least in part the use of the Internet if such betting or betting is illegal under applicable federal or state law in the state or tribal country in which the bet or bet is initiated. received or otherwise manufactured.
