Gambling ban to affect banks?

The Unlawful Internet Gambling Enforcement Act was passed in 2006, but it was never really implemented. It was a hot-and-heavy political issue, but one that the banking industry was forced to pay attention to. The legislation prohibited financial institutions from accepting payments for online betting. But the industry made its clear that the requirement from the bank perspective would be all but impossible to live up to.

The issue has cropped up again because Rep. Barney Frank held hearings that explored the idea of legalizing Internet gambling in some form. The bank industry has changed it's position little. Samuel Vallandingham of the Independent Community Bankers of America testified, "The added burden of monitoring all payment transactions for the taint of unlawful Internet gambling would drain finite resources currently engaged in complying with anti-terrorism, anti-money laundering regulations, the plethora of new regulations emerging from the financial crisis and the daily operation of community banks."

The lobbying group came out in support of efforts to legalize and regulate the industry. Developing technology to regulate this sort of online activity will be a key issue. Clearly, banks would rather stay out of the de facto enforcement business. 

For more:
- here's a look at Vallandingham's testimony
- here's an overview from Information Week
- Better to legalize? article

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