[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 627 Reported in Senate (RS)]






                                                       Calendar No. 346
108th CONGRESS
  1st Session
                                 S. 627

                          [Report No. 108-173]

 To prevent the use of certain payment instruments, credit cards, and 
 fund transfers for unlawful Internet gambling, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 13, 2003

 Mr. Kyl (for himself, Mr. Shelby, and Mrs. Feinstein) introduced the 
    following bill; which was referred to the Committee on Banking, 
                       Housing, and Urban Affairs

                            October 27, 2003

               Reported by Mr. Shelby, with an amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

_______________________________________________________________________

                                 A BILL


 
 To prevent the use of certain payment instruments, credit cards, and 
 fund transfers for unlawful Internet gambling, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

<DELETED>SECTION 1. SHORT TITLE.</DELETED>

<DELETED>    This Act may be cited as the ``Unlawful Internet Gambling 
Funding Prohibition Act''.</DELETED>

<DELETED>SEC. 2. FINDINGS.</DELETED>

<DELETED>    Congress finds that--</DELETED>
        <DELETED>    (1) Internet gambling is primarily funded through 
        personal use of payment system instruments, credit cards, and 
        wire transfers;</DELETED>
        <DELETED>    (2) the National Gambling Impact Study Commission 
        in 1999 recommended the passage of legislation to prohibit wire 
        transfers to Internet gambling sites or the banks which 
        represent them;</DELETED>
        <DELETED>    (3) Internet gambling is a growing cause of debt 
        collection problems for insured depository institutions and the 
        consumer credit industry;</DELETED>
        <DELETED>    (4) Internet gambling conducted through offshore 
        jurisdictions has been identified by United States law 
        enforcement officials as a significant money laundering 
        vulnerability;</DELETED>
        <DELETED>    (5) gambling through the Internet, which has grown 
        rapidly in the half-decade preceding the enactment of this Act, 
        opens up the possibility of immediate, individual, 24-hour 
        access in every home to the full range of wagering 
        opportunities on sporting events or casino-like contests, such 
        as roulette, slot machines, poker, or black-jack; and</DELETED>
        <DELETED>    (6) the extent to which gambling is permitted and 
        regulated in the United States has been primarily a matter for 
        determination by individual States and, if applicable, Indian 
        tribes, with Federal law serving to prevent interstate or other 
        attempts to evade or avoid such determinations.</DELETED>

<DELETED>SEC. 3. PROHIBITION ON ACCEPTANCE OF ANY PAYMENT SYSTEM 
              INSTRUMENT, CREDIT CARD, OR FUND TRANSFER FOR UNLAWFUL 
              INTERNET GAMBLING.</DELETED>

<DELETED>    Chapter 53 of title 31, United States Code, is amended by 
adding at the end the following:</DELETED>

         <DELETED>``SUBCHAPTER IV--FUNDING OF ILLEGAL INTERNET 
                           GAMBLING</DELETED>

<DELETED>``Sec. 5361. Definitions</DELETED>
<DELETED>    ``For purposes of this subchapter, the following 
definitions shall apply:</DELETED>
        <DELETED>    ``(1) Bet or wager.--The term `bet or wager'--
        </DELETED>
                <DELETED>    ``(A) means the staking or risking by any 
                person of something of value upon the outcome of a 
                contest of others, a sporting event, or a game subject 
                to chance, upon an agreement or understanding that the 
                person or another person will receive something of 
                value in the event of a certain outcome;</DELETED>
                <DELETED>    ``(B) includes the purchase of a chance or 
                opportunity to win a lottery or other prize (which 
                opportunity to win is predominantly subject to 
                chance);</DELETED>
                <DELETED>    ``(C) includes any scheme of a type 
                described in section 3702 of title 28, United States 
                Code;</DELETED>
                <DELETED>    ``(D) includes any instructions or 
                information pertaining to the establishment or movement 
                of funds in, to, or from an account by the bettor or 
                customer with regard to the business of betting or 
                wagering; and</DELETED>
                <DELETED>    ``(E) does not include--</DELETED>
                        <DELETED>    ``(i) any activity governed by the 
                        securities laws (as that term is defined in 
                        section 3(a)(47) of the Securities Exchange Act 
                        of 1934) for the purchase or sale of securities 
                        (as that term is defined in section 3(a)(10) of 
                        such Act);</DELETED>
                        <DELETED>    ``(ii) any transaction conducted 
                        on or subject to the rules of a registered 
                        entity or exempt board of trade pursuant to the 
                        Commodity Exchange Act;</DELETED>
                        <DELETED>    ``(iii) any over-the-counter 
                        derivative instrument;</DELETED>
                        <DELETED>    ``(iv) any other transaction 
                        that--</DELETED>
                                <DELETED>    ``(I) is excluded or 
                                exempt from regulation under the 
                                Commodity Exchange Act; or</DELETED>
                                <DELETED>    ``(II) is exempt from 
                                State gaming or bucket shop laws under 
                                section 12(e) of the Commodity Exchange 
                                Act or section 28(a) of the Securities 
                                Exchange Act of 1934;</DELETED>
                        <DELETED>    ``(v) any contract of indemnity or 
                        guarantee;</DELETED>
                        <DELETED>    ``(vi) any contract for 
                        insurance;</DELETED>
                        <DELETED>    ``(vii) any deposit or other 
                        transaction with an insured 
                        institution;</DELETED>
                        <DELETED>    ``(viii) any participation in a 
                        simulation sports game, or an educational game 
                        or contest, that--</DELETED>
                                <DELETED>    ``(I) is not dependent 
                                solely on the outcome of any single 
                                sporting event or nonparticipant's 
                                singular individual performance in any 
                                single sporting event;</DELETED>
                                <DELETED>    ``(II) has an outcome that 
                                reflects the relative knowledge and 
                                skill of the participants, with such 
                                outcome determined predominantly by 
                                accumulated statistical results of 
                                sporting events; and</DELETED>
                                <DELETED>    ``(III) offers a prize or 
                                award to a participant that is 
                                established in advance of the game or 
                                contest and is not determined by the 
                                number of participants or the amount of 
                                any fees paid by those participants; 
                                or</DELETED>
                        <DELETED>    ``(ix) any lawful transaction with 
                        a business licensed or authorized by a 
                        State.</DELETED>
        <DELETED>    ``(2) Business of betting or wagering.--The term 
        `business of betting or wagering' does not include, other than 
        for purposes of section 5366, any creditor, credit card issuer, 
        insured institution, or other financial institution, operator 
        of a terminal at which an electronic fund transfer may be 
        initiated, money transmitting business, or international, 
        national, regional, or local network utilized to effect a 
        credit transaction, electronic fund transfer, stored value 
        product transaction, or money transmitting service, or any 
        participant in such network, or any interactive computer 
        service or telecommunications service.</DELETED>
        <DELETED>    ``(3) Designated payment system.--The term 
        `designated payment system' means any system utilized by any 
        creditor, credit card issuer, financial institution, operator 
        of a terminal at which an electronic fund transfer may be 
        initiated, money transmitting business, or international, 
        national, regional, or local network utilized to effect a 
        credit transaction, electronic fund transfer, stored value 
        product transaction, or money transmitting service, or any 
        participant in such network, that the Secretary, in 
        consultation with the Board of Governors of the Federal Reserve 
        System and the Attorney General of the United States, 
        determines, by regulation or order, could be utilized in 
        connection with, or to facilitate, any restricted 
        transaction.</DELETED>
        <DELETED>    ``(4) Internet.--The term `Internet' means the 
        international computer network of interoperable packet switched 
        data networks.</DELETED>
        <DELETED>    ``(5) Interactive computer service.--The term 
        `interactive computer service' has the same meaning as in 
        section 230(f) of the Communications Act of 1934.</DELETED>
        <DELETED>    ``(6) Office.--The term `Office' means the Office 
        of Electronic Funding Oversight, established under section 
        5362.</DELETED>
        <DELETED>    ``(7) Restricted transaction.--The term 
        `restricted transaction' means any transaction or transmittal 
        involving any credit, funds, instrument, or proceeds described 
        in any paragraph of section 5363 which the recipient is 
        prohibited from accepting under section 5363.</DELETED>
        <DELETED>    ``(8) Secretary.--The term `Secretary' means the 
        Secretary of the Treasury.</DELETED>
        <DELETED>    ``(9) Unlawful internet gambling.--The term 
        `unlawful Internet gambling' means the placing, receipt, or 
        other transmission of a bet or wager by any means which 
        involves the use, at least in part, of the Internet, where such 
        bet or wager is unlawful under any applicable Federal or State 
        law in the State in which the bet or wager is initiated, 
        received, or otherwise made.</DELETED>
        <DELETED>    ``(10) Other terms.--</DELETED>
                <DELETED>    ``(A) Credit; creditor; credit card; and 
                card issuer.--The terms `credit', `creditor', `credit 
                card', and `card issuer' have the same meanings as in 
                section 103 of the Truth in Lending Act.</DELETED>
                <DELETED>    ``(B) Electronic fund transfer.--The term 
                `electronic fund transfer'--</DELETED>
                        <DELETED>    ``(i) has the same meaning as in 
                        section 903 of the Electronic Fund Transfer 
                        Act, except that such term includes transfers 
                        that would otherwise be excluded under section 
                        903(6)(E) of that Act; and</DELETED>
                        <DELETED>    ``(ii) includes any fund transfer 
                        covered by Article 4A of the Uniform Commercial 
                        Code, as in effect in any State.</DELETED>
                <DELETED>    ``(C) Financial institution.--The term 
                `financial institution' has the same meaning as in 
                section 903 of the Electronic Fund Transfer Act, except 
                that such term does not include a casino, sports book, 
                or other business at or through which bets or wagers 
                may be placed or received.</DELETED>
                <DELETED>    ``(D) Insured institution.--The term 
                `insured institution' means--</DELETED>
                        <DELETED>    ``(i) an insured depository 
                        institution, as defined in section 3 of the 
                        Federal Deposit Insurance Act; and</DELETED>
                        <DELETED>    ``(ii) an insured credit union, as 
                        defined in section 101 of the Federal Credit 
                        Union Act.</DELETED>
                <DELETED>    ``(E) Money transmitting business and 
                money transmitting service.--The terms `money 
                transmitting business' and `money transmitting service' 
                have the same meanings as in section 5330(d) 
                (determined without regard to any regulations issued by 
                the Secretary thereunder).</DELETED>
<DELETED>``Sec. 5362. Office of electronic funding oversight; policies 
              and procedures to identify and prevent restricted 
              transactions</DELETED>
<DELETED>    ``(a) Establishment of Treasury Office.--</DELETED>
        <DELETED>    ``(1) In general.--There is established within the 
        Department of the Treasury, the Office of Electronic Funding 
        Oversight, the purposes of which are--</DELETED>
                <DELETED>    ``(A) to coordinate Federal efforts to 
                prohibit restricted transactions; and</DELETED>
                <DELETED>    ``(B) otherwise to carry out the duties of 
                the Office, as specified in this subchapter.</DELETED>
        <DELETED>    ``(2) Director.--The Office shall be headed by a 
        Director, appointed by the Secretary. The Director of the 
        Office may serve as the designee of the Secretary, at the 
        request of the Secretary, for any purpose under this 
        subchapter.</DELETED>
<DELETED>    ``(b) Regulations.--Not later than 6 months after the date 
of enactment of this subchapter, the Office, in consultation with the 
Board of Governors of the Federal Reserve System and the Attorney 
General of the United States, shall prescribe regulations requiring any 
designated payment system, and all participants therein, to establish 
policies and procedures reasonably designed to identify and prevent 
restricted transactions through the establishment of policies and 
procedures that--</DELETED>
        <DELETED>    ``(1) allow the payment system and any person 
        involved in the payment system to identify restricted 
        transactions by means of codes in authorization messages or by 
        other means;</DELETED>
        <DELETED>    ``(2) block restricted transactions identified as 
        a result of the policies and procedures developed pursuant to 
        paragraph (1); and</DELETED>
        <DELETED>    ``(3) prevent the acceptance of the products or 
        services of the payment system in connection with a restricted 
        transaction.</DELETED>
<DELETED>    ``(c) Requirements for Policies and Procedures.--In 
prescribing regulations pursuant to subsection (b), the Office shall--
</DELETED>
        <DELETED>    ``(1) identify types of policies and procedures, 
        including nonexclusive examples, which would be deemed to be 
        `reasonably designed to identify' and `reasonably designed to 
        block' or to `prevent the acceptance of the products or 
        services' with respect to each type of transaction, such as, 
        should credit card transactions be so designated, identifying 
        transactions by a code or codes in the authorization message 
        and denying authorization of a credit card transaction in 
        response to an authorization message;</DELETED>
        <DELETED>    ``(2) to the extent practical, permit any 
        participant in a payment system to choose among alternative 
        means of identifying and blocking, or otherwise preventing the 
        acceptance of the products or services of the payment system or 
        participant in connection with, restricted transactions; 
        and</DELETED>
        <DELETED>    ``(3) consider exempting restricted transactions 
        from any requirement imposed under such regulations, if the 
        Office finds that it is not reasonably practical to identify 
        and block, or otherwise prevent, such transactions.</DELETED>
<DELETED>    ``(d) Compliance With Payment System Policies and 
Procedures.--A creditor, credit card issuer, financial institution, 
operator of a terminal at which an electronic fund transfer may be 
initiated, money transmitting business, or international, national, 
regional, or local network utilized to effect a credit transaction, 
electronic fund transfer, stored value product transaction, or money 
transmitting service, or a participant in such network, shall be 
considered to be in compliance with the regulations prescribed under 
subsection (b), if--</DELETED>
        <DELETED>    ``(1) such person relies on and complies with the 
        policies and procedures of a designated payment system of which 
        it is a member or participant--</DELETED>
                <DELETED>    ``(A) to identify and block restricted 
                transactions; or</DELETED>
                <DELETED>    ``(B) to otherwise prevent the acceptance 
                of the products or services of the payment system, 
                member, or participant in connection with restricted 
                transactions; and</DELETED>
        <DELETED>    ``(2) such policies and procedures of the 
        designated payment system comply with the requirements of 
        regulations prescribed under subsection (b).</DELETED>
<DELETED>    ``(e) No Liability for Blocking or Refusing To Honor 
Restricted Transactions.--A person that is subject to a regulation 
prescribed or order issued under this subchapter and blocks, or 
otherwise refuses to honor, a restricted transaction, or as a member of 
a designated payment system relies on the policies and procedures of 
the payment system, in an effort to comply with regulations prescribed 
under this section, shall not be liable to any party for such 
action.</DELETED>
<DELETED>    ``(f) Regulatory Enforcement.--Regulations issued by the 
Office under this subchapter shall be enforced by the Federal 
functional regulators and the Federal Trade Commission, in the manner 
provided in section 505(a) of the Gramm-Leach-Bliley Act.</DELETED>
<DELETED>``Sec. 5363. Prohibition on acceptance of any bank instrument 
              for unlawful Internet gambling</DELETED>
<DELETED>    ``No person engaged in the business of betting or wagering 
may knowingly accept, in connection with the participation of another 
person in unlawful Internet gambling--</DELETED>
        <DELETED>    ``(1) credit, or the proceeds of credit, extended 
        to or on behalf of such other person (including credit extended 
        through the use of a credit card);</DELETED>
        <DELETED>    ``(2) an electronic fund transfer or funds 
        transmitted by or through a money transmitting business, or the 
        proceeds of an electronic fund transfer or money transmitting 
        service, from or on behalf of such other person;</DELETED>
        <DELETED>    ``(3) any check, draft, or similar instrument 
        which is drawn by or on behalf of such other person and is 
        drawn on or payable at or through any financial institution; 
        or</DELETED>
        <DELETED>    ``(4) the proceeds of any other form of financial 
        transaction, as the Secretary may prescribe by regulation, 
        which involves a financial institution as a payor or financial 
        intermediary on behalf of or for the benefit of such other 
        person.</DELETED>
<DELETED>``Sec. 5364. Civil remedies</DELETED>
<DELETED>    ``(a) Jurisdiction.--The district courts of the United 
States shall have original and exclusive jurisdiction to prevent and 
restrain violations of this subchapter or the rules or regulations 
issued under this subchapter by issuing appropriate orders in 
accordance with this section, regardless of whether a prosecution has 
been initiated under this subchapter.</DELETED>
<DELETED>    ``(b) Proceedings.--</DELETED>
        <DELETED>    ``(1) Institution by federal government.--
        </DELETED>
                <DELETED>    ``(A) In general.--The United States, 
                acting through the Attorney General, or, in the case of 
                rules or regulations issued under this subchapter, 
                through an agency authorized to enforce such 
                regulations in accordance with this subchapter, may 
                institute proceedings under this section to prevent or 
                restrain a violation or a threatened violation of this 
                subchapter or such rules or regulations.</DELETED>
                <DELETED>    ``(B) Relief.--Upon application of the 
                United States under this paragraph, the district court 
                may enter a preliminary injunction or an injunction 
                against any person to prevent or restrain a violation 
                or threatened violation of this subchapter or the rules 
                or regulations issued under this subchapter, in 
                accordance with rule 65 of the Federal Rules of Civil 
                Procedure.</DELETED>
        <DELETED>    ``(2) Institution by state attorney general.--
        </DELETED>
                <DELETED>    ``(A) In general.--The attorney general of 
                a State (or other appropriate State official) in which 
                a violation of this subchapter allegedly has occurred 
                or will occur may institute proceedings under this 
                section to prevent or restrain the violation or 
                threatened violation.</DELETED>
                <DELETED>    ``(B) Relief.--Upon application of the 
                attorney general (or other appropriate State official) 
                of an affected State under this paragraph, the district 
                court may enter a preliminary injunction or an 
                injunction against any person to prevent or restrain a 
                violation or threatened violation of this subchapter, 
                in accordance with rule 65 of the Federal Rules of 
                Civil Procedure.</DELETED>
        <DELETED>    ``(3) Indian lands.--</DELETED>
                <DELETED>    ``(A) In general.--Notwithstanding 
                paragraphs (1) and (2), for a violation of this 
                subchapter or the rules or regulations issued under 
                this subchapter that is alleged to have occurred, or 
                may occur, on Indian lands (as that term is defined in 
                section 4 of the Indian Gaming Regulatory Act)--
                </DELETED>
                        <DELETED>    ``(i) the United States shall have 
                        the enforcement authority provided under 
                        paragraph (1); and</DELETED>
                        <DELETED>    ``(ii) the enforcement authorities 
                        specified in an applicable Tribal-State compact 
                        negotiated under section 11 of the Indian 
                        Gaming Regulatory Act shall be carried out in 
                        accordance with that compact.</DELETED>
                <DELETED>    ``(B) Rule of construction.--No provision 
                of this subchapter shall be construed as altering, 
                superseding, or otherwise affecting the application of 
                the Indian Gaming Regulatory Act.</DELETED>
<DELETED>    ``(c) Expedited Proceedings.--In addition to any 
proceeding under subsection (b), a district court may, in exigent 
circumstances, enter a temporary restraining order against a person 
alleged to be in violation of this subchapter or the rules or 
regulations issued under this subchapter, upon application of the 
United States under subsection (b)(1), or the attorney general (or 
other appropriate State official) of an affected State under subsection 
(b)(2), in accordance with rule 65(b) of the Federal Rules of Civil 
Procedure.</DELETED>
<DELETED>    ``(d) Limitation Relating to Interactive Computer 
Services.--</DELETED>
        <DELETED>    ``(1) In general.--Relief granted under this 
        section against an interactive computer service shall--
        </DELETED>
                <DELETED>    ``(A) be limited to the removal of, or 
                disabling of access to, an online site violating this 
                subchapter, or a hypertext link to an online site 
                violating this subchapter, that resides on a computer 
                server that such service controls or operates, except 
                that the limitation in this subparagraph shall not 
                apply if the service is subject to liability under this 
                section pursuant to section 5366;</DELETED>
                <DELETED>    ``(B) be available only after notice to 
                the interactive computer service and an opportunity for 
                the service to appear are provided;</DELETED>
                <DELETED>    ``(C) not impose any obligation on an 
                interactive computer service to monitor its service or 
                to affirmatively seek facts indicating activity 
                violating this subchapter;</DELETED>
                <DELETED>    ``(D) specify the interactive computer 
                service to which it applies; and</DELETED>
                <DELETED>    ``(E) specifically identify the location 
                of the online site or hypertext link to be removed or 
                access to which is to be disabled.</DELETED>
        <DELETED>    ``(2) Coordination with other law.--An interactive 
        computer service that does not violate this subchapter shall 
        not be liable under section 1084 of title 18, United States 
        Code, except that the limitation in this paragraph shall not 
        apply if an interactive computer service has actual knowledge 
        and control of bets and wagers and--</DELETED>
                <DELETED>    ``(A) operates, manages, supervises, or 
                directs an Internet website at which unlawful bets or 
                wagers may be placed, received, or otherwise made or at 
                which unlawful bets or wagers are offered to be placed, 
                received, or otherwise made; or</DELETED>
                <DELETED>    ``(B) owns or controls, or is owned or 
                controlled by, any person who operates, manages, 
                supervises, or directs an Internet website at which 
                unlawful bets or wagers may be placed, received, or 
                otherwise made, or at which unlawful bets or wagers are 
                offered to be placed, received, or otherwise 
                made.</DELETED>
        <DELETED>    ``(3) Rule of construction.--The provisions of 
        paragraph (2) do not affect any potential liability of an 
        interactive computer service or other person under any 
        provision of title 18, United States Code, other than as 
        specifically provided in paragraph (2).</DELETED>
<DELETED>    ``(e) Factors To Be Considered in Certain Cases.--In 
considering granting relief under this section against any payment 
system, or any participant in a payment system that is a creditor, 
credit card issuer, financial institution, operator of a terminal at 
which an electronic fund transfer may be initiated, money transmitting 
business, or international, national, regional, or local network 
utilized to effect a credit transaction, electronic fund transfer, 
stored value product transaction, or money transmitting service, or a 
participant in such network, the court shall consider--</DELETED>
        <DELETED>    ``(1) the extent to which the person extending 
        credit or transmitting funds knew or should have known that the 
        transaction was in connection with unlawful Internet 
        gambling;</DELETED>
        <DELETED>    ``(2) the history of such person in extending 
        credit or transmitting funds when such person knew or should 
        have known that the transaction is in connection with unlawful 
        Internet gambling;</DELETED>
        <DELETED>    ``(3) the extent to which such person has 
        established and is maintaining policies and procedures in 
        compliance with rules and regulations issued under this 
        subchapter;</DELETED>
        <DELETED>    ``(4) the extent to which it is feasible for any 
        specific remedy prescribed as part of such relief to be 
        implemented by such person without substantial deviation from 
        normal business practice; and</DELETED>
        <DELETED>    ``(5) the costs and burdens that the specific 
        remedy will have on such person.</DELETED>
<DELETED>    ``(f) Notice to Regulators and Financial Institutions.--
Before initiating any proceeding under subsection (b) with respect to a 
violation or potential violation of this subchapter or the rules or 
regulations issued under this subchapter by any creditor, credit card 
issuer, financial institution, operator of a terminal at which an 
electronic fund transfer may be initiated, money transmitting business, 
or international, national, regional, or local network utilized to 
effect a credit transaction, electronic fund transfer, stored value 
product transaction, or money transmitting service, or any participant 
in such network, the Attorney General of the United States, an attorney 
general of a State (or other appropriate State official), or an agency 
authorized to initiate such proceeding under this subchapter, shall--
</DELETED>
        <DELETED>    ``(1) notify such person, and the appropriate 
        regulatory agency (as determined in accordance with section 
        5362(f) for such person) of such violation or potential 
        violation and the remedy to be sought in such proceeding; 
        and</DELETED>
        <DELETED>    ``(2) allow such person 30 days to implement a 
        reasonable remedy for the violation or potential violation, 
        consistent with the factors described in subsection (e), and in 
        conjunction with such action as the appropriate regulatory 
        agency may take.</DELETED>
<DELETED>``Sec. 5365. Criminal penalties</DELETED>
<DELETED>    ``(a) In General.--Whoever violates this subchapter or the 
rules or regulations issued under this subchapter shall be fined under 
title 18, United States Code, or imprisoned for not more than 5 years, 
or both.</DELETED>
<DELETED>    ``(b) Permanent Injunction.--Upon conviction of a person 
under this section, the court may enter a permanent injunction 
enjoining such person from placing, receiving, or otherwise making bets 
or wagers or sending, receiving, or inviting information assisting in 
the placing of bets or wagers.</DELETED>
<DELETED>``Sec. 5366. Circumventions prohibited</DELETED>
<DELETED>    ``Notwithstanding section 5361(2), a creditor, credit card 
issuer, financial institution, operator of a terminal at which an 
electronic fund transfer may be initiated, money transmitting business, 
or international, national, regional, or local network utilized to 
effect a credit transaction, electronic fund transfer, stored value 
product transaction, or money transmitting service, or any participant 
in such network, or any interactive computer service or 
telecommunications service, may be liable under this subchapter if such 
creditor, issuer, institution, operator, business, network, or 
participant has actual knowledge and control of bets and wagers, and--
</DELETED>
        <DELETED>    ``(1) operates, manages, supervises, or directs an 
        Internet website at which unlawful bets or wagers may be 
        placed, received, or otherwise made, or at which unlawful bets 
        or wagers are offered to be placed, received, or otherwise 
        made; or</DELETED>
        <DELETED>    ``(2) owns or controls, or is owned or controlled 
        by, any person who operates, manages, supervises, or directs an 
        Internet website at which unlawful bets or wagers may be 
        placed, received, or otherwise made, or at which unlawful bets 
        or wagers are offered to be placed, received, or otherwise 
        made.''.</DELETED>

<DELETED>SEC. 4. INTERNET GAMBLING IN OR THROUGH FOREIGN 
              JURISDICTIONS.</DELETED>

<DELETED>    (a) In General.--In deliberations between the United 
States Government and any other country on money laundering, 
corruption, and crime issues, the United States Government should--
</DELETED>
        <DELETED>    (1) encourage cooperation by foreign governments 
        and relevant international fora in identifying whether Internet 
        gambling operations are being used for money laundering, 
        corruption, or other crimes;</DELETED>
        <DELETED>    (2) advance policies that promote the cooperation 
        of foreign governments, through information sharing or other 
        measures, in the enforcement of this Act and the amendments 
        made by this Act; and</DELETED>
        <DELETED>    (3) encourage the Financial Action Task Force on 
        Money Laundering, in its annual report on money laundering 
        typologies, to study the extent to which Internet gambling 
        operations are being used for money laundering 
        purposes.</DELETED>
<DELETED>    (b) Report Required.--The Secretary of the Treasury shall 
submit an annual report to Congress on any deliberations between the 
United States and other countries on issues relating to Internet 
gambling.</DELETED>

<DELETED>SEC. 5. AMENDMENTS TO CRIMINAL GAMBLING PROVISIONS.</DELETED>

<DELETED>    (a) Amendment to Definition.--Section 1081 of title 18, 
United States Code, is amended--</DELETED>
        <DELETED>    (1) by designating the five undesignated 
        paragraphs that begin with ``The term'' as paragraphs (1) 
        through (5), respectively; and</DELETED>
        <DELETED>    (2) in paragraph (5), as so designated--</DELETED>
                <DELETED>    (A) by striking ``wire communication'' and 
                inserting ``communication'';</DELETED>
                <DELETED>    (B) by inserting ``satellite, microwave,'' 
                after ``cable,''; and</DELETED>
                <DELETED>    (C) by inserting ``(whether fixed or 
                mobile)'' after ``connection''.</DELETED>
<DELETED>    (b) Increase in Penalty for Unlawful Wire Transfers of 
Wagering Information.--Section 1084(a) of title 18, United States Code, 
is amended by striking ``two years'' and inserting ``5 
years''.</DELETED>

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Internet Gambling Funding 
Prohibition Act''.

SEC. 2. FINDINGS.

    Congress finds that--
            (1) Internet gambling is primarily funded through personal 
        use of payment system instruments, credit cards, and wire 
        transfers;
            (2) the National Gambling Impact Study Commission in 1999 
        recommended the passage of legislation to prohibit wire 
        transfers to Internet gambling sites or the banks which 
        represent them;
            (3) Internet gambling is a growing cause of debt collection 
        problems for insured depository institutions and the consumer 
        credit industry;
            (4) Internet gambling conducted through offshore 
        jurisdictions has been identified by United States law 
        enforcement officials as a significant money laundering 
        vulnerability; and
            (5) gambling through the Internet, which has grown rapidly 
        in the half-decade preceding the enactment of this Act, opens 
        up the possibility of immediate, individual, 24-hour access in 
        every home to the full range of wagering opportunities on 
        sporting events or casino-like contests, such as roulette, slot 
        machines, poker, or blackjack.

SEC. 3. PROHIBITION ON ACCEPTANCE OF ANY PAYMENT SYSTEM INSTRUMENT, 
              CREDIT CARD, OR FUND TRANSFER FOR INTERNET GAMBLING.

    (a) In General.--Chapter 53 of title 31, United States Code, is 
amended by adding at the end the following:

      ``SUBCHAPTER IV--PROHIBITION ON FUNDING OF INTERNET GAMBLING

``Sec. 5361. Definitions
    ``For purposes of this subchapter, the following definitions shall 
apply:
            ``(1) Bet or wager.--The term `bet or wager'--
                    ``(A) means the staking or risking by any person of 
                something of value upon the outcome of a contest of 
                others, a sporting event, or a game subject to chance, 
                upon an agreement or understanding that the person or 
                another person will receive something of value in the 
                event of a certain outcome;
                    ``(B) includes the purchase of a chance or 
                opportunity to win a lottery or other prize (which 
                opportunity to win is predominantly subject to chance);
                    ``(C) includes any scheme of a type described in 
                section 3702 of title 28, United States Code;
                    ``(D) includes any instructions or information 
                pertaining to the establishment or movement of funds 
                in, to, or from an account by the bettor or customer 
                with regard to the business of betting or wagering; and
                    ``(E) does not include--
                            ``(i) any activity governed by the 
                        securities laws (as that term is defined in 
                        section 3(a)(47) of the Securities Exchange Act 
                        of 1934) for the purchase or sale of securities 
                        (as that term is defined in section 3(a)(10) of 
                        that Act);
                            ``(ii) any transaction conducted on or 
                        subject to the rules of a registered entity or 
                        exempt board of trade pursuant to the Commodity 
                        Exchange Act;
                            ``(iii) any over-the-counter derivative 
                        instrument;
                            ``(iv) any other transaction that--
                                    ``(I) is excluded or exempt from 
                                regulation under the Commodity Exchange 
                                Act; or
                                    ``(II) is exempt from State gaming 
                                or bucket shop laws under section 12(e) 
                                of the Commodity Exchange Act or 
                                section 28(a) of the Securities 
                                Exchange Act of 1934;
                            ``(v) any contract of indemnity or 
                        guarantee;
                            ``(vi) any contract for insurance;
                            ``(vii) any deposit or other transaction 
                        with an insured institution; or
                            ``(viii) any participation in a simulation 
                        sports game, an educational game, or a contest, 
                        that--
                                    ``(I) is not dependent solely on 
                                the outcome of any single sporting 
                                event or nonparticipant's singular 
                                individual performance in any single 
                                sporting event;
                                    ``(II) has an outcome that reflects 
                                the relative knowledge of the 
                                participants, or their skill at 
                                physical reaction or physical 
                                manipulation (but not chance), and, in 
                                the case of a simulation sports game, 
                                has an outcome that is determined 
                                predominantly by accumulated 
                                statistical results of sporting events; 
                                and
                                    ``(III) offers a prize or award to 
                                a participant that is established in 
                                advance of the game or contest and is 
                                not determined by the number of 
                                participants or the amount of any fees 
                                paid by those participants.
            ``(2) Business of betting or wagering.--The term `business 
        of betting or wagering' does not include any creditor, credit 
        card issuer, insured institution, or other financial 
        institution, operator of a terminal at which an electronic fund 
        transfer may be initiated, money transmitting business, or 
        international, national, regional, or local network utilized to 
        effect a credit transaction, electronic fund transfer, 
stored value product transaction, or money transmitting service, or any 
participant in such network, or any interactive computer service or 
telecommunications service.
            ``(3) Closed-loop subscriber-based service.--The term 
        `closed-loop subscriber-based service' means any information 
        service or system that uses--
                    ``(A) a device or combination of devices--
                            ``(i) expressly authorized and operated in 
                        accordance with the laws of a State, 
                        exclusively for placing, receiving, or 
                        otherwise making a bet or wager described in 
                        subsection (b)(1) or (c)(1) of section 5363; 
                        and
                            ``(ii) by which a person located within any 
                        State must subscribe and be registered with the 
                        provider of the wagering service by name, 
                        address, and appropriate billing information to 
                        be authorized to place, receive, or otherwise 
                        make a bet or wager, and must be physically 
                        located within that State in order to be 
                        authorized to do so;
                    ``(B) an effective customer verification and age 
                verification system, expressly authorized and operated 
                in accordance with the laws of the State in which it is 
                located, and a system reasonably designed to verify the 
                location at which a bet or wager is made, to ensure 
                that all applicable Federal and State legal and 
                regulatory requirements for lawful gambling are met; 
                and
                    ``(C) appropriate data security standards to 
                prevent unauthorized access by any person who has not 
                subscribed or who is a minor.
            ``(4) Designated payment system.--The term `designated 
        payment system' means any system utilized by any creditor, 
        credit card issuer, financial institution, operator of a 
        terminal at which an electronic fund transfer may be initiated, 
        money transmitting business, or international, national, 
        regional, or local network utilized to effect a credit 
        transaction, electronic fund transfer, stored value product 
        transaction, or money transmitting service, or any participant 
        in such network, that the Secretary, in consultation with the 
        Board of Governors of the Federal Reserve System and the 
        Attorney General of the United States, determines, by 
        regulation or order, could be utilized in connection with, or 
        to facilitate, any restricted transaction.
            ``(5) Internet.--The term `Internet' means the 
        international computer network of interoperable packet switched 
        data networks.
            ``(6) Interactive computer service.--The term `interactive 
        computer service' has the same meaning as in section 230(f) of 
        the Communications Act of 1934.
            ``(7) Internet gambling.--The term `Internet gambling' 
        means the placing, receipt, or other transmission of a bet or 
        wager by any means which involves the use, at least in part, of 
        the Internet.
            ``(8) Office.--The term `Office' means the Office of 
        Electronic Funding Oversight, established under section 5362.
            ``(9) Private network.--The term `private network' means a 
        communications channel or channels, including voice or computer 
        data transmission facilities, that uses either--
                    ``(A) private dedicated lines; or
                    ``(B) the public communications infrastructure, if 
                the infrastructure is secured by means of the 
                appropriate private communications technology to 
                prevent unauthorized access.
            ``(10) Restricted transaction.--The term `restricted 
        transaction' means any transaction or transmittal involving any 
        credit, funds, instrument, or proceeds described in any 
        paragraph of section 5363(a) which the recipient is prohibited 
        from accepting under section 5363.
            ``(11) Secretary.--The term `Secretary' means the Secretary 
        of the Treasury.
            ``(12) Other terms.--
                    ``(A) Credit; creditor; credit card; and card 
                issuer.--The terms `credit', `creditor', `credit card', 
                and `card issuer' have the same meanings as in section 
                103 of the Truth in Lending Act.
                    ``(B) Electronic fund transfer.--The term 
                `electronic fund transfer'--
                            ``(i) has the same meaning as in section 
                        903 of the Electronic Fund Transfer Act, except 
                        that such term includes transfers that would 
                        otherwise be excluded under section 903(6)(E) 
                        of that Act; and
                            ``(ii) includes any fund transfer covered 
                        by Article 4A of the Uniform Commercial Code, 
                        as in effect in any State.
                    ``(C) Financial institution.--The term `financial 
                institution' has the same meaning as in section 903 of 
                the Electronic Fund Transfer Act, except that such term 
                does not include a casino, sports book, or other 
                business at or through which bets or wagers may be 
                placed or received.
                    ``(D) Insured institution.--The term `insured 
                institution' means--
                            ``(i) an insured depository institution, as 
                        defined in section 3 of the Federal Deposit 
                        Insurance Act; and
                            ``(ii) an insured credit union, as defined 
                        in section 101 of the Federal Credit Union Act.
                    ``(E) Money transmitting business and money 
                transmitting service.--The terms `money transmitting 
                business' and `money transmitting service' have the 
                same meanings as in section 5330(d) (determined without 
                regard to any regulations issued by the Secretary 
                thereunder).
``Sec. 5362. Office of electronic funding oversight; policies and 
              procedures to identify and prevent restricted 
              transactions
    ``(a) Establishment of Treasury Office.--
            ``(1) In general.--There is established within the 
        Department of the Treasury, the Office of Electronic Funding 
        Oversight, the purposes of which are--
                    ``(A) to coordinate Federal efforts to prohibit 
                restricted transactions; and
                    ``(B) otherwise to carry out the duties specified 
                in this subchapter.
            ``(2) Director.--The Office shall be headed by a Director, 
        appointed by the Secretary. The Director of the Office may 
        serve as the designee of the Secretary, at the request of the 
        Secretary, for any purpose under this subchapter.
    ``(b) Regulations.--Not later than 270 days after the date of 
enactment of this subchapter, the Secretary, in consultation with the 
Board of Governors of the Federal Reserve System and the Attorney 
General of the United States, shall prescribe regulations requiring 
each designated payment system, and all participants therein, to 
identify and prevent restricted transactions through the establishment 
of policies and procedures reasonably designed to--
            ``(1) allow the payment system and any person involved in 
        the payment system to identify restricted transactions by means 
        of codes in authorization messages or by other means;
            ``(2) block restricted transactions identified as a result 
        of the policies and procedures developed pursuant to paragraph 
        (1); and
            ``(3) prevent the acceptance of the products or services of 
        the payment system in connection with a restricted transaction.
    ``(c) Requirements for Policies and Procedures.--In prescribing 
regulations pursuant to subsection (b), the Secretary shall--
            ``(1) identify types of policies and procedures, including 
        nonexclusive examples, which would be deemed, as applicable, to 
        be `reasonably designed to identify' and `reasonably designed 
        to block', or `reasonably designed to prevent the acceptance of 
        the products or services' with respect to each type of 
        restricted transaction;
            ``(2) to the extent practical, permit any participant in a 
        payment system to choose among alternative means of identifying 
        and blocking, or otherwise preventing the acceptance of the 
        products or services of the payment system or participant in 
        connection with, restricted transactions; and
            ``(3) consider exempting restricted transactions from any 
        requirement imposed under such regulations, if the Secretary 
        finds that it is not reasonably practical to identify and 
        block, or otherwise prevent, such transactions.
    ``(d) Compliance With Payment System Policies and Procedures.--A 
creditor, credit card issuer, financial institution, operator of a 
terminal at which an electronic fund transfer may be initiated, money 
transmitting business, or international, national, regional, or local 
network utilized to effect a credit transaction, electronic fund 
transfer, stored value product transaction, or money transmitting 
service, or a participant in such network, shall be considered to be in 
compliance with the regulations prescribed under subsection (b), if--
            ``(1) such person relies on and complies with the policies 
        and procedures of a designated payment system of which it is a 
        member or participant--
                    ``(A) to identify and block restricted 
                transactions; and
                    ``(B) to otherwise prevent the acceptance of the 
                products or services of the payment system, member, or 
                participant in connection with restricted transactions; 
                and
            ``(2) such policies and procedures of the designated 
        payment system comply with the requirements of regulations 
        prescribed under subsection (b).
    ``(e) No Liability for Blocking or Refusing To Honor Restricted 
Transactions.--A person that is subject to a regulation prescribed or 
order issued under this subchapter and blocks, or otherwise refuses to 
honor, a restricted transaction (or a transaction that such person 
reasonably believes to be a restricted transaction), or as a member of 
a designated payment system relies on the policies and procedures of 
the payment system, in an effort to comply with regulations prescribed 
under subsection (b), shall not be liable to any party for such action.
    ``(f) Regulatory Enforcement.--Regulations issued by the Secretary 
under this subchapter shall be enforced by the Federal functional 
regulators and the Federal Trade Commission, in the manner provided in 
section 505(a) of the Gramm-Leach-Bliley Act.
``Sec. 5363. Prohibition on acceptance of any bank instrument for 
              Internet gambling
    ``(a) Prohibition.--No person engaged in the business of betting or 
wagering may knowingly accept, in connection with the participation of 
another person in Internet gambling--
            ``(1) credit, or the proceeds of credit, extended to or on 
        behalf of such other person (including credit extended through 
        the use of a credit card);
            ``(2) an electronic fund transfer, or funds transmitted by 
        or through a money transmitting business, or the proceeds of an 
        electronic fund transfer or money transmitting service, from or 
        on behalf of such other person;
            ``(3) any check, draft, or similar instrument which is 
        drawn by or on behalf of such other person and is drawn on or 
        payable at or through any financial institution; or
            ``(4) the proceeds of any other form of financial 
        transaction, as the Secretary may prescribe by regulation, 
        which involves a financial institution as a payor or financial 
        intermediary on behalf of or for the benefit of such other 
        person.
    ``(b) Rule of Application.--
            ``(1) Limitation.--Subject to paragraph (2), the 
        prohibition in subsection (a) does not apply to any otherwise 
        lawful bet or wager that is placed, received, or otherwise made 
        on an interstate or intrastate basis on a live horse or a live 
        dog race, or the sending, receiving, or inviting of information 
        assisting in the placing of such a bet or wager, if such bet or 
        wager, or the transmission of such information, as applicable, 
        is--
                    ``(A) expressly authorized, and licensed or 
                regulated by the State in which such bet or wager is 
                received, under applicable Federal law and the laws of 
                that State;
                    ``(B) placed on a closed-loop subscriber-based 
                service;
                    ``(C) initiated from a State in which betting or 
                wagering on that same type of live horse or live dog 
                racing is lawful and received in a State in which such 
                betting or wagering is lawful;
                    ``(D) subject to the regulatory oversight of the 
                State in which the bet or wager is received, and 
                subject to minimum control standards for the 
                accounting, regulatory inspection, and auditing by such 
                State of all such bets or wagers transmitted from 1 
                State to another; and
                    ``(E) in the case of--
                            ``(i) live horse racing, made in accordance 
                        with the Interstate Horse Racing Act of 1978 
                        (15 U.S.C. 3001 et seq.); or
                            ``(ii) live dog racing, subject to consent 
                        agreements that are comparable to those 
                        required by the Interstate Horse Racing Act of 
                        1978, approved by the appropriate State 
                        regulatory agencies, in the State receiving the 
                        signal, and in the State in which the bet or 
                        wager originates.
            ``(2) Bets or wagers made by agents or proxies.--
                    ``(A) In general.--The exception under paragraph 
                (1) does not apply in any case in which a bet or wager 
                is placed, received, or otherwise made by the use of an 
                agent or proxy using the Internet or an interactive 
                computer service.
                    ``(B) Qualification.--Nothing in this paragraph may 
                be construed to prohibit the owner operator of a 
                parimutuel wagering facility that is licensed by a 
                State from employing an agent in the operation of the 
                account wagering system owned or operated by the 
                parimutuel facility.
    ``(c) Other Rules of Application.--
            ``(1) Limitation.--Subject to paragraph (2), the 
        prohibition in subsection (a) does not apply to any otherwise 
        lawful bet or wager that is placed, received, or otherwise made 
        on any game that constitutes class II gaming or class III 
        gaming (as those terms are defined in section 4 of the Indian 
        Gaming Regulatory Act, 25 U.S.C. 2703), or the sending, 
        receiving, or inviting of information assisting in the placing 
        of any such bet or wager, as applicable, if--
                    ``(A) the game is permitted under and conducted in 
                accordance with the Indian Gaming Regulatory Act (25 
                U.S.C. 2701 et seq.);
                    ``(B) each person placing, receiving, or otherwise 
                making such bet or wager, or transmitting such 
                information, is physically located on Indian lands (as 
                that term is defined in section 4 of the Indian Gaming 
                Regulatory Act, 25 U.S.C. 2703) when such person 
                places, receives, or otherwise makes the bet or wager, 
                or transmits such information;
                    ``(C) the game is conducted on a closed-loop 
                subscriber-based system or a private network; and
                    ``(D) in the case of a game that constitutes class 
                III gaming--
                            ``(i) the game is authorized under, and is 
                        conducted in accordance with, the respective 
                        Tribal-State compacts (entered into and 
                        approved pursuant to section 11(d) of the 
                        Indian Gaming Regulatory Act, 25 U.S.C. 2710) 
                        governing gaming activity on the Indian lands, 
                        in each respective State, on which each person 
                        placing, receiving, or otherwise making such 
                        bet or wager, or transmitting such information, 
                        is physically located when such person places, 
                        receives, or otherwise makes the bet or wager, 
                        or transmits such information; and
                            ``(ii) each such Tribal-State compact 
                        expressly provides that the game may be 
                        conducted using the Internet or other 
                        interactive computer service only on a closed-
                        loop subscriber-based system or a private 
                        network.
            ``(2) Activities under existing compacts.--
                    ``(A) In general.--The requirement of paragraph 
                (1)(D)(ii) does not apply in the case of gaming 
                activity, otherwise subject to this section, that was 
                being conducted on Indian lands on July 31, 2003, using 
                the Internet or other interactive computer service, 
                with the approval of the State gaming commission or 
                like regulatory authority of the State in which such 
                Indian lands are located, but without such required 
                compact approval, until the date on which the compact 
                governing gaming activity on such Indian lands expires 
                (exclusive of any automatic or discretionary renewal or 
                extension of such compact), if such gaming activity is 
                conducted using the Internet or other interactive 
                computer service only on a closed-loop subscriber-based 
                system or a private network.
                    ``(B) Definition.--For purposes of this paragraph, 
                the phrase `conducted on Indian lands' shall refer to 
                all Indian lands on which any person placing, 
                receiving, or otherwise making a bet or wager, or 
                sending, receiving, or inviting information assisting 
                in the placing of a bet or wager, is physically located 
                when such person places, receives, or otherwise makes 
                the bet or wager, or sends, receives, or invites such 
                information.
``Sec. 5364. Civil remedies
    ``(a) Jurisdiction.--The district courts of the United States shall 
have original and exclusive jurisdiction to prevent and restrain 
violations of this subchapter or the rules or regulations issued under 
this subchapter by issuing appropriate orders in accordance with this 
section, regardless of whether a prosecution has been initiated under 
this subchapter.
    ``(b) Proceedings.--
            ``(1) Institution by federal government.--
                    ``(A) In general.--The United States, acting 
                through the Attorney General of the United States, or, 
in the case of rules or regulations issued under this subchapter, 
through an agency authorized to enforce such regulations in accordance 
with this subchapter, may institute proceedings under this section to 
prevent or restrain a violation or a threatened violation of this 
subchapter or such rules or regulations.
                    ``(B) Relief.--Upon application of the United 
                States under this paragraph, the district court may 
                enter a preliminary injunction or an injunction against 
                any person to prevent or restrain a violation or 
                threatened violation of this subchapter or the rules or 
                regulations issued under this subchapter, in accordance 
                with rule 65 of the Federal Rules of Civil Procedure.
            ``(2) Institution by state attorney general.--
                    ``(A) In general.--The attorney general (or other 
                appropriate State official) of a State in which a 
                violation of this subchapter allegedly has occurred or 
                will occur may institute proceedings under this section 
                to prevent or restrain the violation or threatened 
                violation.
                    ``(B) Relief.--Upon application of the attorney 
                general (or other appropriate State official) of an 
                affected State under this paragraph, the district court 
                may enter a preliminary injunction or an injunction 
                against any person to prevent or restrain a violation 
                or threatened violation of this subchapter, in 
                accordance with rule 65 of the Federal Rules of Civil 
                Procedure.
            ``(3) Indian lands.--Notwithstanding paragraphs (1) and 
        (2), for a violation of this subchapter or the rules or 
        regulations issued under this subchapter that is alleged to 
        have occurred, or may occur, on Indian lands (as that term is 
        defined in section 4 of the Indian Gaming Regulatory Act)--
                    ``(A) the United States shall have the enforcement 
                authority provided under paragraph (1); and
                    ``(B) the enforcement authorities specified in an 
                applicable Tribal-State compact negotiated under 
                section 11 of the Indian Gaming Regulatory Act 
                (including such authorities that may apply to 
                activities described in section 5363(c)) shall be 
                carried out in accordance with that compact.
    ``(c) Expedited Proceedings.--In addition to any proceeding under 
subsection (b), a district court may, in exigent circumstances, enter a 
temporary restraining order against a person alleged to be in violation 
of this subchapter or the rules or regulations issued under this 
subchapter, upon application of the United States under subsection 
(b)(1), or the attorney general (or other appropriate State official) 
of an affected State under subsection (b)(2), in accordance with rule 
65(b) of the Federal Rules of Civil Procedure.
    ``(d) Limitation Relating to Interactive Computer Services.--
            ``(1) In general.--Relief granted under this section 
        against an interactive computer service shall--
                    ``(A) be limited to the removal of, or disabling of 
                access to, an online site violating this subchapter, or 
                a hypertext link to an online site violating this 
                subchapter, that resides on a computer server that such 
                service controls or operates, except that the 
                limitation in this subparagraph shall not apply if the 
                service is subject to liability under this section 
                pursuant to section 5366;
                    ``(B) be available only after notice to the 
                interactive computer service and an opportunity for the 
                service to appear are provided;
                    ``(C) not impose any obligation on an interactive 
                computer service to monitor its service or to 
                affirmatively seek facts indicating activity violating 
                this subchapter;
                    ``(D) specify the interactive computer service to 
                which it applies; and
                    ``(E) specifically identify the location of the 
                online site or hypertext link to be removed or access 
                to which is to be disabled.
            ``(2) Coordination with other law.--An interactive computer 
        service that does not violate this subchapter shall not be 
        liable under section 1084 of title 18, United States Code, 
        except that the limitation in this paragraph shall not apply if 
        an interactive computer service has actual knowledge and 
        control of bets and wagers and--
                    ``(A) operates, manages, supervises, or directs an 
                Internet website at which bets or wagers may be placed, 
                received, or otherwise made or at which bets or wagers 
                are offered to be placed, received, or otherwise made; 
                or
                    ``(B) owns or controls, or is owned or controlled 
                by, any person who operates, manages, supervises, or 
                directs an Internet website at which bets or wagers may 
                be placed, received, or otherwise made, or at which 
                bets or wagers are offered to be placed, received, or 
                otherwise made.
            ``(3) Rule of construction.--The provisions of paragraph 
        (2) do not affect any potential liability of an interactive 
        computer service or other person under any provision of title 
        18, United States Code, other than as specifically provided in 
        paragraph (2).
    ``(e) Factors To Be Considered in Certain Cases.--In considering 
granting relief under this section against any payment system, or any 
participant in a payment system that is a creditor, credit card issuer, 
financial institution, operator of a terminal at which an electronic 
fund transfer may be initiated, money transmitting business, or 
international, national, regional, or local network utilized to effect 
a credit transaction, electronic fund transfer, stored value product 
transaction, or money transmitting service, or a participant in such 
network, the court shall consider--
            ``(1) the extent to which the person extending credit or 
        transmitting funds knew or should have known that the 
        transaction was in connection with Internet gambling;
            ``(2) the history of such person in extending credit or 
        transmitting funds when such person knew or should have known 
that the transaction is in connection with Internet gambling;
            ``(3) the extent to which such person has established and 
        is maintaining policies and procedures in compliance with rules 
        and regulations issued under this subchapter;
            ``(4) the extent to which it is feasible for any specific 
        remedy prescribed as part of such relief to be implemented by 
such person without substantial deviation from normal business 
practice; and
            ``(5) the costs and burdens that the specific remedy will 
        have on such person.
    ``(f) Notice to Regulators and Financial Institutions.--Before 
initiating any proceeding under subsection (b) (or under subsection 
(c), in the case of an insured institution or a broker or dealer or 
investment company registered with the Securities and Exchange 
Commission), with respect to a violation or potential violation of this 
subchapter or the rules or regulations issued under this subchapter by 
any creditor, credit card issuer, financial institution, operator of a 
terminal at which an electronic fund transfer may be initiated, money 
transmitting business, or international, national, regional, or local 
network utilized to effect a credit transaction, electronic fund 
transfer, stored value product transaction, or money transmitting 
service, or any participant in such network, the Attorney General of 
the United States, an attorney general (or other appropriate State 
official) of a State, or an agency authorized to initiate such 
proceeding under this subchapter, shall--
            ``(1) notify such person, and the appropriate regulatory 
        agency (as determined in accordance with section 5362(f) for 
        such person) of such violation or potential violation and the 
        remedy to be sought in such proceeding; and
            ``(2) allow such person not longer than 60 days to 
        implement a remedy for the violation or potential violation, 
        consistent with the factors described in subsection (e), and in 
        conjunction with such action as the appropriate regulatory 
        agency may take, if such person takes reasonable steps within 
        that 60-day period to prevent the occurrence of such violation 
        or potential violation pending implementation of such remedy.
``Sec. 5365. Criminal penalties
    ``(a) In General.--Whoever violates any provision of this 
subchapter or the rules or regulations issued under any provision of 
this subchapter shall be fined under title 18, United States Code, or 
imprisoned for not more than 5 years, or both.
    ``(b) Permanent Injunction.--Upon conviction of a person under this 
section, the court may enter a permanent injunction enjoining such 
person from placing, receiving, or otherwise making bets or wagers or 
sending, receiving, or inviting information assisting in the placing of 
bets or wagers.
``Sec. 5366. Circumventions prohibited
    ``Notwithstanding section 5361(2), a creditor, credit card issuer, 
financial institution, operator of a terminal at which an electronic 
fund transfer may be initiated, money transmitting business, or 
international, national, regional, or local network utilized to effect 
a credit transaction, electronic fund transfer, stored value product 
transaction, or money transmitting service, or any participant in such 
network, or any interactive computer service or telecommunications 
service, may be liable under this subchapter if such creditor, issuer, 
institution, operator, business, network, or participant has actual 
knowledge and control of bets and wagers, and--
            ``(1) operates, manages, supervises, or directs an Internet 
        website at which bets or wagers may be placed, received, or 
        otherwise made, or at which bets or wagers are offered to be 
        placed, received, or otherwise made; or
            ``(2) owns or controls, or is owned or controlled by, any 
        person who operates, manages, supervises, or directs an 
        Internet website at which bets or wagers may be placed, 
        received, or otherwise made, or at which bets or wagers are 
        offered to be placed, received, or otherwise made.
``Sec. 5367. Rule of construction
    ``No provision of this subchapter shall be construed as altering, 
superseding, or otherwise affecting the application of the Indian 
Gaming Regulatory Act.
``Sec. 5368. Authorization of appropriations
    ``There are authorized to be appropriated to the Secretary such 
sums as may be necessary to carry out this subchapter.''.
    (b) Clerical Amendment.--The table of sections for chapter 53 of 
title 31, United States Code, is amended by adding at the end the 
following:

``5361. Definitions.
``5362. Office of electronic funding oversight; policies and procedures 
                            to identify and prevent restricted 
                            transactions.
``5363. Prohibition on acceptance of any bank instrument for Internet 
                            gambling.
``5364. Civil remedies.
``5365. Criminal penalties.
``5366. Circumventions prohibited.
``5367. Rule of construction.
``5368. Authorization of appropriations.''.

SEC. 4. INTERNET GAMBLING IN OR THROUGH FOREIGN JURISDICTIONS.

    (a) In General.--In deliberations between the United States 
Government and any other country on money laundering, corruption, and 
crime issues, the United States Government shall--
            (1) encourage cooperation by foreign governments and 
        relevant international fora in identifying whether Internet 
        gambling operations are being used for money laundering, 
        corruption, or other crimes;
            (2) advance policies that promote the cooperation of 
        foreign governments, through information sharing or other 
        measures, in the enforcement of this Act and the amendments 
        made by this Act; and
            (3) encourage the Financial Action Task Force on Money 
        Laundering, in its annual report on money laundering 
        typologies, to study the extent to which Internet gambling 
        operations are being used for money laundering purposes.
    (b) Report Required.--The Secretary of the Treasury shall submit an 
annual report to Congress on any deliberations between the United 
States and other countries on issues relating to Internet gambling.

SEC. 5. AMENDMENTS TO CRIMINAL GAMBLING PROVISIONS.

    (a) Amendment to Definition.--Section 1081 of title 18, United 
States Code, is amended--
            (1) by designating the 5 undesignated paragraphs that begin 
        with ``The term'' as paragraphs (1) through (5), respectively; 
        and
            (2) in paragraph (5), as so designated--
                    (A) by striking ``wire communication'' and 
                inserting ``communication'';
                    (B) by inserting ``satellite, microwave,'' after 
                ``cable,''; and
                    (C) by inserting ``(whether fixed or mobile)'' 
                after ``connection''.
    (b) Application of Section 1084(a) to All Communications and 
Increase in Penalty for Transfers of Wagering Information.--Section 
1084(a) of title 18, United States Code, is amended--
            (1) by striking ``wire'' each place that term appears; and
            (2) by striking ``two years'' and inserting ``5 years''.




                                                       Calendar No. 346

108th CONGRESS

  1st Session

                                 S. 627

                          [Report No. 108-173]

_______________________________________________________________________

                                 A BILL

 To prevent the use of certain payment instruments, credit cards, and 
 fund transfers for unlawful Internet gambling, and for other purposes.

_______________________________________________________________________

                            October 27, 2003

                       Reported with an amendment