[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4411 Placed on Calendar Senate (PCS)]


                                                       Calendar No. 519
109th CONGRESS
  2d Session
                                H. R. 4411


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 12, 2006

                    Received and read the first time

                             July 13, 2006

            Read the second time and placed on the calendar

_______________________________________________________________________

                                 AN ACT


 
 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,

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Internet Gambling 
Prohibition and Enforcement Act''.
    (b) Table of Contents.--The table of contents is as follows:

Sec. 1. Short title and table of contents.
             TITLE I--MODERNIZATION OF THE WIRE ACT OF 1961

Sec. 101. Definitions.
Sec. 102. Modification of existing prohibition.
Sec. 103. Authorization of civil enforcement.
Sec. 104. Authorization of appropriations.
Sec. 105. Rules of construction.
Sec. 106. Sense of Congress.
  TITLE II--POLICIES AND PROCEDURES REQUIRED TO PREVENT PAYMENTS FOR 
                           UNLAWFUL GAMBLING

Sec. 201. Policies and procedures required to prevent payments for 
                            unlawful gambling.
Sec. 202. Technical and conforming amendment.
    TITLE III--INTERNET GAMBLING IN OR THROUGH FOREIGN JURISDICTIONS

Sec. 301. Internet gambling in or through foreign jurisdictions.

             TITLE I--MODERNIZATION OF THE WIRE ACT OF 1961

SEC. 101. DEFINITIONS.

    Section 1081 of title 18, United States Code, is amended--
            (1) by designating the five undesignated paragraphs that 
        begin with ``The term'' as paragraphs (1) through (5), 
        respectively;
            (2) by amending paragraph (5), as so designated, to read as 
        follows:
            ``(5) The term `communication facility' means any and all 
        instrumentalities, personnel, and services (among other things, 
        the receipt, forwarding, or delivery of communications) used or 
        useful in the transmission of writings, signs, pictures, and 
        sounds of all kinds by aid of wire, cable, radio, or an 
        electromagnetic, photoelectronic or photooptical system, or 
        other like connection (whether fixed or mobile) between the 
        points of origin and reception of such transmission.''; and
            (3) by adding at the end the following:
            ``(6) The term `bets or wagers'--
                    ``(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 predominantly 
                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; and
                    ``(D) 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 under 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 depository institution;
                            ``(viii) participation in any game or 
                        contest in which participants do not stake or 
                        risk anything of value other than--
                                    ``(I) personal efforts of the 
                                participants in playing the game or 
                                contest or obtaining access to the 
                                Internet; or
                                    ``(II) points or credits that the 
                                sponsor of the game or contest provides 
                                to participants free of charge and that 
                                can be used or redeemed only for 
                                participation in games or contests 
                                offered by the sponsor; or
                            ``(ix) participation in any fantasy or 
                        simulation sports game or educational game or 
                        contest in which (if the game or contest 
                        involves a team or teams) no fantasy or 
                        simulation sports team is based on the current 
                        membership of an actual team that is a member 
                        of an amateur or professional sports 
                        organization (as those terms are defined in 
                        section 3701 of title 28) and that meets the 
                        following conditions:
                                    ``(I) All prizes and awards offered 
                                to winning participants are established 
                                and made known to the participants in 
                                advance of the game or contest and 
                                their value is not determined by the 
                                number of participants or the amount of 
                                any fees paid by those participants.
                                    ``(II) All winning outcomes reflect 
                                the relative knowledge and skill of the 
                                participants and are determined 
                                predominantly by accumulated 
                                statistical results of the performance 
                                of individuals (athletes in the case of 
                                sports events) in multiple real-world 
                                sporting or other events.
                                    ``(III) No winning outcome is 
                                based--
                                            ``(aa) on the score, point-
                                        spread, or any performance or 
                                        performances of any single 
                                        real-world team or any 
                                        combination of such teams; or
                                            ``(bb) solely on any single 
                                        performance of an individual 
                                        athlete in any single real-
                                        world sporting or other event.
            ``(7) The terms `credit', `creditor', `credit card', and 
        `card issuer' have the same meanings as in section 103 of the 
        Truth in Lending Act.
            ``(8) The term `electronic fund transfer'--
                    ``(A) 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
                    ``(B) includes any fund transfer covered by Article 
                4A of the Uniform Commercial Code, as in effect in any 
                State.
            ``(9) 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.
            ``(10) The term `financial transaction provider' has the 
        same meaning as in section 5361 of title 31 (as added by title 
        II of this Act).
            ``(11) The term `foreign jurisdiction' means a jurisdiction 
        of a foreign country or political subdivision thereof.
            ``(12) The term `gambling business' means a business of 
        betting or wagering.
            ``(13) The term `information assisting in the placing of 
        bets or wagers' means information knowingly transmitted by an 
        individual in a gambling business that enables or facilitates a 
        bet or wager and does not include--
                    ``(A) any posting or reporting of any educational 
                information on how to make a legal bet or wager or the 
                nature of betting or wagering, as long as such posting 
                or reporting does not solicit or provide information 
                for the purpose of facilitating or enabling the placing 
                or receipt of bets or wagers in a jurisdiction where 
                such betting is illegal; or
                    ``(B) advertising relating to betting or wagering 
                in a jurisdiction where such betting or wagering is 
                legal, as long as such advertising does not solicit or 
                provide information for the purpose of facilitating or 
                enabling the placing or receipt of bets or wagers in a 
                jurisdiction where such betting is illegal.
            ``(14) The term `insured depository institution'--
                    ``(A) has the same meaning as in section 3 of the 
                Federal Deposit Insurance Act; and
                    ``(B) includes an insured credit union (as defined 
                in section 101 of the Federal Credit Union Act).
            ``(15) The term `interactive computer service' has the same 
        meaning as in section 230(f) of the Communications Act of 1934.
            ``(16) The terms `money transmitting business' and `money 
        transmitting service' have the same meanings as in section 
        5330(d) (determined without regard to any regulations 
        prescribed by the Secretary thereunder).
            ``(17) The terms `own or control' and to be `owned or 
        controlled' include circumstances within the meaning of section 
        2(a)(2) of the Bank Holding Company Act of 1956.
            ``(18) The term `person' includes a government (including 
        any governmental entity (as defined in section 3701(2) of title 
        28)).
            ``(19) The term `State' means a State of the United States, 
        the District of Columbia, or a commonwealth, territory, or 
        possession of the United States.
            ``(20) The term `tribe' or `tribal' means an Indian tribe, 
        as defined under section 4(5) of the Indian Gaming Regulatory 
        Act of 1988).
            ``(21) For purposes of Section 1085(b), the term `account' 
        means--
                    ``(A) the unpaid balance of money or its equivalent 
                received or held by an insured depository institution 
                in the usual course of business and for which it has 
                given or is obligated to give credit, either 
                conditionally or unconditionally, to an account, 
                including interest credited, or which is evidenced by 
                an instrument on which the depository institution is 
                primarily liable; and
                    ``(B) money received or held by an insured 
                depository institution, or the credit given for money 
                or its equivalent received or held by the insured 
                depository institution in the usual course of business 
                for a special or specific purpose, regardless of the 
                legal relationships established thereby, including 
                escrow funds, funds held as security for securities 
                loaned by the depository institution, funds deposited 
                as advance payment on subscriptions to United States 
                Government securities, and funds held to meet its 
                acceptances.''.

SEC. 102. MODIFICATION OF EXISTING PROHIBITION.

    Section 1084 of title 18, United States Code, is amended to read as 
follows:
``Sec. 1084. Use of a communication facility to transmit bets or 
              wagers; criminal penalties
    ``(a) Except as otherwise provided in this section, whoever, being 
engaged in a gambling business, knowingly--
            ``(1) uses a communication facility for the transmission in 
        interstate or foreign commerce, within the special maritime and 
        territorial jurisdiction of the United States, or to or from 
        any place outside the jurisdiction of any nation with respect 
        to any transmission to or from the United States, of--
                    ``(A) bets or wagers;
                    ``(B) information assisting in the placing of bets 
                or wagers; or
                    ``(C) a communication, which entitles the recipient 
                to receive money or credit as a result of bets or 
                wagers, or for information assisting in the placing of 
                bets or wagers; or
            ``(2) accepts, in connection with the transmission of a 
        communication in interstate or foreign commerce, within the 
        special maritime and territorial jurisdiction of the United 
        States, or to or from any place outside the jurisdiction of any 
        nation with respect to any transmission to or from the United 
        States of bets or wagers or information assisting in the 
        placing of bets or wagers--
                    ``(A) credit, or the proceeds of credit, extended 
                to or on behalf of another (including credit extended 
                through the use of a credit card);
                    ``(B) 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 the other person;
                    ``(C) any check, draft, or similar instrument which 
                is drawn by or on behalf of the other person and is 
                drawn on or payable through any financial institution; 
                or
                    ``(D) the proceeds of any other form of financial 
                transaction as the Secretary of the Treasury and the 
                Board of Governors of the Federal Reserve System may 
                prescribe by regulation which involves a financial 
                institution as a payor or financial intermediary on 
                behalf of or for the benefit of the other person,
shall be fined under this title or imprisoned not more than five years, 
or both.
    ``(b) Nothing in this section prohibits--
            ``(1) the transmission of information assisting in the 
        placing of bets or wagers for use in news reporting if such 
        transmission does not solicit or provide information for the 
        purpose of facilitating or enabling the placing or receipt of 
        bets or wagers in a jurisdiction where such betting is illegal;
            ``(2) the transmission of information assisting in the 
        placing of bets or wagers from a State or foreign country where 
        such betting or wagering is permitted under Federal, State, 
        tribal, or local law into a State or foreign country in which 
        such betting on the same event is permitted under Federal, 
        State, tribal, or local law; or
            ``(3) the interstate transmission of information relating 
        to a State-specific lottery between a State or foreign country 
        where such betting or wagering is permitted under Federal, 
        State, tribal, or local law and an out-of-State data center for 
        the purposes of assisting in the operation of such State-
        specific lottery.
    ``(c) Nothing in this section prohibits the use of a communication 
facility for the transmission of bets or wagers or information 
assisting in the placing of bets or wagers, if--
            ``(1) at the time the transmission occurs, the individual 
        or entity placing the bets or wagers or information assisting 
        in the placing of bets or wagers, the gambling business, and, 
        subject to section 1084(b)(3), any individual or entity acting 
        in concert with a gambling business to process the bets or 
        wagers are physically located in the same State, and for class 
        II or class III gaming under the Indian Gaming Regulatory Act, 
        are physically located on Indian lands within that State;
            ``(2) the State or tribe has explicitly authorized such 
        bets and wagers, the State or tribal law requires a secure and 
        effective location and age verification system to assure 
        compliance with age and location requirements, and the gambling 
        business and any individual or entity acting in concert with a 
        gambling business to process the bets or wagers complies with 
        such law;
            ``(3) the State has explicitly authorized and licensed the 
        operation of the gambling business and any individual or entity 
        acting in concert with a gambling business to process the bets 
        and wagers within its borders or the tribe has explicitly 
        authorized and licensed the operation of the gambling business 
        and any individual or entity acting in concert with a gambling 
        business to process the bets and wagers, on Indian lands within 
        its jurisdiction;
            ``(4) with respect to class II or class III gaming, the 
        game and gambling business complies with the requirements of 
        the Indian Gaming Regulatory Act; and
            ``(5) with respect to class III gaming under the Indian 
        Gaming Regulatory Act, the game is authorized under, and is 
        conducted in accordance with, the respective Tribal-State 
        compact of the Tribe having jurisdiction over the Indian lands 
        where the individual or entity placing the bets or wagers or 
        information assisting in the placing of bets or wagers, the 
        gambling business, and any individual or entity acting in 
        concert with a gambling business to process those bets or 
        wagers are physically located, and such Tribal-State compact 
        expressly provides that the game may be conducted using a 
        communication facility to transmit bets or wagers or 
        information assisting in the placing of bets or wagers.
For purposes of this subsection, the intermediate routing of electronic 
data constituting or containing all or part of a bet or wager, or all 
or part of information assisting in the placing of bets or wagers, 
shall not determine the location or locations in which a bet or wager 
is transmitted, initiated, received or otherwise made; or from or to 
which a bet or wager, or information assisting in the placing of bets 
or wagers, is transmitted.
    ``(d) Nothing in this section creates immunity from criminal 
prosecution under any laws of any State or tribe.
    ``(e) Nothing in this section authorizes activity that is 
prohibited under chapter 178 of title 28, United States Code.
    ``(f) When any common carrier, subject to the jurisdiction of the 
Federal Communications Commission, is notified in writing by a Federal, 
State, tribal, or local law enforcement agency, acting within its 
jurisdiction, that any communication facility furnished by it is being 
used or will be used by its subscriber for the purpose of transmitting 
or receiving gambling information in interstate or foreign commerce, 
within the special maritime and territorial jurisdiction of the United 
States, or to or from any place outside the jurisdiction of any nation 
with respect to any transmission to or from the United States in 
violation of Federal, State, tribal, or local law, it shall discontinue 
or refuse, the leasing, furnishing, or maintaining of such facility, 
after reasonable notice to the subscriber, but no damages, penalty or 
forfeiture, civil or criminal, shall be found against any common 
carrier for any act done in compliance with any notice received from a 
law enforcement agency. Nothing in this section shall be deemed to 
prejudice the right of any person affected thereby to secure an 
appropriate determination, as otherwise provided by law, in a Federal 
court or in a State, tribal, or local tribunal or agency, that such 
facility should not be discontinued or removed, or should be 
restored.''.

SEC. 103. AUTHORIZATION OF CIVIL ENFORCEMENT.

    Chapter 50 of title 18, United States Code, is amended by adding at 
the end the following new section:
``Sec. 1085. Civil remedies
    ``(a) Jurisdiction.--The district courts of the United States (in 
addition to any other remedies under current law) shall have original 
and exclusive jurisdiction to prevent and restrain violations of 
section 1084 by issuing appropriate orders in accordance with this 
section, regardless of whether a prosecution has been initiated under 
section 1084.
    ``(b) Proceedings.--
            ``(1) The United States may institute proceedings under 
        this section--
                    ``(A) to obtain injunctive or declarative relief, 
                including but not limited to a temporary restraining 
                order and a preliminary injunction, against any person 
                (other than a financial transaction provider) to 
                prevent or restrain a violation or a threatened 
                violation of section 1084;
                    ``(B) in the case of an insured depository 
                institution that is a financial transaction provider, 
                to--
                            ``(i) restrain an account maintained at 
                        such insured depository institution if such 
                        account is--
                                    ``(I) owned or controlled by a 
                                gambling business; and
                                    ``(II) includes proceeds of, or is 
                                used to facilitate a violation of, 
                                section 1084; or
                            ``(ii) seize funds in an account described 
                        in subparagraph (i) if such funds--
                                    ``(I) are owned or controlled by a 
                                gambling business; and
                                    ``(II) constitute the proceeds of, 
                                were derived from, or facilitated, a 
                                violation of section 1084.
                    ``(C) The limitation in subparagraph (A) shall not 
                apply if the financial transaction provider is a 
                gambling business within the meaning of section 
                1081(12), in which case such financial transaction 
                provider shall be subject to the enforcement provisions 
                under subparagraph (A).
            ``(2) The attorney general (or other appropriate State 
        official) of a State in which a communication in violation of 
        section 1084 allegedly has been or will be initiated or 
        received may institute proceedings under this section to obtain 
        injunctive or declarative relief to prevent or restrain the 
        violation or threatened violation. Upon application of the 
        attorney general (or other appropriate State official) of an 
        affected State under this paragraph, the district court may 
        enter a temporary restraining order, a preliminary injunction, 
        an injunction, or declaratory relief against any person (other 
        than a financial transaction provider) to prevent or restrain a 
        violation or threatened violation of section 1084, in 
        accordance with rule 65 of the Federal Rules of Civil 
        Procedure.
            ``(3) Notwithstanding paragraphs (1) and (2), for a 
        communication in violation of section 1084 that allegedly has 
        been or will be initiated or received 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);
                    ``(B) the enforcement authorities specified in an 
                applicable Tribal-State compact negotiated under 
                section 11 of the Indian Gaming Regulatory Act (25 
                U.S.C. 2710) shall be carried out in accordance with 
                that compact; and
                    ``(C) if there is no applicable Tribal-State 
                compact, an appropriate tribal official may institute 
                proceedings in the same manner as an attorney general 
                of a State.
        No provision of this section shall be construed as altering, 
        superseding, or otherwise affecting the application of the 
        Indian Gaming Regulatory Act.
            ``(4) Notwithstanding paragraph (3), no relief shall be 
        granted under this section against a financial transaction 
        provider except as provided in paragraph (1).
    ``(c) No damages, penalty, or forfeiture, civil or criminal, shall 
be found against any person or entity for any act done in compliance 
with any notice received from a law enforcement agency.
    ``(d) Relief granted under this section against an interactive 
computer service (as defined in section 230(f) of the Communications 
Act of 1934) shall--
            ``(1) be limited to the removal of, or disabling of access 
        to, an online site violating section 1084, or a hypertext link 
        to an online site violating such section, that resides on a 
        computer server that such service controls or operates; except 
        this limitation shall not apply if the service is violating 
        section 1084 or is in active concert with a person who is 
        violating section 1084 and receives actual notice of the 
        relief;
            ``(2) be available only after notice to the interactive 
        computer service and an opportunity for the service to appear 
        are provided;
            ``(3) not impose any obligation on an interactive computer 
        service to monitor its service or to affirmatively seek facts 
        indicating activity violating section 1084;
            ``(4) specify the interactive computer service to which it 
        applies; and
            ``(5) specifically identify the location of the online site 
        or hypertext link to be removed or access to which is to be 
        disabled.''.

SEC. 104. AUTHORIZATION OF APPROPRIATIONS.

    In addition to any other sums authorized to be appropriated for 
this purpose, there are authorized to be appropriated to the Department 
of Justice for each of fiscal years 2007 through 2010 $10,000,000 for 
investigations and prosecutions of violations of section 1084 of title 
18, United States Code.

SEC. 105. RULES OF CONSTRUCTION.

    (a) Nothing in this Act may be construed to prohibit any activity 
that is allowed under Public Law 95-515 as amended (15 U.S.C. 3001 et 
seq.).
    (b) Nothing in this Act may be construed to preempt State law 
prohibiting gambling.

SEC. 106. SENSE OF CONGRESS.

    It is the sense of Congress that this Act does not change which 
activities related to horse racing may or may not be allowed under 
Federal law. Section 105 is intended to address concerns that this Act 
could have the effect of changing the existing relationship between the 
Interstate Horseracing Act (15 U.S.C. 3001 et seq.), and other Federal 
statutes that were in effect at the time of this Act's consideration; 
this Act is not intended to change that relationship; and this Act is 
not intended to resolve any existing disagreements over how to 
interpret the relationship between the Interstate Horseracing Act and 
other Federal statutes.

  TITLE II--POLICIES AND PROCEDURES REQUIRED TO PREVENT PAYMENTS FOR 
                           UNLAWFUL GAMBLING

SEC. 201. POLICIES AND PROCEDURES REQUIRED TO PREVENT PAYMENTS FOR 
              UNLAWFUL GAMBLING.

    Chapter 53 of title 31, United States Code, is amended by adding at 
the end the following new subchapter:

 ``SUBCHAPTER IV--POLICIES AND PROCEDURES REQUIRED TO PREVENT PAYMENTS 
                         FOR UNLAWFUL GAMBLING

``Sec. 5361. Definitions
    ``For purposes of this subchapter, the following definitions shall 
apply:
            ``(1) 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.
            ``(2) Designated payment system.--The term `designated 
        payment system' means any system utilized by a financial 
        transaction provider that the Secretary and the Board of 
        Governors of the Federal Reserve System, in consultation with 
        the Attorney General, jointly determine, by regulation or 
        order, could be utilized in connection with, or to facilitate, 
        any restricted transaction.
            ``(3) Electronic fund transfer.--The term `electronic fund 
        transfer'--
                    ``(A) 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
                    ``(B) includes any fund transfer covered by Article 
                4A of the Uniform Commercial Code, as in effect in any 
                State.
            ``(4) 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.
            ``(5) Financial transaction provider.--The term `financial 
        transaction provider' means 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 
        payment network utilized to effect a credit transaction, 
        electronic fund transfer, stored value product transaction, or 
        money transmitting service, or a participant in such network, 
        or other participant in a designated payment system.
            ``(6) Insured depository institution.--The term `insured 
        depository institution'--
                    ``(A) has the same meaning as in section 3 of the 
                Federal Deposit Insurance Act; and
                    ``(B) includes an insured credit union (as defined 
                in section 101 of the Federal Credit Union Act).
            ``(7) 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 
        prescribed by the Secretary thereunder).
            ``(8) Restricted transaction.--The term `restricted 
        transaction' means any transaction or transmittal involving any 
        credit, funds, instrument, or proceeds described in any 
        paragraph of section 5362 which the recipient is prohibited 
        from accepting under such section.
            ``(9) Secretary.--The term `Secretary' means the Secretary 
        of the Treasury.
            ``(10) Unlawful gambling.--
                    ``(A) In general.--The term `unlawful gambling' 
                means to place, receive, or otherwise knowingly 
                transmit a bet or wager by any means which involves the 
                use of a communication facility where such bet or wager 
                is unlawful under any applicable Federal or State law 
                in the State or tribal lands in which the bet or wager 
                is initiated, received, or otherwise made.
                    ``(B) Exclusion of certain authorized 
                transactions.--The term `unlawful gambling' does not 
                include any intrastate or intratribal transactions 
                authorized under section 1084(c) of title 18, United 
                States Code.
                    ``(C) Intermediate routing.--With respect to 
                section 5362, the intermediate routing of electronic 
                data shall not determine the location or locations in 
                which a bet or wager is initiated, received, or 
                otherwise made.
            ``(11) Other terms.--The terms `bet or wager', 
        `communication facility', `gambling business', `own and 
        control', `person', `State', and `tribal' have the same 
        meanings as in section 1081 of title 18.
``Sec. 5362. Prohibition on acceptance of any financial instrument for 
              unlawful gambling
    ``No person engaged in a gambling business may knowingly accept, in 
connection with the participation of another person in unlawful 
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 and the Board of Governors of the 
        Federal Reserve System may jointly 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.
``Sec. 5363. Policies and procedures to identify and prevent restricted 
              transactions
    ``(a) Regulations.--Before the end of the 270-day period beginning 
on the date of the enactment of this subchapter, the Secretary and the 
Board of Governors of the Federal Reserve System, in consultation with 
the Attorney General, shall prescribe regulations (which the Secretary 
and the Board jointly determine to be appropriate) requiring each 
designated payment system, and all participants therein, to identify 
and block or otherwise prevent or prohibit restricted transactions 
through the establishment of policies and procedures reasonably 
designed to identify and block or otherwise prevent or prohibit the 
acceptance of restricted transactions in any of the following ways:
            ``(1) The establishment of policies and procedures that--
                    ``(A) 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; and
                    ``(B) block restricted transactions identified as a 
                result of the policies and procedures developed 
                pursuant to subparagraph (A).
            ``(2) The establishment of policies and procedures that 
        prevent or prohibit the acceptance of the products or services 
        of the payment system in connection with a restricted 
        transaction.
    ``(b) Requirements for Policies and Procedures.--In prescribing 
regulations under subsection (a), the Secretary and the Board of 
Governors of the Federal Reserve System shall--
            ``(1) identify types of policies and procedures, including 
        nonexclusive examples, which would be deemed, as applicable, to 
        be reasonably designed to identify and block or otherwise 
        prevent or prohibit 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 or prohibiting the 
        acceptance of the products or services of the payment system or 
        participant in connection with, restricted transactions; and
            ``(3) consider exempting certain restricted transactions or 
        designated payment systems from any requirement imposed under 
        such regulations, if the Secretary and the Board jointly find 
        that it is not reasonably practical to identify and block, or 
        otherwise prevent or prohibit the acceptance of, such 
        transactions.
    ``(c) Compliance With Payment System Policies and Procedures.--A 
financial transaction provider shall be considered to be in compliance 
with the regulations prescribed under subsection (a), 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 to--
                    ``(A) identify and block restricted transactions; 
                or
                    ``(B) otherwise prevent or prohibit 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 (a).
    ``(d) No Liability for Blocking or Refusing to Honor Restricted 
Transactions.--A person that identifies and blocks a transaction, 
prevents or prohibits the acceptance of its products or services in 
connection with a transaction, or otherwise refuses to honor a 
transaction--
            ``(1) that is a restricted transaction;
            ``(2) that such person reasonably believes to be a 
        restricted transaction; or
            ``(3) as a designated payment system or a member of a 
        designated payment system in reliance on the policies and 
        procedures of the payment system, in an effort to comply with 
        regulations prescribed under subsection (a),
shall not be liable to any party for such action.
    ``(e) Regulatory Enforcement.--The requirements of this subchapter 
shall be enforced exclusively by--
            ``(1) the Federal functional regulators, with respect to 
        the designated payment systems and financial transaction 
        providers subject to the respective jurisdiction of such 
        regulators under section 505(a) of the Gramm-Leach-Bliley Act 
        and section 5g of the Commodities Exchange Act; and
            ``(2) the Federal Trade Commission, with respect to 
        designated payment systems and financial transaction providers 
        not otherwise subject to the jurisdiction of any Federal 
        functional regulators (including the Commission) as described 
        in paragraph (1).''.

SEC. 202. TECHNICAL AND CONFORMING AMENDMENT.

    The table of sections for chapter 53 of title 31, United States 
Code, is amended by adding at the end the following:
 ``subchapter iv--policies and procedures required to prevent payments 
                         for unlawful gambling
``5361. Definitions.
``5362. Prohibition on acceptance of any financial instrument for 
                            unlawful gambling.
``5363. Policies and procedures to identify and prevent restricted 
                            transactions.''.

    TITLE III--INTERNET GAMBLING IN OR THROUGH FOREIGN JURISDICTIONS

SEC. 301. 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 should--
            (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
            (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 the Congress on any deliberations between the United 
States and other countries on issues relating to Internet gambling.

            Passed the House of Representatives July 11, 2006.

            Attest:

                                                 KAREN L. HAAS,

                                                                 Clerk.
                                                       Calendar No. 519

109th CONGRESS

  2d Session

                               H. R. 4411

_______________________________________________________________________

                                 AN ACT

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

_______________________________________________________________________

                             July 13, 2006

            Read the second time and placed on the calendar