[Congressional Record Volume 148, Number 128 (Thursday, October 3, 2002)]
[Extensions of Remarks]
[Page E1737]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            LEACH-LaFALCE INTERNET GAMBLING ENFORCEMENT ACT

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                               speech of

                         HON. MICHAEL N. CASTLE

                              of delaware

                    in the house of representatives

                        Tuesday, October 1, 2002

  Mr. CASTLE. Mr. Speaker, I rise today to acknowledge some of the 
improvements that have been made to H.R. 556 since it was reported out 
of the House Financial Services Committee earlier this year. I also 
want to express my continued concerns about some remaining problems 
with the bill that I hope will be resolved as this bill moves through 
the Senate and is ultimately reconciled with the House language.
  There is no doubt that illegal internet gambling is a serious issue 
that merits effective solutions. Today, it is much too easy for 
children to use their parents' credit cards to gamble on the internet 
creating financial burdens for the family. My concerns about this 
legislation should not be interpreted by anyone to mean I have a 
diminished concern for the seriousness of this problem. To the 
contrary, I want Congress to enact solutions that are truly effective 
and that will not exacerbate the problem.
  My first concern is that this legislation will fracture the unity so 
essential to regulating the financial services industry. Provisions in 
this bill that grant the US Attorney General and State Attorney 
Generals the authority to seek injunctions from the courts against 
financial institutions that may be having their payment systems 
manipulated to transact illegal internet gambling will result in 50 
different rules for what is necessary for a financial institution to 
comply with this law. This lack of uniformity will create a disruptive 
and confusing patchwork of rules that will take resources away from 
what is needed to solve this problem. Instead, I believe this bill 
should strike the injunctive section and retain the section that allows 
the banking regulators to establish regulations for the types of 
quality control systems financial institutions should have in place to 
guard against internet gambling. This regulatory section was a vast 
improvement to the bill reported out of the House Financial Services 
Committee earlier this year.
  According to a recent interim study by the independent U.S. 
Government Accounting Office (GAO), currently, financial institutions 
are estimated to be stopping eighty percent of internet gambling 
transactions using their current internal policies against internet 
gambling. Banking regulators would have the ability to gather 
information about which policies are the most effective and promulgate 
rules for the industry to further increase the success rate of blocking 
illegal internet gambling transactions. This type of regulatory 
expertise will not be available to 50 different state judges who have 
full court dockets and will not likely have the time to fashion an 
effective and efficient injunctive remedy.
  My second concern is that this legislation may exacerbate the extent 
to which internet gambling is used as a money laundering tool. The 
interim GAO study reported that using credit cards for money laundering 
transactions carried high risks for criminals due to the record-keeping 
in these transactions and the transaction limits on these cards. 
Unfortunately, e-cash transactions do not present these same risks so 
this bill could serve as a roadmap for criminals to money launder 
through e-cash.
  Mr. Speaker, as the 107th Congress draws to a close, this legislation 
is unlikely to be considered by the Senate in time to reach consensus 
and be delivered to the President for signature. Therefore, should the 
House consider this legislation again in the next Congress, my hope is 
that the bill supporters will be open to changes. The GAO is scheduled 
to complete its report on this issue in November 2002. I am hopeful 
that its final report will provide some direction to Congress on a 
better way to address the serious problem of internet gambling.

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