[Congressional Record Volume 152, Number 88 (Monday, July 10, 2006)]
[House]
[Pages H4958-H4962]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                               AMENDMENTS

  Under clause 8 of rule XVIII, proposed amendments were submitted as 
follows:

                               H.R. 4411

                         Offered By: Mr. Dreier

       Amendment No. 1: Strike all after the enacting clause and 
     insert the following:

     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--

[[Page H4959]]

       (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 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:

     ``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

[[Page H4960]]

     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 
     impact expressly provides that the game may be conducted 
     using a communication facility to transmit bets or wagers 
     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 on-line 
     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

[[Page H4961]]

     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

[[Page H4962]]

       ``(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.