2000
<PRE>[DOCID: f:h556rh.txt]





                                                 Union Calendar No. 220
107th CONGRESS
  2d Session
                                H. R. 556

                      [Report No. 107-339, Part I]

 To prevent the use of certain bank instruments for unlawful Internet 
                   gambling, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           February 12, 2001

  Mr. Leach introduced the following bill; which was referred to the 
 Committee on Financial Services, and in addition to the Committee on 
   the Judiciary, for a period to be subsequently determined by the 
  Speaker, in each case for consideration of such provisions as fall 
           within the jurisdiction of the committee concerned

                           December 13, 2001

  Reported from the Committee on Financial Services with an amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

                           December 13, 2001

Referral to the Committee on the Judiciary extended for a period ending 
                    not later than December 21, 2001

                           December 20, 2001

Referral to the Committee on the Judiciary extended for a period ending 
                     not later than March 29, 2002

                             March 29, 2002

Additional sponsors: Mr. Petri, Mr. Green of Wisconsin, Mr. Oxley, Mr. 
              LaFalce, Mr. Wolf, Mr. Bachus, and Mr. Owens

                             March 29, 2002

 The Committee on the Judiciary discharged; committed to the Committee 
 of the Whole House on the State of the Union and ordered to be printed
    [For text of introduced bill, see copy of bill as introduced on 
                           February 12, 2001]

_______________________________________________________________________

                                 A BILL


 
 To prevent the use of certain bank instruments 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.

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

SEC. 2. FINDINGS.

    The Congress finds as follows:
            (1) Internet gambling is primarily funded through personal 
        use of bank instruments, including 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 major 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.

SEC. 3. PROHIBITION ON ACCEPTANCE OF ANY BANK INSTRUMENT FOR UNLAWFUL 
              INTERNET GAMBLING.

    (a) In General.--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--
            (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 the other person;
            (3) any check, draft, or similar instrument which is drawn 
        by or on behalf of the 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 the other person.
    (b) Definitions.--For purposes of this Act, the following 
definitions shall apply:
            (1) Bets or wagers.--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 subject to chance, 
                upon an agreement or understanding that the person or 
                another person will receive something of greater value 
                than the amount staked or risked 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 
                an account by the bettor or customer with 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 
                        such 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 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 
                        a depository institution (as defined in section 
                        3(c) of the Federal Deposit Insurance Act);
                            (viii) any participation in a simulation 
                        sports game or an educational game or 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 and skill of the 
                                participants with such outcome 
                                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 
2000
by the number of 
                                participants or the amount of any fees 
                                paid by those participants; and
                            (ix) any transaction authorized under State 
                        law with a business licensed or authorized by a 
                        State.
            (2) Business of betting or wagering.--The term ``business 
        of betting or wagering'' does not include, other than for 
        purposes of subsection (e), any creditor, credit card issuer, 
        insured depository institution, 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) Internet.--The term ``Internet'' means the 
        international computer network of interoperable packet switched 
        data networks.
            (4) Unlawful internet gambling.--The term ``unlawful 
        Internet gambling'' means to place, receive, or otherwise 
        transmit 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.
            (5) Other terms.--
                    (A) Credit; creditor; and credit card.--The terms 
                ``credit'', ``creditor'', and ``credit card'' have the 
                meanings given such terms in section 103 of the Truth 
                in Lending Act.
                    (B) Electronic fund transfer.--The term 
                ``electronic fund transfer''--
                            (i) has the meaning given such term in 
                        section 903 of the Electronic Fund Transfer 
                        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 meaning given such term in 
                section 903 of the Electronic Fund Transfer Act.
                    (D) Money transmitting business and money 
                transmitting service.--The terms ``money transmitting 
                business'' and ``money transmitting service'' have the 
                meanings given such terms in section 5330(d) of title 
                31, United States Code.
                    (E) Secretary.--The term ``Secretary'' means the 
                Secretary of the Treasury.
    (c) Civil Remedies.--
            (1) Jurisdiction.--The district courts of the United States 
        shall have original and exclusive jurisdiction to prevent and 
        restrain violations of this section by issuing appropriate 
        orders in accordance with this section, regardless of whether a 
        prosecution has been initiated under this section.
            (2) Proceedings.--
                    (A) Institution by federal government.--
                            (i) In general.--The United States, acting 
                        through the Attorney General, may institute 
                        proceedings under this subsection to prevent or 
restrain a violation of this section.
                            (ii) Relief.--Upon application of the 
                        United States under this subparagraph, the 
                        district court may enter a preliminary 
                        injunction or an injunction against any person 
                        to prevent or restrain a violation of this 
                        section, in accordance with Rule 65 of the 
                        Federal Rules of Civil Procedure.
                    (B) Institution by state attorney general.--
                            (i) In general.--The attorney general of a 
                        State (or other appropriate State official) in 
                        which a violation of this section allegedly has 
                        occurred or will occur may institute 
                        proceedings under this subsection to prevent or 
                        restrain the violation.
                            (ii) Relief.--Upon application of the 
                        attorney general (or other appropriate State 
                        official) of an affected State under this 
                        subparagraph, the district court may enter a 
                        preliminary injunction or an injunction against 
                        any person to prevent or restrain a violation 
                        of this section, in accordance with Rule 65 of 
                        the Federal Rules of Civil Procedure.
                    (C) Indian lands.--
                            (i) In general.--Notwithstanding 
                        subparagraphs (A) and (B), for a violation 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)--
                                    (I) the United States shall have 
                                the enforcement authority provided 
                                under subparagraph (A); and
                                    (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.
                            (ii) Rule of construction.--No provision of 
                        this section shall be construed as altering, 
                        superseding, or otherwise affecting the 
                        application of the Indian Gaming Regulatory 
                        Act.
                    (D) Banking regulators.--Before initiating any 
                proceeding under this paragraph with respect to a 
                violation or potential violation of subsection (e) by 
                an insured depository institution (as defined in 
                section 3 of the Federal Deposit Insurance Act), the 
                Attorney General of the United States or an attorney 
                general of a State (or other appropriate State 
                official) shall--
                            (i) notify the appropriate Federal banking 
                        agency (as defined in such section) of such 
                        violation or potential violation; and
                            (ii) allow such agency a reasonable time to 
                        issue an order to such insured depository 
                        institution under section 8(x) of the Federal 
                        Deposit Insurance Act.
            (3) Expedited proceedings.--In addition to any proceeding 
        under paragraph (2), a district court may, in exigent 
        circumstances, enter a temporary restraining order against a 
        person alleged to be in violation of this section upon 
        application of the United States under paragraph (2)(A), or the 
        attorney general (or other appropriate State official) of an 
        affected State under paragraph (2)(B), in accordance with Rule 
        65(b) of the Federal Rules of Civil Procedure.
            (4) Limitation.--No provision of this section shall be 
        construed as authorizing an injunction against an interactive 
      
1491
  computer service (as defined in section 230(f) of the 
        Communications Act of 1934) unless such interactive computer 
        service is acting in concert or participation with a person who 
        violates this section and such service receives actual notice 
        of the order.
    (d) Criminal Penalty.--
            (1) In general.--Whoever violates this section shall be 
        fined under title 18, United States Code, or imprisoned for not 
        more than 5 years, or both.
            (2) Permanent injunction.--Upon conviction of a person 
        under this subsection, the court may enter a permanent 
        injunction enjoining such person from placing, receiving, or 
        otherwise making illegal bets or wagers or sending, receiving, 
        or inviting information assisting in the placing of bets or 
        wagers.
    (e) Circumventions Prohibited.--Notwithstanding subsection (b)(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, or money transmitting service, or any participant in such 
network, or any interactive computer service or telecommunications 
service, may be liable under this section 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 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
            (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.
    (f) Enforcement Actions.--Section 8 of the Federal Deposit 
Insurance Act (12 U.S.C. 1818) is amended by adding at the end the 
following new subsection:
    ``(x) Depository Institution Involvement in Internet Gambling.--If 
any appropriate Federal banking agency determines that any insured 
depository institution is engaged in any of the following activities, 
the agency may issue an order to such institution prohibiting such 
institution from continuing to engage in any of the following 
activities:
            ``(1) Extending credit, or facilitating an extension of 
        credit, electronic fund transfer, or money transmitting service 
        with the actual knowledge that any person is violating section 
        3(a) of the Unlawful Internet Gambling Funding Prohibition Act 
        in connection with such extension of credit, electronic fund 
        transfer, or money transmitting service.
            ``(2) Paying, transferring, or collecting on any check, 
        draft, or other instrument drawn on any depository institution 
        with the actual knowledge that any person is violating section 
        3(a) of the Unlawful Internet Gambling Funding Prohibition Act 
        in connection with such check, draft, or other instrument.''.

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 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.
    (b) Report Required.--The Secretary of the Treasury shall submit an 
annual report to the Congress on the deliberations between the United 
States and other countries on issues relating to Internet gambling.




                                                 Union Calendar No. 220

107th CONGRESS

  2d Session

                               H. R. 556

                      [Report No. 107-339, Part I]

_______________________________________________________________________

                                 A BILL

 To prevent the use of certain bank instruments for unlawful Internet 
                   gambling, and for other purposes.

_______________________________________________________________________

                             March 29, 2002

Committee discharged; committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

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