Introduction: Regulation GG-Funding of Unlawful Internet Gambling

Regulation GG (12 CFR 233.1 et seq.) requires that certain participants in payment systems have policies and procedures that are designed to stop illegal Internet gambling transactions. The regulation implements the Unlawful Internet Gambling Enforcement Act of 2006 [31 USC 5361 – 5367]. Although the regulation’s effective date was January 19, 2009, most financial institutions were not required to comply until June 1, 2010. [See the Federal Register for November 18, 2008, beginning at page 69381.]

Regulation GG does not determine the legality or illegality of any form of gambling. Other state or federal law establishes that. Regulation GG only mandates that certain participants in payment systems have policies and procedures designed to stop transactions the other laws define as illegal.

Regulation GG’s approach is to first identify payment systems through which illegal Internet gambling transactions might occur. Persons who participate in these payment systems are required to have the policies and procedures required by the regulation. But Regulation GG exempts a number of participants in each of these systems from the requirement. Only the “non-exempt participants” must have the policies and procedures.

The regulation then describes what the policies and procedures must contain in order to comply with the requirement. And, finally, the regulation provides some examples of policies and procedures that an institution can look to as a guide in assembling its own policies and procedures.