What Is Regulation GG? Prohibition on Funding of Unlawful Internet Gambling
Regulation GG, also known as Prohibition on Funding of Unlawful Internet Gambling, is a regulation of the U.S. Federal Reserve Board that governs how people can participate in online gambling activities.
The main rule of Regulation GG stipulates that entities involved in online betting and wagering, whether they are businesses or individuals, cannot accept payments from third parties in connection with online gambling activities.
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Example: Restricted Transaction
An example of non-compliance with this rule might be a business that accepts payments from an individual in exchange for making online bets or wagers on behalf of that individual.
This is called a “restricted transaction” in the language of Regulation GG.
Under Regulation GG, the Secretary of the Treasury and the Federal Reserve Systems, along with the United States Department of Justice, have identified methods of payment considered as “restricted transactions,” including:
- online gambling operators (e.g., the gambling company itself)
- check transactions
- wire transfers
- receiving depository financial institutions (RDFIs) involved in credit transactions
- originating depository financial institution (ODFIs) in debit transactions
- gateway operators for debit transactions across borders
- a third-party processor for any of the above methods of payment
- system operators, merchant acquirers, third-party processors or card issuers in any card system (e.g., credit, debit or prepaid cards)
Financial institutions who offer methods of payment that could be used for restricted transactions must abide by the rules set forth in Regulation GG.
Specifically, such financial institutions must establish and maintain policies that monitor, identify, prevent, and prohibit all restricted transactions.
Exceptions to restriction transactions in online gambling do exist, as determined by the agencies (e.g., Department of Treasury, Federal Reserve System, and U.S. Department of Justice) who enforce the regulation.
Financial institutions affected by Regulation GG must, therefore, allow excepted transactions as defined by the governing agencies.
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