Under the UIGEA, the Treasury and Federal Reserve will be required to identify and designate all Internet-based payment systems that could be used to facilitate “restricted transactions,” meaning those transactions connected with online gambling falling under the auspices of the UIGEA. That’s no small order, because it will have to account for all forms of electronic-payment processing, even those not currently used for gambling purposes. It will also require constant monitoring and updating.
The agencies must then coordinate with both (1) all designated payment systems, and (2) all transaction providers servicing the banking industry, and ensure that all of them come up with ways to identify and block as many “restricted transactions” as possible. This means identifying all the possible payment avenues as well, from credit and debit cards (including gift cards), to wire transfers, third-party e-banks and e-wallets, electronic-check systems, paper checks… basically, any way at all that could be conceived of being used for getting money into or out of an Internet gambling site. Several pages of the notice are devoted just to defining many of these payment channels as they currently exist.
However, the UIGEA --- largely at the behest of the banking industry when the law was being drafted --- requires the agencies involved to exempt certain classes of transactions if the two agencies (Treasury and Federal Reserve) jointly determine that it is not practical to block them. Already, paper checks and the ACH (Automated Clearing House) system for the processing of said checks has been identified as a category where such categorical blocking (or manual sorting) is neither feasible nor practical.
Do the UIGEA’s regulations specify what types of gambling transactions are to be blocked? Pointedly, specifically, emphatically no. Quoting from the notice: “[T]he Act itself does not specify which gambling activities are legal or illegal and the Act does not require the Agencies to do so.”