UK Extracts Voluntary Online Gambling Blocking Deal from Major Providers

uk-flagIn the face of a UIGEA-style piece of legislation being considered in the United Kingdom’s House of Lords, three large online-banking and credit-card companies have agreed to a voluntarily agreement designed to prevent their companies’ methods of moving funds between players and illegal offshore gambling sites.

The agreement by Mastercard, Visa Europe and PayPal is in relation to an ongoing British addressing of its online-gambling lies, in particular the 2013 Gambling (Licensing and Advertising) Bill.

Each of the three companies already has exhibited moderate anti-gambling practices in its previous online-business dealings.  PayPal, for instance, a division of the California, United States firm eBay, was one of the first firms to block US-based online gambling transactions via its services.  PayPal’s mid-2000’s departure from the online scene opened up the way for a host of more gambling-dedicated online successors, notably FirePay, NETeller, Moneybookers and others.

Mastercard and Visa’s Europe division, being more traditional credit-card issuers, have generally allowed their member banks to determine what sorts of transactions to block.  Some offshore banks and enterprises have still found a way to process MC and Visa transaction, but generally via a “black box” approach, in which the true purpose of the transactions is disguised from Mastercard or Visa.

It’s that loophole, in part, that the United Kingdom is trying to address in its current attempt to bar offshore operators who decline UK licensing but still seek to serve the country’s customers.  This week’s agreement adds to the prohibitions already facing unlicensed operators, which in additional to the usual threats of fines and prosecution include an advertising ban, all designed to make servicing the UK an unprofitable proposition for these unlicensed firms.

The agreement is also  intended to forestall more restrictive legislation, such as an amendment to the Gambling Bill that was narrowly defeated this week.  The amendment (below) would have given the UK the authority to order firms such as Mastercard, Paypal or Visa Europe and other financial processors to block transactions coming from alleged unlicensed gambling sites.  Rather than being ordered to block what would probably have taken the form of a blacklist of unlicensed sites, the financial companies opted for a “voluntary” alternative.  Such a blacklist, it’s noted, could still be used under the “voluntary” arrangement.

Whether or not such an agreement will be effective remains to be seen.  One of the proponents of the more restrictive amendment that narrowly failed, Baroness Elspeth Howe of Idlicote, believes that such a voluntary agreement won’t work, since the unlicensed operators will simply switch to alternative channels.  In any event, the three payment services have chosen the safer course, positioning themselves as firms unwilling to be used for any sort of questionable gambling-related processing.

Here’s the text of the amendment that didn’t pass, but might pop up again in the near future:

. . . . .

Amendment 1
Clause 1, page 1, line 6, at end insert—
“(b) after subsection (5) insert—

“(6) The Commission may give a direction under this subsection if the Commission reasonably believe that a person or organisation who does not hold a remote gambling licence is providing remote gambling services in the United Kingdom.

(7) A direction under subsection (6) may be given to—
(a) a particular person operating in the financial sector,
(b) any description of persons operating in that sector, or
(c) all persons operating in that sector.

(8) A direction under subsection (6) may require a relevant person not to enter into or continue to participate in—
(a) a specified transaction or business relationship with a designated person,
(b) a specified description of transactions or business relationships with a designated person, or
(c) any transaction or business relationship with a designated person.

(9) Any reference in this section to a person operating in the financial sector is to a credit or financial institution that—
(a) is a United Kingdom person, or
(b) is acting in the course of a business carried on by it in the United Kingdom.

(10) In this section—
“credit institution” and “financial institution” have the meanings given in paragraph 5 of Schedule 7 to the Counter-Terrorism Act 2008;
“designated person”, in relation to a direction, means any of the persons in relation to whom the direction is given;
“relevant person”, in relation to a direction, means any of the persons to whom the direction is given.

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