§5364 — Title 31 Money and Finance | U.S. Code

Summary

Require the Secretary of the Treasury and the Federal Reserve Board, working with the Attorney General, to issue rules within 270 days after this subchapter was enacted. The rules must make each designated payment system and its participants adopt policies and procedures to find and stop "restricted transactions." They can do this by using codes in authorization messages or other methods, or by refusing to accept the system’s products or services for those transactions. The rules must give examples of acceptable policies, let participants pick among practical methods, allow exemptions when it is not reasonably practical to block certain transactions, and make sure payments tied to activities that the law says are not unlawful internet gambling are not blocked. A company complies if it follows its payment system’s approved policies. Anyone who blocks or refuses a transaction that is or is reasonably believed to be restricted, or who acts in good faith to follow these rules, is covered. Only federal functional regulators enforce the rules for entities under their supervision, and the Federal Trade Commission enforces them for others.

Title 31, §5364

Money and Finance — Source: USLM XML via OLRC

(a)Before the end of the 270-day period beginning on the date of the enactment of this subchapter, the Secretary and the Board of Governors of the Federal Reserve System, in consultation with the Attorney General, shall prescribe regulations (which the Secretary and the Board jointly determine to be appropriate) requiring each designated payment system, and all participants therein, to identify and block or otherwise prevent or prohibit restricted transactions through the establishment of policies and procedures reasonably designed to identify and block or otherwise prevent or prohibit the acceptance of restricted transactions in any of the following ways:

(1)The establishment of policies and procedures that—

(A)allow the payment system and any person involved in the payment system to identify restricted transactions by means of codes in authorization messages or by other means; and

(B)block restricted transactions identified as a result of the policies and procedures developed pursuant to subparagraph (A).

(2)The establishment of policies and procedures that prevent or prohibit the acceptance of the products or services of the payment system in connection with a restricted transaction.

(b)In prescribing regulations under subsection (a), the Secretary and the Board of Governors of the Federal Reserve System shall—

(1)identify types of policies and procedures, including nonexclusive examples, which would be deemed, as applicable, to be reasonably designed to identify and block or otherwise prevent or prohibit the acceptance of the products or services with respect to each type of restricted transaction;

(2)to the extent practical, permit any participant in a payment system to choose among alternative means of identifying and blocking, or otherwise preventing or prohibiting the acceptance of the products or services of the payment system or participant in connection with, restricted transactions;

(3)exempt certain restricted transactions or designated payment systems from any requirement imposed under such regulations, if the Secretary and the Board jointly find that it is not reasonably practical to identify and block, or otherwise prevent or prohibit the acceptance of, such transactions; and

(4)ensure that transactions in connection with any activity excluded from the definition of unlawful internet gambling in subparagraph (B), (C), or (D)(i) of section 5362(10) are not blocked or otherwise prevented or prohibited by the prescribed regulations.

(c)A financial transaction provider shall be considered to be in compliance with the regulations prescribed under subsection (a) if—

(1)such person relies on and complies with the policies and procedures of a designated payment system of which it is a member or participant to—

(A)identify and block restricted transactions; or

(B)otherwise prevent or prohibit the acceptance of the products or services of the payment system, member, or participant in connection with restricted transactions; and

(2)such policies and procedures of the designated payment system comply with the requirements of regulations prescribed under subsection (a).

(d)A person that identifies and blocks a transaction, prevents or prohibits the acceptance of its products or services in connection with a transaction, or otherwise refuses to honor a transaction—

(1)that is a restricted transaction;

(2)that such person reasonably believes to be a restricted transaction; or

(3)as a designated payment system or a member of a designated payment system in reliance on the policies and procedures of the payment system, in an effort to comply with regulations prescribed under subsection (a),

(e)The requirements under this section shall be enforced exclusively by—

(1)the Federal functional regulators, with respect to the designated payment systems and financial transaction providers subject to the respective jurisdiction of such regulators under section 505(a) of the Gramm-Leach-Bliley Act and section 5g of the Commodities Exchange Act; and

(2)the Federal Trade Commission, with respect to designated payment systems and financial transaction providers not otherwise subject to the jurisdiction of any Federal functional regulators (including the Commission) as described in paragraph (1).

Notes & Related Subsidiaries

Editorial Notes

References in Text

The date of the enactment of this subchapter, referred to in subsec. (a), is the date of enactment of Pub. L. 109–347, which was approved Oct. 13, 2006. section 505(a) of the Gramm-Leach-Bliley Act, referred to in subsec. (e)(1), is classified to section 6805(a) of Title 15, Commerce and Trade. section 5g of the Commodities Exchange Act, referred to in subsec. (e)(1), is classified to section 7b–2 of Title 7, Agriculture.

§5364 Policies and Procedures to Identify and Prevent Restricted Transactions

Summary

Title 31, §5364

Notes & Related Subsidiaries

Editorial Notes

References in Text

Citations & Metadata