(a) All non-exempt participants
in designated payment systems shall establish and implement written
policies and procedures reasonably designed to identify and block
or otherwise prevent or prohibit restricted transactions.
(b) A non-exempt financial transaction provider participant
in a designated payment system shall be considered to be in compliance
with the requirements of paragraph (a) of this section if—
(1) It relies on and complies with the
written policies and procedures of the designated payment system that
are reasonably designed to—
(i) Identify and block restricted transactions;
or
(ii) Otherwise
prevent or prohibit the acceptance of the products or services of
the designated payment system or participant in connection with restricted
transactions; and
(2) Such policies and procedures of the
designated payment system comply with the requirements of this part.
(c) For purposes of paragraph (b)(2) in
this section, a participant in a designated payment system may rely
on a written statement or notice by the operator of that designated
payment system to its participants that states that the operator has
designed or structured the system’s policies and procedures for identifying
and blocking or otherwise preventing or prohibiting restricted transactions
to comply with the requirements of this part as conclusive evidence
that the system’s policies and procedures comply with the requirements
of this part, unless the participant is notified otherwise by its
federal functional regulator or, in the case of participants that
are not directly supervised by a federal functional regulator, the
Federal Trade Commission.
(d) As provided in the
act, 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, shall
not be liable to any party for such action if—
(1) The transaction is a restricted transaction;
(2) Such person reasonably
believes the transaction to be a restricted transaction; or
(3) The person is a participant
in a designated payment system and blocks or otherwise prevents the
transaction in reliance on the policies and procedures of the designated
payment system in an effort to comply with this regulation.
(e) Nothing in this regulation requires
or is intended to suggest that designated payment systems or participants
therein must or should block or otherwise prevent or prohibit any
transaction in connection with any activity that is excluded from
the definition of “unlawful Internet gambling” in the act as an intrastate
transaction, an intratribal transaction, or a transaction in connection
with any activity that is allowed under the Interstate Horseracing
Act of 1978 (15 U.S.C. 3001 et seq.; see section 233.1(a)).
(f) Nothing in this regulation modifies any requirement
imposed on a participant by other applicable law or regulation to
file a suspicious activity report to the appropriate authorities.
(g) The requirement of this regulation to establish
and implement written policies and procedures applies only to the
U.S. offices of participants in designated payment systems.
