The CRE, Center for Regulatory Effectiveness, recently issued a report on the UIGEA and stated they had major issues with the bill. The CRE is an agency that gives Congress analyses of regulations for the government. They reviewed the UIGEA and have found many problems with it.

They have stated the proposed banking rules are very unspecific in the fact of defining online gambling transactions. The government’s agencies have no idea how much it would cost a company to apply the rules. Because of this the UIGEA is in violation of the Paperwork Reduction Act (PRA). The report provided by the CRE list many examples to how the UIGEA is violating the PRA and has come to this deduction:

“Since the (Treasury) Department has not yet reliably determined the small business impact of the proposed rules, they do not have the record for certifying that they have met the burden reduction requirements of the PRA and will not have such a record until they develop a Revised Initial Regulatory Flexibility Analysis. Accordingly, the Office of Management and Budget should withhold approval until the necessary record is developed and provided to the public for comment.

The CRE also took the government to task for including the estimates cost of several items the UIGEA will require, such as “establishing transaction codes and merchant/business category codes that are required to accompany the authorization request.” The CRE report reads: “The complete burden associated with this very extensive labeling requirement (computer programming, coordination with tens of thousands of participating financial institutions and merchants, testing, training, software, hardware, etc.) need to be included in the PRA estimate.”

They have also come to the conclusion that the UIGEA is not effective when it comes to smaller banks. They have stated that merchants, which includes gambling, are not included in the Information Collection Request, ICR, they can choose to plead the “public protection” provisions of the PRA and then the merchants would not be breaking any laws. They would face no penalty for not turning in information that is subject to the UIGEA rule.

The CRE came to these conclusions on the UIGEA: The Treasury Department has not provided a specific, objectively supported estimate of burden as required by the PRA. The Treasury Department has not provided a record supporting the certification that they have reduced the burden on businesses to the extent practical, with a particular emphasis on small businesses, as required by the PRA. The Treasury Department has not made the further efforts to reduce the paperwork burden on small business with fewer than 25 employees as required by the PRA.
They also have recommended that because the Information Collection Request does not comply to the PRA, then it should be sent back to the Department for revision and correction. The ICR should be revised and then be sent to the public for comment before it is approved.