Aug 19 2010

FBI Cracks Down on Well Known Payment Processor

written by: John under News, Poker Law Comments: 1

Despite all of the good news being released about the legality of online poker in the United States, a year old court case against payment processor owner Ahmad Khawaja has come to an end with the Federal Bureau of Investigation confiscating about $13.3 million from two payment processors – Allied Systems and Allied Wallet. Most notably, the payment processors were serving the largest poker site on the Internet – PokerStars. This large web site was one of the reasons that the funds were so easily traced back to Khawaja.

The FBI is claiming that the funds seizure is an enforcement of the 2006 UIGEA and that the seized money is only a small percentage of the amount of money that was exchanged through the payment processors during 2009. According to the FBI, 8 bank accounts were set up to process transactions – in direct violation of the UIGEA. The defense argued unsuccessfully that the UIGEA was confusing and allowed for such actions to take place legally. However, the Feds have long blocked bank account transactions involving online gambling and this situation was one of the times when the payment processors “got caught.”

PokerStars has responded to the incident by releasing this press statement:

“PokerStars does not condone efforts by processors to conceal the nature or purpose of funds used to play online poker. PokerStars has taken steps to ensure that processors properly disclose the nature of their business to their relevant financial institutions.”

One of the reasons that many are questioning these federal decisions is that they were unable to press charges against poker rooms like PokerStars – as they operate outside of the United States. So, the only remaining target was the payment processors involved in the transactions to the web sites. First, the federal government charged Douglas Rennick and now have concluded their case against Khawaja. Beyond the seizure of funds, no criminal charges will be filed against either party due to the admittance that the UIGEA does not set up a clear process to criminally charge violators.

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