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GB: Voluntary agreement reached to block payments but no statutory control

In the House of Lords debate yesterday (4 March 2014), the issue of payment blocking as a measure to enforce against unlicensed operators post-implementation of the Gambling (Licensing and Advertising) Bill was once again discussed. The proposed amendment (set out in full below), which would have provided the Gambling Commission with statutory powers to oblige “credit institutions” and “financial institutions” to block payments to unlicensed operators was narrowly defeated.

However, Baroness Howe of Idlicote (who suggested the amendment together with Lord Stevenson) confirmed that a letter had been sent from Lord Garnier to other Lords which stated that “the Gambling Commission has reached agreement with a number of major payment systems organisations to work together to block financial transactions with unlicensed operators“.  Later in the debate Baroness Jolly noted that this (voluntary) agreement was reached between Visa Europe, Mastercard and Paypal and in practice means that consumers may have transactions blocked when attempting to transact with unlicensed operators or, it may result in the relevant operator having payment support withdrawn. It is understood that any transactions with Visa, Mastercard or Paypal from unlicensed sites will amount to a breach of their terms and conditions which require that all transactions much be legal in all applicable jurisdictions.

It will be interesting to see if this voluntary agreement will work or add anything to the current advertising ban. In Baroness Howe’s opinion, the issue of payment blocking is one that “cannot be addressed by a voluntary agreement between just these three providers“.

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.””