Current through April 30, 2021
Section 233.2 - Definitions
The following definitions apply solely for purposes of this part:(a)Actual knowledge with respect to a transaction or commercial customer means when a particular fact with respect to that transaction or commercial customer is known by or brought to the attention of: (1) An individual in the organization responsible for the organization's compliance function with respect to that transaction or commercial customer; or(2) An officer of the organization.(b)Automated clearing house system or ACH system means a funds transfer system, primarily governed by the ACH Rules, which provides for the clearing and settlement of batched electronic entries for participating financial institutions. When referring to ACH systems, the terms in this regulation (such as "originating depository financial institution," "operator," "originating gateway operator," "receiving depository financial institution," "receiving gateway operator," and "third-party sender") are defined as those terms are defined in the ACH Rules.(c)Bet or wager:(1) Means the staking or risking by any person of something of value upon the outcome of a contest of others, a sporting event, or a game subject to chance, upon an agreement or understanding that the person or another person will receive something of value in the event of a certain outcome;(2) Includes the purchase of a chance or opportunity to win a lottery or other prize (which opportunity to win is predominantly subject to chance);(3) Includes any scheme of a type described in 28 U.S.C. 3702 ;(4) Includes any instructions or information pertaining to the establishment or movement of funds by the bettor or customer in, to, or from an account with the business of betting or wagering (which does not include the activities of a financial transaction provider, or any interactive computer service or telecommunications service); and(5) Does not include- (i) Any activity governed by the securities laws (as that term is defined in section 3(a)(47) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78c(a)(47) ) for the purchase or sale of securities (as that term is defined in section 3(a)(10) of that act ( 15 U.S.C. 78c(a)(10) );(ii) Any transaction conducted on or subject to the rules of a registered entity or exempt board of trade under the Commodity Exchange Act ( 7 U.S.C. 1 et seq. );(iii) Any over-the-counter derivative instrument;(iv) Any other transaction that-(A) Is excluded or exempt from regulation under the Commodity Exchange Act ( 7 U.S.C. 1 et seq. ); or(B) Is exempt from State gaming or bucket shop laws under section 12(e) of the Commodity Exchange Act ( 7 U.S.C. 16(e) ) or section 28(a) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78bb(a) );(v) Any contract of indemnity or guarantee;(vi) Any contract for insurance;(vii) Any deposit or other transaction with an insured depository institution;(viii) Participation in any game or contest in which participants do not stake or risk anything of value other than- (A) Personal efforts of the participants in playing the game or contest or obtaining access to the Internet; or(B) Points or credits that the sponsor of the game or contest provides to participants free of charge and that can be used or redeemed only for participation in games or contests offered by the sponsor; or(ix) Participation in any fantasy or simulation sports game or educational game or contest in which (if the game or contest involves a team or teams) no fantasy or simulation sports team is based on the current membership of an actual team that is a member of an amateur or professional sports organization (as those terms are defined in 28 U.S.C. 3701 ) and that meets the following conditions: (A) All prizes and awards offered to winning participants are established and made known to the participants in advance of the game or contest and their value is not determined by the number of participants or the amount of any fees paid by those participants.(B) All winning outcomes reflect the relative knowledge and skill of the participants and are determined predominantly by accumulated statistical results of the performance of individuals (athletes in the case of sports events) in multiple real-world sporting or other events.(C) No winning outcome is based-(1) On the score, point-spread, or any performance or performances of any single real-world team or any combination of such teams, or(2) Solely on any single performance of an individual athlete in any single real-world sporting or other event.(d)Block means to reject a particular transaction before or during processing, but it does not require freezing or otherwise prohibiting subsequent transfers or transactions regarding the proceeds or account.(e)Card issuer means any person who issues a credit card, debit card, pre-paid card, or stored value card, or the agent of such person with respect to such card.(f)Card system means a system for authorizing, clearing and settling transactions in which credit cards, debit cards, pre-paid cards, or stored value cards (such cards being issued or authorized by the operator of the system), are used to purchase goods or services or to obtain a cash advance. The term includes systems both in which the merchant acquirer, card issuer, and system operator are separate entities and in which more than one of these roles are performed by the same entity.(g)Check clearing house means an association of banks or other payors that regularly exchange checks for collection or return.(h)Check collection system means an interbank system for collecting, presenting, returning, and settling for checks or intrabank system for settling for checks deposited in and drawn on the same bank. When referring to check collection systems, the terms in this regulation (such as "paying bank," "collecting bank," "depositary bank," "returning bank," and "check") are defined as those terms are defined in 12 CFR 229.2 . For purposes of this part, "check" also includes an electronic representation of a check that a bank agrees to handle as a check.(i)Commercial customer means a person that is not a consumer and that contracts with a non-exempt participant in a designated payment system to receive, or otherwise accesses, payment transaction services through that non-exempt participant.(j)Consumer means a natural person.(k)Designated payment system means a system listed in §__.3.(l)Electronic fund transfer has the same meaning given the term in section 903 of the Electronic Fund Transfer Act ( 15 U.S.C. 1693a ), except that such term includes transfers that would otherwise be excluded under section 903(6)(E) of that act ( 15 U.S.C. 1693a(6)(E) ), and includes any funds transfer covered by Article 4A of the Uniform Commercial Code, as in effect in any State.(m)Financial institutio n means a State or national bank, a State or Federal savings and loan association, a mutual savings bank, a State or Federal credit union, or any other person that, directly or indirectly, holds an account belonging to a consumer. The term does not include a casino, sports book, or other business at or through which bets or wagers may be placed or received.(n)Financial transaction provider means a creditor, credit card issuer, financial institution, operator of a terminal at which an electronic fund transfer may be initiated, money transmitting business, or international, national, regional, or local payment network utilized to effect a credit transaction, electronic fund transfer, stored value product transaction, or money transmitting service, or a participant in such network, or other participant in a designated payment system.(o)Foreign banking office means:(1) Any non-U.S. office of a financial institution; and(2) Any non-U.S. office of a foreign bank as described in 12 U.S.C. 3101(7) .(p)Interactive computer service means any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server, including specifically a service or system that provides access to the Internet and such systems operated or services offered by libraries or educational institutions.(q)Internet means the international computer network of interoperable packet switched data networks.(r)Internet gambling business means the business of placing, receiving or otherwise knowingly transmitting a bet or wager by any means which involves the use, at least in part, of the Internet, but does not include the performance of the customary activities of a financial transaction provider, or any interactive computer service or telecommunications service.(s)Intrastate transaction means placing, receiving, or otherwise transmitting a bet or wager where- (1) The bet or wager is initiated and received or otherwise made exclusively within a single State;(2) The bet or wager and the method by which the bet or wager is initiated and received or otherwise made is expressly authorized by and placed in accordance with the laws of such State, and the State law or regulations include-(i) Age and location verification requirements reasonably designed to block access to minors and persons located out of such State; and(ii) Appropriate data security standards to prevent unauthorized access by any person whose age and current location has not been verified in accordance with such State's law or regulations; and(3) The bet or wager does not violate any provision of-(i) The Interstate Horseracing Act of 1978 ( 15 U.S.C. 3001 et seq. );(ii) 28 U.S.C. chapter 178 (professional and amateur sports protection);(iii) The Gambling Devices Transportation Act ( 15 U.S.C. 1171 et seq. ); or(iv) The Indian Gaming Regulatory Act ( 25 U.S.C. 2701 et seq. ).(t)Intratribal transaction means placing, receiving or otherwise transmitting a bet or wager where- (1) The bet or wager is initiated and received or otherwise made exclusively- (i) Within the Indian lands of a single Indian tribe (as such terms are defined under the Indian Gaming Regulatory Act ( 25 U.S.C. 2703 )); or(ii) Between the Indian lands of two or more Indian tribes to the extent that intertribal gaming is authorized by the Indian Gaming Regulatory Act ( 25 U.S.C. 2701 et seq. );(2) The bet or wager and the method by which the bet or wager is initiated and received or otherwise made is expressly authorized by and complies with the requirements of- (i) The applicable tribal ordinance or resolution approved by the Chairman of the National Indian Gaming Commission; and(ii) With respect to class III gaming, the applicable Tribal-State compact;(3) The applicable tribal ordinance or resolution or Tribal-State compact includes- (i) Age and location verification requirements reasonably designed to block access to minors and persons located out of the applicable Tribal lands; and(ii) Appropriate data security standards to prevent unauthorized access by any person whose age and current location has not been verified in accordance with the applicable tribal ordinance or resolution or Tribal-State Compact; and(4) The bet or wager does not violate any provision of-(i) The Interstate Horseracing Act of 1978 ( 15 U.S.C. 3001 et seq. );(ii) 28 U.S.C. chapter 178 (professional and amateur sports protection);(iii) The Gambling Devices Transportation Act ( 15 U.S.C. 1171 et seq. ); or(iv) The Indian Gaming Regulatory Act ( 25 U.S.C. 2701 et seq. ).(u)Money transmitting business has the meaning given the term in 31 U.S.C. 5330(d)(1) (determined without regard to any regulations prescribed by the Secretary of the Treasury thereunder).(v)Operator of a designated payment system means an entity that provides centralized clearing and delivery services between participants in the designated payment system and maintains the operational framework for the system. In the case of an automated clearinghouse system, the term "operator" has the same meaning as provided in the ACH Rules.(w)Participant in a designated payment system means an operator of a designated payment system, a financial transaction provider that is a member of, or has contracted for financial transaction services with, or is otherwise participating in, a designated payment system, or a third-party processor. This term does not include a customer of the financial transaction provider, unless the customer is also a financial transaction provider otherwise participating in the designated payment system on its own behalf.(x)Reasoned legal opinion means a written expression of professional judgment by a State-licensed attorney that addresses the facts of a particular client's business and the legality of the client's provision of its services to relevant customers in the relevant jurisdictions under applicable federal and State law, and, in the case of intratribal transactions, applicable tribal ordinances, tribal resolutions, and Tribal-State compacts. A written legal opinion will not be considered "reasoned" if it does nothing more than recite the facts and express a conclusion.(y)Restricted transaction means any of the following transactions or transmittals involving any credit, funds, instrument, or proceeds that the Act prohibits any person engaged in the business of betting or wagering (which does not include the activities of a financial transaction provider, or any interactive computer service or telecommunications service) from knowingly accepting, in connection with the participation of another person in unlawful Internet gambling- (1) Credit, or the proceeds of credit, extended to or on behalf of such other person (including credit extended through the use of a credit card);(2) An electronic fund transfer, or funds transmitted by or through a money transmitting business, or the proceeds of an electronic fund transfer or money transmitting service, from or on behalf of such other person; or(3) Any check, draft, or similar instrument that is drawn by or on behalf of such other person and is drawn on or payable at or through any financial institution.(z)State means any State of the United States, the District of Columbia, or any commonwealth, territory, or other possession of the United States, including the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, American Samoa, Guam, and the Virgin Islands.(aa)Third-party processor means a service provider that- (1) In the case of a debit transaction payment, such as an ACH debit entry or card system transaction, has a direct relationship with the commercial customer that is initiating the debit transfer transaction and acts as an intermediary between the commercial customer and the first depository institution to handle the transaction;(2) In the case of a credit transaction payment, such as an ACH credit entry, has a direct relationship with the commercial customer that is to receive the proceeds of the credit transfer and acts as an intermediary between the commercial customer and the last depository institution to handle the transaction; and(3) In the case of a cross-border ACH debit or check collection transaction, is the first service provider located within the United States to receive the ACH debit instructions or check for collection.(bb)Unlawful Internet gambling means to place, receive, or otherwise knowingly transmit a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager is unlawful under any applicable Federal or State law in the State or Tribal lands in which the bet or wager is initiated, received, or otherwise made. The term does not include placing, receiving, or otherwise transmitting a bet or wager that is excluded from the definition of this term by the Act as an intrastate transaction or an intra-tribal transaction, and does not include any activity that is allowed under the Interstate Horseracing Act of 1978 ( 15 U.S.C. 3001 et seq. ; see §233.1(a)). The intermediate routing of electronic data shall not determine the location or locations in which a bet or wager is initiated, received, or otherwise made.(cc)Wire transfer system means a system through which an unconditional order to a bank to pay a fixed or determinable amount of money to a beneficiary upon receipt, or on a day stated in the order, is transmitted by electronic or other means through the network, between banks, or on the books of a bank. When referring to wire transfer systems, the terms in this regulation (such as "bank," "originator's bank," "beneficiary's bank," and "intermediary bank") are defined as those terms are defined in 12 CFR part 210, appendix B.