News

Tuesday, 31 August 2010 11:52

Two online payment processors have agreed to the forfeiture of $13.3 million which was seized in June 2009 by the FBI.

The two companies, Allied Wallet along with Allied Systems are owned by Ahmad Khawaja who agreed this week to the forfeiture in a United States Federal Government civil settlement. It was part of deal that would prevent any further legal problems for Khawaja's firms who were processing online payments for poker websites including the world’s largest online poker website, PokerStars.

The processors got tangled up in a federal case that involved fund transfers for online gambling companies. Khawaja's two companies were also involved in transferring money coming from outside the United States via wire transfers coming from people who fully understood that they were exchanging money as part of an online gambling operation.

The Government made the civil forfeiture complaint saying the funds forfeited were deposited in a bank account held at Goldwater Bank located in Scottsdale, Arizona between January and May 2009, constituted the proceeds of an illegally operated gambling business. Those funds were traced to offshore based online gambling firms including PokerStars. As a result, the FBI was able to confiscate $13.3 million in June 2009 from Goldwater Bank.

Since the signing into law of the UIGEA (Unlawful Internet Gambling Enforcement Act), the federal government has not taken much of an interest in offshore based online gambling websites or their owners. Instead their primary focus has been on payment processors involved in aiding the completion of financial transactions for the sites. PokerStars was not too pleased when information was released about Khawaja's settlement with the government.

A PokerStars spokesperson said that the company does not condone concealment by payment processors of the purpose of any funds that are used for playing poker online. They have taken the necessary steps to ensure the proper disclosure to the relevant financial institutions by processors.

Payment processors involved with online gambling websites are being watched closely since June this year when the UIGEA regulations swung into effect. The law was initially passed in 2006 and aims to prevent people gambling online by making it illegal for financial institutions such as banks and credit card companies to process fund transfers for Internet gambling websites. This law could be overturned if Barney Frank's countering Bill 2267, named the Internet Gambling Regulation, Consumer Protection and Enforcement Act, passes into law. However, an amendment to the wording of the Bill would place any Internet gambling company that has been found to have been operating illegally in the United States in the predicament that they would not be granted an operating license in the future.

Poker firms including PokerStars and Full Tilt Poker fall into that category, which is a major concern if they are kept out of the gaming market in the US if the amendment is upheld.