FRGG_20240828_omb

Supporting Statement for the
Recordkeeping Requirements Associated with Regulation GG
(FR GG; OMB No. 7100-0317)
Summary
The Board of Governors of the Federal Reserve System (Board), under authority
delegated by the Office of Management and Budget (OMB), has extended for three years,
without revision, the Recordkeeping Requirements Associated with Regulation GG (FR GG;
OMB No. 7100-0317). Regulation GG - Prohibition on Funding of Unlawful Internet Gambling
(12 CFR Part 233) requires participants in designated payment systems1 to establish written
policies and procedures related to the Unlawful Internet Gambling Enforcement Act of 2006 (the
Act).2 The information collection requirements are contained in section 5 of Regulation GG.3
The estimated total annual burden for the FR GG is 46,410 hours.
Background and Justification
In general, the Act prohibits any person engaged in the business of betting or wagering
(as defined in the Act) from knowingly accepting payments in connection with the participation
of another person in unlawful Internet gambling. Such transactions are termed “restricted
transactions.” The Act generally defines “unlawful Internet gambling” as placing, receiving, or
otherwise knowingly transmitting 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.4
Section 2 of Regulation GG defines “participant in a designated payment system” as (1) an operator of a
designated payment system (i.e., the entity that provides centralized clearing and delivery services between
participants and maintains the operational framework for the system), (2) a financial transaction provider (e.g.,
creditor, credit card issuer, money transmitting business) that is a member of, has contracted for financial transaction
services with, or is otherwise participating in a designated payment system, or (3) a third-party processor. Section 4
of Regulation GG, however, exempts four broad categories of payment system participants (1) those processing a
transaction through an automated clearing house (with exception, as defined in the regulation), (2) those
participating in a particular check collection through a check collection system, (3) those participating in a money
transmitting business, and (4) those participating in a particular wire transfer through a wire transfer system.
2 See 31 U.S.C. § 5361 et seq.
3 Section 802 of the Act requires the Board and the Department of the Treasury to prescribe joint regulations
requiring each designated payment system, and all participants in such systems, to identify and block or otherwise
prevent or prohibit restricted transactions through the establishment of policies and procedures reasonably designed
to identify and block or otherwise prevent or prohibit the acceptance of restricted transactions.
4 From the general definition, the Act exempts three categories of transactions (1) intrastate transactions (a bet or
wager made exclusively within a single state, whose state law or regulation contains certain safeguards regarding
such transactions and expressly authorizes the bet or wager and the method by which the bet or wager is made, and
which does not violate any provision of applicable federal gaming statutes), (2) intratribal transactions (a bet or
wager made exclusively within the Indian lands of a single Indian tribe or between the Indian lands of two or more
Indian tribes as authorized by federal law, if the bet or wager and the method by which the bet or wager is made is
expressly authorized by and complies with applicable Tribal ordinance or resolution (and Tribal-State Compact, if
applicable) and includes certain safeguards regarding such transaction, and if the bet or wager does not violate
applicable federal gaming statutes), and (3) interstate horseracing transactions (any activity that is allowed under the
Interstate Horseracing Act of 1978 (15 U.S.C. § 3001 et seq.)).
1

The Act states that its provisions should not be construed to alter, limit, or extend any federal or
state law or Tribal-State compact prohibiting, permitting, or regulating gambling within the
United States.5 The Act does not spell out which activities are legal and which are illegal, but
rather relies on the underlying substantive federal and state laws. The FR GG policies and
procedures recordkeeping requirements are necessary because Congress found that Internet
gambling is primarily funded through personal use of payment system instruments, credit cards,
and wire transfers.
Description of Information Collection
Section 5 of Regulation GG requires all non-exempt participants in the designated
payment systems to establish and implement written policies and procedures reasonably
designed to identify and block, or otherwise prevent or prohibit, restricted transactions. 6 In
accordance with the Act, section 5 states that a non-exempt participant in a designated payment
system shall be considered in compliance with this requirement if (1) it relies on, and complies
with, the written policies and procedures of the designated payment system that are reasonably
designed to identify and block restricted transactions or otherwise prevent or prohibit the
acceptance of the products or services of the designated payment system or participant in
connection with restricted transactions and (2) such policies and procedures of the designated
payment system comply with the requirements of this section.7 Regulation GG provides that,
unless notified otherwise by its regulator, a participant may rely on a written statement or notice
by the operator of the designated payment system to its participants that the operator has
designed or structured the system’s policies and procedures for identifying and blocking or
otherwise preventing or prohibiting restricted transactions to comply with the requirements of
Regulation GG.8
The Board is taking into account depository institutions, card system operators, and
money transmitting business operators for the regulation’s requirement to establish and maintain
the policies and procedures required by section 5 of Regulation GG.
Section 6 sets out non-exclusive examples of policies and procedures the agencies believe
are reasonably designed to prevent or prohibit restricted transactions for non-exempt participants
in each designated payment system. Under Regulation GG, non-exempt participants in each
designated payment system should maintain policies and procedures that (1) address methods for
conducting due diligence in establishing a commercial customer relationship designed to ensure
that the commercial customer does not originate or receive restricted transactions through the
customer relationship and (2) include procedures reasonably designed to prevent or prohibit
restricted transactions, including procedures to be followed with respect to a customer if the
participant discovers the customer has been engaging in restricted transactions through its
customer relationship.9 Also, the participant may notify all of its commercial customers, through

5

See 31 U.S.C. § 5361(b).
12 CFR 233.5(a).
7 12 CFR 233.5(b). See also 31 U.S.C. § 5363(c).
8 12 CFR 233.5(c).
9 12 CFR 233.6(b).
6

2

provisions in the account or commercial customer relationship agreement or otherwise, that
restricted transactions are prohibited from being processed through the account or relationship.10
The Board understands that respondents may use information technology to comply with
these provisions, including maintaining written policies and procedures, e.g., storing records
digitally.
Respondent Panel
The FR GG panel comprises depository institutions, card system operators, credit unions,
and money transmitting business operators.
Frequency and Time Schedule
Regulation GG does not include a specific time period for record retention; however,
non-exempt participants would be required to maintain the policies and procedures for a
particular designated payment system as long as they participate in that system.
Public Availability of Data
There are no data related to this information collection available to the public.
Legal Status
The Board is authorized pursuant to section 802 of the Act (31 U.S.C. § 5364(a))) to
prescribe regulations requiring designated payment systems and participants therein to establish
of policies and procedures to identify and block or otherwise prevent or prohibit restricted
transactions. The Board uses the information obtained from the FR GG to help ensure
compliance with section 802 of the Act. The FR GG is mandatory.
The policies and procedures are not required to be submitted to the Board, so normally no
confidentiality issues would be implicated. To the extent such policies and procedures are
obtained by the Board through the examination process, they can be kept confidential under
FOIA exemption 8 (5 U.S.C. § 552(b)(8)), because it is matter contained in or related to
examination, operating, or condition reports prepared by, on behalf of, or for the use of an
agency responsible for the regulation or supervision of financial institutions.
Consultation Outside the Agency
The Board consulted with the Department of the Treasury regarding this information
collection renewal.

10

12 CFR 233.6(b)(3).

3

Public Comments
On March 7, 2024, the Board published an initial notice in the Federal Register (89 FR
16572) requesting public comment for 60 days on the extension, without revision, of the FR GG.
The comment period for this notice expired on May 6, 2024. The Board did not receive any
comments. The Board adopted the extension, without revision, of the FR GG as originally
proposed. On July 30, 2024, the Board published a final notice in the Federal Register (89 FR
61118).
Estimate of Respondent Burden
As shown in the table below, the estimated total annual burden for the FR GG is 46,410
hours. For the purpose of estimating burden, the total number of depository institutions listed
includes the number of entities regulated by the Board as of December 31, 2022, and half of the
remaining depository institutions and third-party processors not subject to either agency’s
regulation or supervision. The Board is also accounting for the burden for half of the card system
operators and money transmitting business operators to which the agencies estimate the final rule
applies, as of December 31, 2022. The burden estimate was produced using the standard Board
burden calculation methodology. These recordkeeping requirements represent less than 1 percent
of the Board’s total paperwork burden.
Estimated
number of
respondents11

FR GG
Depository institutions
Card system operators
Credit unions
Money transmitting business
operators
De novo institutions

Estimated
Estimated
Estimated
annual
average hours annual burden
frequency per response
hours

2,178
7
2,373

1
1
1

10
10
10

21,780
70
23,730

74

1

10

740

3

1

30

90

Total

46,410

The estimated total annual cost to the public for the FR GG is $3,241,739.12

11

Of these respondents, 1,649 depository institutions, 2,128 credit unions, and 61 money transmitting business
operators are considered small entities as defined by the Small Business Administration (i.e., entities with less than
$850 million in total assets). Size standards effective March 17, 2023. See https://www.sba.gov/document/supporttable-size-standards. There are no special accommodations given to mitigate the burden on small institutions.
12 Total cost to the responding public is estimated using the following formula: total burden hours, multiplied by the
cost of staffing, where the cost of staffing is calculated as a percent of time for each occupational group multiplied
by the group’s hourly rate and then summed (30% Office & Administrative Support at $23, 45% Financial
Managers at $84, 15% Lawyers at $85, and 10% Chief Executives at $124). Hourly rates for each occupational
group are the (rounded) mean hourly wages from the Bureau of Labor Statistics (BLS), Occupational Employment
and Wages, May 2023, published April 3, 2024, https://www.bls.gov/news.release/ocwage.t01.htm. Occupations are
defined using the BLS Standard Occupational Classification System, https://www.bls.gov/soc/.

4

Sensitive Questions
This information collection contains no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Cost to the Federal Reserve System
The estimated cost to the Federal Reserve System for this information collection is
negligible.

5