WASHINGTON — As the credit union trades sit down to digest the new proposed rule, issued by the Treasury Department and Federal Reserve Board last week implementing the Unlawful Internet Gambling Enforcement Act, they already know one thing: it is not all they hoped for.

The law prohibits gambling businesses from accepting payments in connection with unlawful Internet gambling, including payments made through credit cards, electronic funds transfers, and checks. The proposal would require U.S. financial firms that participate in designated payment systems to have policies and procedures "reasonably designed to identify and block or otherwise prevent or prohibit transactions in connection with unlawful Internet gambling." Examples are provided.

Certain exemptions are provided for in the proposal. "The Agencies are proposing to exempt all participants in the ACH systems, check collection systems, and wire transfer systems, except for the participant that possesses the customer relationship with the Internet gambling business," it reads. Additionally, certain participants that receive certain cross-border transactions from or send them to foreign