FBI Seizes Funds from Poker Processor

The FBI recently reached an agreement to keep over $13 million previously seized from two online poker payment processors, who settled with the U.S. Government to avoid harsher penalties. The two processors – Allied Systems and Allied Wallet – were both owned by Ahmad Khawaja.

The processors were used to transfer funds to and from major online poker sites, including PokerStars. These transfers were deemed illegal under the UIGEA, the regulations of which went into effect in June this year. While UIGEA does nothing to make online gambling illegal in the United States, it does seek to prevent banks and other financial institutions from processing gambling transactions, thus cutting off funding for online gambling.

According to the government’s complaint, the funds held by Khawaja were proceeds from the operation of an illegal gambling business. These funds were deposited between January and May of 2009, into an account held at Goldwater Bank in Scottsdale, Arizona. In June 2009, the FBI seized the entire $13.3 million balance, and this settlement forfeits any rights Khawaja had to that money. Authorities say that the funds seized constitute only a fraction of the total funds Khawaja held.

According to a statement by PokerStars, the company did not know that Khawaja had been processing payments illegally.

“PokerStars does not condone efforts by processors to conceal the nature or purpose of funds used to play online poker,” said a spokesperson for the site. “PokerStars has taken steps to ensure that processors properly disclose the nature of their business to their relevant financial institutions.”

Online poker regulations have been a hot topic in the United States in recent weeks, as Representative Barney Frank’s Internet Gambling Regulation, Consumer Protection and Enforcement Act recently was voted out of committee for consideration by the entire House of Representatives. The bill would create a regulatory framework for online gambling in the USA, similar to the one recently enacted in France. If such legislation were enacted, it is unclear whether or not sites like Full Tilt Poker and PokerStars would be granted access to the lucrative post-regulation American market.