New Hope for a Real End to “Operation Choke Point”?

SIOUX FALLS, SD, December 3, 2020.  Operation Choke Point (OCP) is an initiative kicked off in March 2013 by the Department of Justice (DoJ) Consumer Protection Working Group to stop banks and payment processors from providing financial services to merchants that were suspected of consumer fraud.  Although independent ATM deployers (IADs) were not specifically indicated as targets of OCP, as cash-based payment businesses IADs have had their cash and settlement accounts closed simply because those accounts allegedly meet some of the warning signs FIs have been instructed to look for – specifically, significant fluctuation in the amount of funds flowing thru the account from month to month.

Title III of the Dodd-Frank Act was supposed to have codified fair access to financial services and fair treatment of customers.  And to its credit, the OCC has twice issued guidance to specifically address reports of banks refusing to provide financial services to entire industry categories engaged in lawful business activities.  However, quoting the introductory section of the OCC announcement:

Despite the OCC’s statements and guidance over the years about the importance of assessing and managing risk on an individual customer basis, some banks continue to employ category-based risk evaluations to deny customers access to financial services. This happens even when an individual customer would qualify for the financial service if evaluated under an objective, quantifiable risk-based analysis. These banks are often reacting to pressure from advocates from across the political spectrum whose policy objectives are served when banks deny certain categories of customers access to financial services.

In order to clarify and better enforce fair access requirements, the OCC is proposing the addition of 12 CFR Part 55.  It states in part:

55. 1(b) To provide fair access to financial services, a covered bank shall:

(1) Make each financial service it offers available to all persons in the geographic market served by the covered bank on proportionally equal terms;

(2) Not deny any person a financial service the bank offers except to the extent justified by such person’s quantified and documented failure to meet quantitative, impartial risk-based standards established in advance by the covered bank . . .

“ATMIA and our entire industry have been advocating for this type of regulatory reform since 2013 and the launch of Operation Choke Point,” said David Tente, ATMIA USA Executive Director.  “For the past seven years, many independent operators with impeccable financial histories have had long-standing banking relationships with major financial institutions terminated, simply because they are part of a cash-intensive industry.”

Public comment on this proposal can be submitted through January 4, 2021.  ATMIA USA will offer its enthusiastic support for the new rule.  And also suggest that it be expanded to include a requirement for written documentation of the basis of denials or account terminations.

ABOUT ATMIA - ATMIA is the leading non-profit trade association representing the entire global ATM industry. ATMIA serves thousands of members from around 500 companies globally, spanning the entire ATM ecosphere, including financial institutions, independent ATM deployers, equipment manufacturers, processors, and a plethora of ATM service and value-added solution providers. ATMIA provides education, advocacy and connections to help its members keep abreast of industry news and developments; increase knowledge and professionalism; improve operational efficiencies; understand and influence regulatory processes; participate in the local, regional and global ATM community; and forge new relationships to advance their businesses. Founded in 1997, ATMIA has active chapters in the United States, Canada, Europe, Latin America, Asia-Pacific, Asia, Africa, India and the Middle East focusing on the unique needs and issues of each region. For more information, please visit atmia.com. Follow us on LinkedIn, Twitter, Facebook or YouTube.