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Justice Department To End Operation Choke Point; ATM Operators Breathe Sigh Of Relief

Posted On: 8/18/2017

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WASHINGTON -- The U.S. Department of Justice said it is ending a contentious Obama-era program that discourages banks from doing business with a range of companies, from payday lenders to gun retailers. 

Inadvertently or not, the initiative -- dubbed "Operation Choke Point" -- was hurting legitimate businesses, especially independent ATM operators who are required to manage their cash services through multiple bank accounts. The Amusement and Music Operators Association (Chicago), the National ATM Council (Jacksonville, FL) and the ATM Industry Association (Sioux Falls, SD) have urged the policy's eradication. AMOA represents vending and amusement machine operators who also run ATMs.

In a letter to Rep. Robert Goodlatte (R-VA), chairman of the House Judiciary Committee, Assistant Attorney General Stephen Boyd called Operation Choke Point "a misguided initiative" and confirmed that DOJ was closing those investigations, Politico reported on the night of Aug. 17.

Under President Obama, the DOJ said the effort, which went into effect in 2013, was intended to root out fraud by banks and payment processors to stop banking networks from enabling wrongdoing by merchants. But for operators whose bank accounts were shut down, it was unlawful and unnerving. 

By identifying certain industries and businesses as high risk for fraud, the feds increased the banks' oversight requirements, often to a high level. As a result, it became unprofitable for banks to work with some clients. For small businesses wrongfully harmed by the Obama policy, the end of Operation Choke Point under President Trump's DOJ is a welcome development.

"This is very good news, but we will have to wait and see if the message gets through to bank examiners and other field staff, and how quickly it does so," said ATMIA executive director David Tente. "While the program was officially suspended earlier this year, the DOJ wasn't pushing that information to field examiners. The proof of whether this is taken seriously is whether we stop seeing account closures for ATM operators."

Even though enforcement of Operation Choke Point was supposedly suspended in January, numerous operators of ATMs continued to have their bank accounts terminated six months after the fact. ATM operators are hoping that legislation by the House Judiciary Committee will end it once and for all.

"We're cautiously optimistic to hear that the administration is doing away with this program, but we have to wait and see how this shakes out with the bureaucracy," said National ATM Council chairman George Saratopoulos. "Most importantly, we have to see how it filters down to the banking world."