Smother Operation Choke Point
Imagine walking into a bank and finding out that your account has been closed, not because you have done anything fraudulent or illegal, but simply because the industry in which you work has been deemed unsavory by the government. The Department of Justice’s (DOJ) “Operation Choke Point” has the purported intention of reducing crimes, such as fraud, identity theft, and money laundering. However, rather than filing a complaint in court, DOJ is “choking off” banking services to entities that have been labeled as questionable. Regardless of its stated intent, the program is deliberately preventing law-abiding citizens from engaging in legitimate activites.
Operation Choke Point has its roots in a task force established by President Obama through a 2009 Executive Order. According to an April 24, 2014 Wall Street Journal article, “Justice launched the effort in early 2013 as a policy initiative of the president’s Financial Fraud Enforcement Task Force, which includes the Federal Deposit Insurance Corp., the Consumer Financial Protection Bureau and other regulatory agencies. Though details are scant—much of the investigation has been conducted in secret—the probe aims to crack down on fraud in the payments system by focusing on banks that service online payday lenders and other services deemed suspicious by the government.”
DOJ’s operation is targeting 30 “high-risk” industries, which were listed by the Federal Deposit Insurance Corporation in a 2011 report, including firearm sales, ammunition sales, get rich products, dating services, credit repair services, home-based charities, pornography, payday loans, and many others. Essentially, DOJ is pressuring banks to shut down the accounts of businesses and individuals in these industries, but the department is neither pressing charges nor asserting that illegal activity is occurring. Instead, the threat of a DOJ investigation, and the burdensome regulatory compliance costs that an investigation entails, are proving to be enough incentive for banks to shut down current accounts and avoid opening new accounts for individuals in these industries.
Gun retailers are one perfectly legitimate and centuries old industry in which merchants are categorically being affected by Operation Choke Point. According to a May 18, 2014 Washington Times article, “T.R. Liberti, owner and operator of Top Gun Firearms Training & Supply in Miami, has felt the sting firsthand. Last month, his local bank, BankUnited N.A., dumped his online business from its service. An explanatory email from the bank said: ‘This letter in no way reflects any derogatory reasons for such action on your behalf. But rather one of industry. Unfortunately your company’s line of business is not commensurate with the industries we work with.’”
The targeting of entire industries, without any evidence of wrongdoing, sets a dangerous precedent. DOJ should abandon Operation Choke Point, focus on identifying and prosecuting known bad actors, and leave law-abiding citizens and merchants alone.
– P.J. Austin
