Justice's new probe, known as "Operation Choke Point," is asking banks to identify customers who may be breaking the law or simply doing something government officials don't like. Banks must then "choke off" those customers' access to financial services, shutting down their accounts.
If a bank doesn't shut down a questionable account when directed to do so, Justice slaps the institution with a penalty for wrongdoing that may or may not have happened. The government is compelling banks to deny service to unpopular but perfectly legal industries by threatening penalties.
Bank regulators—particularly the FDIC—have joined in the action, warning banks away from serving more than 22 categories of businesses, including "Get Rich Products," "Ammunition Sales," "Pharmaceutical Sales," "Home Based Charities," and even "As Seen on TV" businesses.
Some merchant categories that have been associated with high-risk activity include, but are not limited to:
- Ammunition Sales
- Coin Dealers
- Firearms Sales
- Fireworks Sales
- Home-Based Charities
- Pornography
- Tobacco Sales
source:
Justice Puts Banks in a Choke Hold - by Frank Keating - WSJ.com April 24, 2014
“Operation Choke Point” Chokes Off Consumer and Business Access to Payment Systems - Independent Community Bankers of America - April 8, 2014
Managing Risks in Third-Party Payment Processor Relationships - FDIC
