WASHINGTON—NAFCU and CUNA Wednesday sent a letter to Sen. Mike Crapo (R-ID) supporting his stand against Operation Choke Point.
Crapo has introduced an amendment to the Financial Regulatory Improvement Act that would prohibit the FDIC, the OCC, the Board of Governors of the Federal Reserve System, the CFPB, or NCUA from implementing or participating in the Operation Choke Point initiative of the Department of Justice.
The controversial Operation Choke Point was launched by the Department of Justice in 2013 as part of an effort to investigate financial institutions thought to be at higher risk of fraud and money laundering, and also involved payment processors, payment processors and others. Critics, however, led by Republicans, have said the program isn’t about money laundering and is instead about attacking industries opposed by the Obama Administration, such as gun sellers and coal producers.
In the letter, also signed by Independent Community Bankers of America, the trade groups point out that credit unions and banks are committed to maintaining their ability to serve their members and customers, while also strictly adhering to all laws and regulations that govern those services.
“We support and have a long history of partnering with the federal government in fighting fraud and ensuring the integrity of financial markets; nevertheless, we are concerned that Operation Choke Point’s broad enforcement tactics could negatively impact consumers and the economy.
Operation Choke Point activities have resulted in some financial institutions suspending access to financial services for certain legal businesses,” the letter said.
The trade associations noted that the amendment would in no way inhibit the enforcement of anti-fraud laws.
“All of the requirements of the Bank Secrecy Act and other anti-fraud statutes would continue in force and effect as they did before the initiation of Operation Choke Point. Banks and credit unions have a long history of partnership with law enforcement agencies and in complying with the law,” the letter stated. “The amendment would prevent the financial regulators from pressuring a depository financial institution into terminating a specific member/customer account or to otherwise discourage a depository institution, such as a bank or credit union, from entering into or maintaining a financial services relationship with legitimate member/customer without material reason under the Department of Justice’s Operation Choke Point initiative. We strongly believe that before a law enforcement agency or regulator requires that a relationship be terminated with a credit union member or bank customer, the law enforcement agency or regulator must have and provide to the credit union or bank a material reason clearly related to a specific violation of the law.”
In an April 15 letter to House Financial Services Chairman Jeb Hensarling, NCUA Chairman Debbie Matz emphasized that NCUA has not participated in Operation Choke Point or any similar operation, nor will the agency in the future. The letter also emphasized that NCUA does not dictate to credit unions which businesses they serve, as long as the businesses are legal and within the credit union's field of membership.