Senators voice Operation Choke Point Concerns to attorney general

October 8, 2014

WASHINGTON (10/9/14)--Six Republican senators have written to Attorney General Eric Holder expressing concerns with the U.S. Department of Justice's Operation Choke Point. Sens. Mike Crapo (Idaho), David Vitter (La.), Mike Johanns (Neb.), Jerry Moran (Kan.), Tom Coburn (Okla.) and Dean Heller (Nev.) signed the letter.

Operation Choke Point is an initiative introduced by the DOJ in 2013 that allows its Financial Fraud Task Force to investigate whether financial institutions and payment processors were enabling fraudulent activity. Its opponents claim the initiative is restricting consumer access to financial services.

The letter from the senators raises concerns about increased regulatory scrutiny and possible penalties for financial institutions doing business with merchants that fall into Operation Choke Point's list of "high-risk merchant" categories.

Federal financial regulators updated regulatory guidance and retracted the list of high-risk merchant categories last month, which the senators call an "encouraging first step" but note that the implementation of the guidance must be monitored at the examiner level.

The senators request the DOJ provide them with:

  • A detailed explanation and guidance on how the Financial Institution Reform, Recovery and Enforcement Act (FIRREA) and other laws will be enforced as part of Operation Choke Point;

  • All communications between the DOJ and federal financial regulators concerning the development and implementation of Operation Choke Point;

  • The number of tips each regulator has made to the DOJ as part of Operation Choke Point that has resulted in an FIRREA investigation; and

  • The steps the DOJ will take to refocus its implementation of Operation Choke Point in light of the new guidance.

Operation Choke Point has been met with concern by the Credit Union National Association, as well as members of Congress.

CUNA signed a joint trade association letter to the House Financial Services Committee in April charging that Operation Choke Point's "broad and overly aggressive enforcement tactics" are imposing "ill-considered and costly mandates on payment systems."

A letter signed by 23 members of Congress in March stated that the lawmakers had received a number of reports that Operation Choke Point enforcement was causing financial institution to be discouraged from processing lawful transactions.

In June, Reps. Blaine Luetkemeyer (R-Mo.), Mick Mulvaney (R-S.C.), Kevin Yoder (R-Kansas), Ed Perlmutter (D-Colo.), Alcee Hastings (D-Fla.) and Tony Cardenas (D-Calif.) amended a Commerce, Justice and Science Appropriations bill to deny funds to Operation Choke Point. The measure has not been considered by the Senate.

Luetkemeyer also introduced the End Operation Choke Point Act (H.R. 4986), which was referred to committee June 26 (News Now June 30).