Protecting Bank Customers from "Operation Choke Point" — Unless They’re Linked to Terrorism (H.R. 766)
Do you support or oppose this bill?
What is H.R. 766?
(Updated July 21, 2017)
This bill seeks to protect bank customers that otherwise might have had their accounts targeted by Operation Choke Point. However, if the federal government has reason to believe a customer is linked to financing terrorism, they would still be at the mercy of OPC.
Operation Choke Point was an initiative launched by the Dept. of Justice (DOJ) in 2013 to target businesses suspected of fraud and money laundering activities. The program has been criticized for targeting and harming legitimate businesses.
Federal banking agencies would be prohibited from formally or informally suggesting or ordering a depository institution (like a bank or credit union) to terminate a customer accounts, groups of accounts, or restricting relationships with groups of customers unless:
The agency has a material reason to do so;
The reason is not based solely on reputation risk related to that customer or group of customers.
The “material reason” criterion would be satisfied if a federal banking agency believes that customer or group of customers in question poses a threat to national security, including involvement in terrorist financing.
Federal banking agencies would be required to notify the depository institution about a customer’s account restriction or termination — but wouldn't have to notify the customer. Any notice to the customer would be prohibited if the federal banking agency requests or orders the termination or restriction of a customer account if the customer is believed to be a threat to national security.
This bill also revises requirements for summoning witnesses and requiring the production of books or other records deemed relevant by the Attorney General for a civil investigation that may result in civil penalties for specified violations.
Argument in favor
This bill would put a stop to the abuse of legitimate business owners under Operation Choke Point, while still allowing regulators and banks to cut off accounts that they believe are linked to funding terrorist activities. That’s an appropriate balance.
Argument opposed
The Obama administration and the DOJ are right to target businesses that they view as being at high risk for fraud or money laundering. These reforms would impede investigations into those activities unless there’s a connection to terrorism.
Impact
Individuals and businesses whose bank accounts might have been scrutinized due to Operation Choke Point, financial institutions, federal banking agencies, and the DOJ.
Cost of H.R. 766
The CBO estimates that this bill would cause no change in federal spending.
Additional Info
In-Depth: Sponsoring Rep. Blaine Luetkemeyer (R-MO) introduced this bill to make changes made by the Federal Depository Insurance Corporation (FDIC) aimed at preventing legitimate customers from having their bank accounts cut off due to Operation Choke Point into law:
“While steps have been made in the case against Operation Choke Point, there is still a need for my legislation to be reintroduced in this Congress. While I am pleased the FDIC is implementing parts of my legislation, it is not enough. I am reintroducing the Financial Institution Customer Protection Act because this legislation needs to be codified into law so that other agencies don’t ever fall into this illegal and abusive practice. Now that the FDIC has made it clear the agency has been involved in Operation Choke Point, I hope members on both sides of the aisle see the importance of my legislation because all of my colleagues have constituents at home who could be impacted by this program.”
The FDIC admitted that legitimate businesses had been wrongly targeted under Operation Choke Point in January 2015. Among the types of businesses targeted by the DOJ and FDIC operation are firearm and ammunition dealers, pawn stores, cigar shops, and payday lenders.
This bill was passed by the House Financial Services Committee by a vote of 35-19, and currently has 30 cosponsors in the House, all but three of whom are Republicans.
Media:
- Sponsoring Rep. Blaine Luetkemeyer (R-MO) Press Release
- House Financial Services Committee Press Release
- CBO Cost Estimate
- The Daily Signal
- Competitive Enterprise Institute (In Favor)
- National Rifle Association (In Favor)
Summary by Eric Revell
(Photo Credit: Flickr user Steve A Johnson)
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