DOJ Ends Operation Chokepoint
New Department Of Justice has ended Obama Administration’s assault business. United States Department of Justice had been working for the past four years to prevent banks from offering payment services to certain business verticals and entire industries. All those efforts came to a halt last month, with the Trump Administration’s Department Of Justice officially ending Operation Chokepoint.
The change happened back in 16th of August 2017, where Rep. Bob Goodlatte, Chairman of the House Judiciary Committee confirmed with an official announcement. However, this was not a public announcement and it did not appear in a public statement or a press release.
Operation chokepoint was initially designed with the objective of curbing fraud through choking off the access offered for all wrongdoers to the national banking system. This has become a requirement of every single business that exists out there in the world. Due to this initiative, banks were provided with the ability to deny the applications received by businesses that are dealing with high risk consumers. Even though the program was initially designed to eliminate the abusive practices followed by illegal payment processors, it also targets credit repair services, gun dealers, escort services and businesses that promote get-rich products.
The program was initially started back in 2013. At the start, a set of banks were provided with subpoenas, which was linked to the Federal Deposit Insurance Corporation. This helped the banks to figure out the high-risk merchant categories with minimum hassle. Any financial institution, which offered services to this type of a customer could be taken into a civil enforcement action. That’s because the financial institution is offering the services to a business that is linked with illegal activities, which can create an impact on the soundness and safety of the institution.
The entire program was controversial and critics raised their voice against it. They claimed that it can create a tremendous impact on the legitimate industries that exist out there in the world. Moreover, they highlighted that it would take away responsibilities held by regulators into the banks. These two claims were highlighted along with examples in the letter that was released by the Department of Justice.
Department of Justice also highlighted the positive aspects of ending operation chokepoint. In the announcement, it was stated that the new initiative was not taken with the objective of discouraging the provision of financial industries. All the lawful businesses are still in a position to enjoy an uninterrupted service. It would only create an impact on the unethical businesses.
The banks would continue to offer effective compliance programs, which can assist them with understanding the true identity of all their customers. This would keep away high-risk customers from using the services offered by banking systems. The newly introduced programs would include third party payment processors as well. Even though operation chokepoint has been ended by the Department of Justice, businesses that fall into the high-risk categories don’t need to worry too much because alternative programs can provide them with much needed assistance.
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