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The National Pawnbrokers Association argues that its members have been unfairly swept up in the Justice Department initiative known as Operation Choke Point. But banks say Choke Point's not to blame: they're closing the accounts of cash-intensive businesses in order to ensure compliance with anti-money-laundering rules.
April 21 -
If banks consider licensed and regularly supervised pawnbrokers with many compliance responsibilities to be too risky to bank, then what Main Street businesses are safe?
April 21 -
More and more legal businesses are finding themselves shut out of the banking system. But there are a number of possible solutions-including passing a law that would require banks to maintain accounts for businesses able to meet some standard of due diligence.
April 20 -
A growing lack of transparency between some businesses and their banking service providers threatens our ability to effectively manage money laundering and terrorist financing risk.
March 31
I would like to make a few important points regarding the recent opinion piece "
As the author and a
That means that FDIC-supervised financial institutions that properly manage customer relationships and effectively mitigate risks are neither prohibited nor discouraged from providing services to any category of customer accounts or individual customers operating in compliance with applicable laws.
We have met with the National Pawnbrokers Association and have listened to their concerns. The group last year helpfully provided us with a list of 49 pawnbrokers whose deposit account relationships had been canceled by banks. Of those 49 pawnbrokers, only one was banking with an FDIC-supervised institution. When we reviewed the case, we found that the bank based that decision on the risks presented by the individual situation.
The FDIC does not supervise all financial institutions in the United States. Neither of the banks mentioned in the opinion piece are supervised by the FDIC. Furthermore, the National Pawnbrokers Association has told us that a number of its members who have lost their banking relationships are now banking with FDIC-supervised institutions.
For the institutions we do supervise, we have worked hard to reiterate and strengthen our policies regarding banking relationships with customers. We have reinforced with the banks we supervise and our examiners the importance of taking a case-by-case approach.
We welcome continued discussions with bankers supervised by the FDIC, customers who bank with FDIC-supervised banks, and others on the importance of making risk-based decisions regarding customer relationships.
Barbara Hagenbaugh is deputy to the chairman for communications at the Federal Deposit Insurance Corp.
