Mon Jan 1, 0001

Debanking: Operation Choke Point and SARs

Operation Choke Point (2013-2017)

DOJ and FDIC initiative targeting legal but disfavored industries through banking relationships.

Mechanism: Banks received “guidance” that serving certain industries created “reputational risk.” DOJ invoked FIRREA’s “self-affecting” theory — banks harmed themselves by serving disfavored industries. No law passed, no regulation issued.

FDIC 30-item “high risk” list included:

  • Gun and ammunition sales
  • Payday lenders
  • Debt collectors
  • Money services businesses
  • Pornography
  • Fireworks sellers

Impact: One major lender turned away by 275 banks. Dealers found accounts terminated with explanation of “regulatory pressure.”

American Bankers Association: Choke Point was “asking banks to identify customers” who are “simply doing something government officials don’t like.”

End: Officially ended August 2017. FDIC settled multiple lawsuits, promised additional examiner training, agreed to stop “informal” and “unwritten suggestions.”

Suspicious Activity Reports (SARs)

  • ~4 million filed annually
  • 10% classified as “Transaction With No Apparent Economic Purpose”
  • FinCEN maintains searchable database; ~300 employees
  • Banks legally prohibited from disclosing SAR existence to customer (12 CFR 21.11(k))
  • Second SAR on same account often triggers account closure
  • No meaningful appeals process

UK Parallel

Post-2023: UK shooting clubs and gun shops reported similar debanking.

Sources