The U.S. Department of Justice and banking regulators have stepped up the pace of criminal, civil and administrative actions against banks, payment processors, money transmitters, and other financial institutions, for violations of the Bank Secrecy Act, including through a DOJ initiative known as “Operation Chokepoint.” Criminal charges for failing to maintain an effective Anti-Money Laundering Program, or for failing to file Suspicious Activity Reports, are no longer uncommon when the government believes, sometimes with the benefit of hindsight, that a financial institution missed “red flags” in connection with a customer’s account.

In This Presentation:

Discussion Points:

- What is Operation Choke Point?

- Why and for whom is this important?

- What does the government expect?

- What do the critics say?

- What enforcement actions have been brought?

- What steps should banks and processors take?

- Excerpt from What is Operation Choke Point?

- Launched in March 2013 Justice Department’s effort to “crack down” on banks and payment processing firms that have relationships with certain “high risk” merchants. Goal: to identify banks that are: – Processing transactions they know are fraudulent; or – Willfully ignoring evidence of fraud. Over the past year, DOJ has issued more than 50 subpoenas to banks and third-party payment processors, 15 pending criminal and civil investigations, 1 major settlement (Four Oaks Bank, although there have been similar settlements prior to the advent of Operation Choke Point.)

Co-Authored by Jonny Frank of the StoneTurn Group. Presentation co-published by The StoneTurn Group.