FDIC Removes List of “High-Risk” Businesses
Friday, August 1, 2014
Section: National

We alerted our members two months ago that the Department of Justice (DOJ) launched Operation Choke Point to crack down on fraud in the payments system by investigating banks and payment processors. Members were also assured that ICTA Legislative Consultant Jimmy Hayes does not believe that coin dealers will be a target of this overreaching initiative by the DOJ.

The 2011 article “Managing Risks in Third-Party Payment Processor Relationships” by the Federal Deposit Insurance Corporation (FDIC) included a list of “high-risk” industries, which includes coin dealers, was used in the DOJ probe.

As of July 28, 2014, the American Banker reported on its website in the article “FDIC Withdraws Alleged ‘Hit List’ of High-Risk Merchants that the FDIC has withdrawn its list of merchant categories that “had been misinterpreted, resulting in banks' severing ties with legitimate businesses.”

Although the FDIC has removed their list of “high-risk” businesses, banks may be still using it to identify businesses to assess their risk from third-party payment processors.