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Operation Choke Point Causing Complications for ATM Deployers

August 10 – Count independent ATM deployers — such as those found in convenience stores, airports and gas stations — among the players with a grievance toward Operation Choke Point, reports the ATM Industry Association in a recently released white paper. Calling the the Justice Department initiative one of the ATM industry’s “most challenging issues,” the ATM Industry Association (ATMIA) has re-released its industry report “Operation Choke Point: An ATM Industry Update.”

According to the report, independent ATM deployers aren’t specifically indicated as targets of Operation Choke Point, but as cash-based payment businesses independent ATM deployers have had their cash and settlement accounts closed because their ATM settlement accounts allegedly meet some of the warning signs FIs have been instructed to look for – specifically significant fluctuation in the amount of funds flowing thru the account from month to month and charge backs.

The white paper reports that industry partners, associations and sponsor banks have reported an increasing number of account closure letters submitted by independent ATM deployers from FIs handling settlement accounts. In some cases, they request more information about the business but others are account closure letters — sometimes accounts have been closed with no warning at all. The majority of letters being issued are reportedly from top-tier banks.

A Southern Mississippi ATM deployer described how the larger banks refuse to work with his
business and some regional banks are charging extra fees to cover the added compliance costs.
“The need for multiple banks and multiple accounts is time-consuming and a disruption to business,” says Brian Currie, president of Swipe Payment Technologies.
A Texas-based ATM deployer reported that not only were its business accounts closed with no warning but the owner of the business’ personal accounts, which he had had for over 15 years, were closed as well.
Although the FDIC and other regulatory agencies have since been pulling back on the program, account closures continue to be problematic for U.S. ATM operators, notes ATMIA.
“It can be hard for downstream auditors and officials to reverse course once the regulatory agencies have given a directive,” said Mike Keller, general counsel at Cardtronics and chairman of the ATMIA U.S. Governmental Relations Committee.
Among tactics ATMIA suggests to keep accounts open is to turning to smaller regional financial institutions or community banks and maintaining multiple accounts for back-up purposes.
Paul Albright, executive vice president with Outsource ATM, a full-service ATM management company based in Houston, solved his problem by opening an account with one of the community banks he partners with and developing relationships with a variety of FIs in each area of the country it operates in. “Operation Choke Point has complicated our business and increased our operating cost because
we now have to maintain multiple accounts and lines of credit at a variety of banks,” Albright says.
“We would love to be able to operate with a single bank account but multiple accounts and institutions has become an essential to protecting the business,” Rowland says.
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