A recent release from ATMIA suggests that despite the Department of Justice’s 2017 proclamation that Operation Choke Point had been terminated, many ATM operators have continued to have their cash settlement and other business accounts, apparently in good standing, closed for questionable reasons. ATMIA’s statement alleges that speculation is increasing that current closures may be tied more to de-risking strategies or profitability criteria than direct pressure from regulators.
The firm created the 2019 IAD Cash Settlement Account Closure Survey to evaluate the impact of sudden cash settlement account closures experienced by many independent ATM deployers. It sought to determine how widespread this problem is, what circumstances surround a typical account closure and how operators are dealing with it. The survey was open to all independent ATM operators/owners/acquirers — both ATMIA members and non-members.
Perhaps one of the most interesting results of the survey is the revelation that 29 percent of respondents indicated that one or more of their accounts was closed because the entity was deemed to be a Money Service Business. ATMIA asserts that a banker/risk manager making such decisions should be well aware of the fact that ATM operations do not fall within the FinCEN/FDIC definition of an MSB. Unfortunately, the release continues, account terminations are almost never reversed — even when an error has been made.
Survey results show that 12 percent of respondents have never had an account closure and the largest single segment (27 percent) have had only one closure. At the other end of the spectrum, only 14 percent have experienced more than five account closures. Fleet size does not appear to play any role in those numbers; although, 42 percent of respondents operate 100 or fewer ATMs, they are about as likely to have a history of three or more closures as an operator with over 1,000 terminals.
Even one account closure for questionable reasons is too many and can be catastrophic, ATMIA alleges. However, the firm found that independent operators overall do seem to be handling their account closures reasonably well. About 77 percent were given 60 days or less to terminate their bank relationship, and a total of 96 percent were able to find a new bank relationship in less than 60 days. Although that search can be intensely frustrating, nearly all are successful in the end.
The full survey report can be found here.