Government releases new rule designed to roll back the catastrophically negative results of Operation Choke Point

Adult industry performers are no strangers to banking discrimination, with apps like Venmo, PayPal, and CashApp off-limits, and brick-and-mortar banks like Bank of America and Chase known to terminate accounts without notice based on our legal work in the adult industry. A recent rule released by the Office of the Comptroller of the Currency (OCC) designed to ensure fair access to banking, however, may go a long ways towards ending bank discrimination against legal sex workers. Operation Choke Point, a 2013 United States Department of Justice (DOJ) which targeted “high risk” accounts deemed a risk for fraud or money laundering, unfairly labelled adult performers and businesses as part of the “high risk” group, which included gun and ammo dealers, payday lenders, online gambling, and credit repair services. The DOJ put pressure on banks to close high risk accounts, but did not require any evidence of violation of the bank’s terms of service, nor did the DOJ provide any evidence of criminal activity. In 2015, Operation Choke Point was effectively ended, but the damage was done. Many banks still won’t take on adult performers or businesses, even with adequate evidence that all of their activities are legal.

This new guidance from the OCC may help end this discrimination. Depending on how it is enforced, it may require banks to provide evidence of their decision-making process in denying or terminating an account when they are challenged on their decision. The rule aims to lift the power of the banks to determine what economic activities are and are not permitted to access the financial system, and instead return the power of determining what is legal and illegal to elected officials. There is no specific guidance yet for how banks will be required to come into compliance with this rule, but the Adult Performance Artists Guild (APAG) is following this story closely, and will be providing updates as well.

“The rule codifies more than a decade of OCC guidance stating that banks should conduct risk assessment of individual customers, rather than make broad-based decisions affecting whole categories or classes of customers, when provisioning access to services, capital, and credit.” OCC.gov

“As Comptrollers and staff in previous administrations have made clear in speeches, guidance, and testimony, banks should not terminate services to entire categories of customers without conducting individual risk assessments. It is inconsistent with basic principles of prudent risk management to make decisions based solely on conclusory or categorical assertions of risk without actual analysis. Moreover, elected officials should determine what is legal and illegal in our country.”Brian P. Brooks, Acting Comptroller of the Currency