Gun merchants, strippers, coin collectors, and payday lenders of the world rejoice. A letter sent to financial institutions from the Federal Deposit Insurance Corp. this week signals an end to “Operation Choke Point,” a Department of Justice effort to restrict industries deemed as “high risk” from banking access.

The Financial Institution Letter doesn’t mention the controversial initiative by either name or description. Instead, it retreats from the policy with instructions for banks “to take a risk-based approach in assessing individual customer relationships, rather than declining to provide banking services to entire categories of customers without regard to the risks presented by an individual customer or the financial institution's ability to manage the risk.”

The FDIC informed its own staff and examiners of the policy change. “Financial institutions that properly manage customer relationships and effectively mitigate risks are neither prohibited nor discouraged from providing services to any category of customer accounts or individual customers operating in compliance with applicable laws,” the letter says. “FDIC examiners must provide notice in writing for any case in which an institution is directed to exit a customer relationship.” If banks suspect an examiner is not following this protocol, they are advised to make use of a new toll-free number, (800) 756-8854, and dedicated email,, for the FDIC’s Ombudsman.

The move comes amid Congressional pressure. In December, the House Committee on Oversight and Government Reform released a report detailing the FDIC’s involvement in Operation Choke Point. “The initiative is predicated on the claim that providing normal banking services to certain merchants creates a reputational risk sufficient to trigger a federal investigation,” it says. “Bank regulators labeled a wide range of lawful merchants as high-risk, including coin dealers, firearms and ammunition sales, and short-term lending. Operation Choke Point effectively transformed this guidance into an implicit threat of a federal investigation.”

U.S. Rep. Blaine Luetkemeyer (R-Mo.) has sponsored legislation to formalize the change in FDIC policy and extend similar restrictions to the Consumer Financial Protection Bureau and Federal Reserve. During a meeting with FDIC leadership this week, they “acknowledged wrongdoing” and agreed to have the FDIC’s Inspector General “conduct a formal investigation of the program and any staff who have played or may have played a role in the program,” he said in a statement.

As for lingering concerns banks may have, the FDIC stressed the importance of compliance efforts. “Some institutions may be hesitant to provide certain types of banking services due to concerns that they will be unable to comply with the associated requirements of the Bank Secrecy Act,” its letter says. “The FDIC and the other federal banking agencies recognize that, as a practical matter, it is not possible for a financial institution to detect and report all potentially illicit transactions that flow through an institution. Isolated or technical violations, which are limited instances of noncompliance with the BSA that occur within an otherwise adequate system of policies, procedures, and processes, generally do not prompt serious regulatory concern or reflect negatively on management’s supervision or commitment to BSA compliance.”