Anita Rauch, president/CEO of the $272 million Heritage CreditUnion in Madison, Wis., refuted a business owner's claims that thecreditunion closed his account due to Operation Choke Point.

“It's a sad day in America when this can happen to you,” MikeSchuetz, owner of Hawkins Guns LLC in Wisconsin, recently said onFox News. “I didn't realize how big of an issue it was until Istarted investigating what had happened to me.”

The U.S. Department of Justice established Operation Choke Pointto reduce fraud and reputational risk to financial institutions bypressuring them to refuse business from risky sectors.

Schuetz said on Fox News that he recorded a conversation with aHeritage branch manager who explained the credit union does notserve businesses associated with guns and ammunition.

Rauch said that was not the credit union's policy.

“It's not that we are getting pressure from the regulator,”Rauch said. “We are required to operate under the Bank Secrecy Actregulation, and back in August, we discovered that our monitoringsystem needed to be kicked up a notch. We have grown $100 millionin three years and at our size, the amount of monitoring for cashintense businesses – the expectation is a little bit higher. InAugust, we began working on being able to accommodate cash intensebusinesses no matter what the type of business. It wasn't strictlydirected at guns or gun shop owners.”

Schuetz received publicity in conservative media outlets when hetraveled to Wash., D.C. to attend a House Financial ServicesOversight and Investigations subcommittee hearing on Tuesday. Inthe hearing, FDIC Chairman Martin Gruenberg testified about theagency's role in Operation Choke Point.

Schuetz' business is located in the Wisconsin district, which isrepresented by Rep. Sean Duffy (R-Wis.), the chairman of thesubcommittee. Cassie Smedile, Duffy's communications director, saidthe congressman has spoken with Schuetz on several occasions.However, she said Schuetz decided to attend the hearing on hisown.

Rauch explained the credit union was not prepared to handleSchuetz' account.

“We made a mistake. We should not have opened the account forHawkins Guns because we knew we couldn't monitor any cash intensebusinesses,” she said. “It was quickly closed because it showed upon our audit report. At that time we were manually monitoring.”

Rauch said her credit union purchased the necessary monitoringsoftware to serve members like Schuetz in September of lastyear.

“Our position all along has been our inability to serve Mike atHawkins Guns was simply a temporary situation,” she said. “It's notreasonable to think you can buy the software, plug it in and itjust works. It takes a little bit of programming.”

In November of 2014, Rauch said Heritage informed Schuetz thecredit union could open his account in February of 2015.

“I respect his decision not to open an account with us,” shesaid. “I think he is probably not happy with the situation as itcame about and we let him know in both verbal communication andwritten communication we are more than happy to help him.”

Rauch said Heritage has not been asked by regulators to closeaccounts as part of Operation Choke Point. However, she said there are certainrequirements dictating when financial institutions have to filesuspicious activity reports for consumer and business accounts.

“We've been doing that for many years already,” she said. “Thereisn't a change for that. It's just our ability to identify all ofthe suspicious transactions. As far as Operation Choke Point,obviously I think that some businesses like Hawkins Guns, they arefeeling pain, maybe more so then we feel it. But, we value therelationships we have with small businesses of all kinds.”

NCUA Public Affairs Specialist John Fairbanks said the NCUA isnot involved in Operation Choke Point.

Rauch noted that many of Heritage's employees hunt and ownguns.

“For us, that's not what it's about,” she said. “It's aboutcomplying with the regulations. At the end of the day, if there's aproblem at all, it's with the regulation itself.”

Rauch was asked if her credit union has ever closed a member'saccount due to requirements from regulators or as a result ofOperation Choke Point, to which she replied, “No, we have not.”