Iowa House passes bill to block code from tracking gun store buys

Gun Rights

DES MOINES — Iowa House Republicans advanced a bill Tuesday to prohibit use of a planned merchant code for credit card transactions at gun retailers meant to detect suspicious firearms and ammunition sales.

House File 2464 would prevent banks and credit card companies from using a merchant code that would differentiate a gun shop from a general merchandise or sporting goods store. It would also prohibit banks and credit card companies from declining a transaction based solely on a firearms code attached to the store. And it would bar state and local governmental agencies from keeping a record or registry of privately owned firearms, except for records kept during the regular course of a criminal investigation, a criminal prosecution, any court case or as otherwise required by law.

The bill was amended to codify current standard practices of financial institutions to provide consumer protections, including to help detect and deter illegal or suspicious activities, and also prevent fraud by alerting customers of a suspicious purchase on their bank card or credit card.

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Rep. Phil Thompson, R-Boone, chair of the House Public Safety Committee, said the bill aims to prevent financial institutions from creating a de facto gun registry.

Merchant category codes are used to classify different types of businesses by the types of goods and services sold. The U.S. Treasury Department’s Financial Crimes Enforcement Network has sent guidance to financial institutions encouraging them to use new merchant category codes that would help them monitor and report suspicious activity connected to illegal firearms trafficking, money-laundering proceeds from trafficking in firearms or other criminal activity.

Major credit card companies are moving to make a merchant code available for firearm and ammunition retailers to comply with a new California law that will allow banks to potentially track suspicious gun purchases and report them to law enforcement.

Visa, Mastercard and American Express had paused the implementation of the new code because some Republican-led states are working to block its enactment. Supporters of the bill said the code is an infringement on privacy and Second Amendment rights.

“The problem is this is a huge violation of financial privacy, and this is just a back way to keep a list” of privately owned firearms, Thompson said.

Gun safety advocates say the code, approved by an international organization in 2022, can be used as a tool help banks and financial institutions report suspicious gun purchasing activity to law enforcement, consistent with their existing obligations to report suspicious activity related to terrorism financing and other illicit activities.

“It appears that there’s a problem, but no problem could be defined,” Rep. David Jacoby, D-Coralville, said. “There’s a paranoia about a registry. And there’s also an accusation for our financial institutions providing coding to the private sector and the government, which is not happening at the current time. We already allow criminal investigations where needed when there’s criminal prosecutions or investigations. But, I did ask the question: Does this bill do anything to prevent school shootings? It does not.”

The bill passed the House 68-27, with Democrats opposed. It now heads to the Senate for consideration and approval.

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