March 28, 2024

Warren, Dean, 31 Lawmakers Urge Treasury, Financial Regulators to Curb Gun Violence by Directing Financial Institutions to Implement MCC Code for Gun Stores

Uniform, Clear Federal Guidance Will Help Detect Suspicious Sales by Gun and Ammunition Stores Across the Country 

Text of Letter (PDF)

Washington, D.C. – U.S. Senator Elizabeth Warren (D-Mass.) and U.S. Representative Madeleine Dean (D-Pa.) led 31 lawmakers in a letter to the Department of the Treasury (Treasury) and financial agencies within Treasury: the Financial Crimes Enforcement Network (FinCEN), the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Federal Reserve — urging Treasury to issue clear guidance directing payment card networks and financial institutions to implement the new Merchant Category Code (MCC) for firearm and ammunition retailers. These codes could allow financial institutions to identify suspicious gun and ammunition purchases. 

Their letter to Treasury follows a December 2023 letter Senator Warren and Representative Dean led to the major payment networks —Visa, American Express, Discover, and MasterCard — urging them to promptly implement the gun store MCC. 

“Treasury should prompt payment networks to make the MCC available for use, require merchant banks to assign the MCC, and develop guidance on recognizing activity that may be associated with gun crimes.  The need for uniform, clear federal guidance on this interstate commerce issue is becoming increasingly clear as states adopt differing and confusing rules about the gun store MCC,” wrote the lawmakers. 

Gun violence is at an all-time high, and in recent years, several mass shooters have relied on credit cards to purchase thousands of dollars’ worth of guns and ammunition just days or weeks before the killings. Credit cards have also facilitated fraudulent gun purchases. The lawmakers noted that MCC codes are a key tool for identifying suspicious credit card purchases. Card networks and financial institutions can use an MCC code, in combination with other data points, to evaluate patterns of transactions associated with criminal activity and report high-risk activity to bank regulators or law enforcement. 

Until 2022, gun stores lacked a unique MCC, despite the existence of unique MCCs for virtually every other type of merchant, including codes for art dealers, automotive tire shops, and candy stores. Instead, gun stores were listed under the same MCC as sporting goods stores or miscellaneous general merchandise stores. In September 2022, the International Organization for Standardization approved the creation of a new MCC specifically for gun stores.  This “watershed moment” meant that, for the first time, financial institutions could accurately detect suspicious and fraudulent purchases from the country’s 78,000 licensed gun dealers and report those purchases to regulators and law enforcement. 

“However, the gun store MCC cannot be implemented until credit card companies opt to make the code available. Shortly after the creation of the gun store MCC in 2022, the largest credit card companies agreed to use it. Months later, they backtracked and said they were ‘pausing’ implementation due to the prospect of then-pending state laws banning use of the MCC. Since then, conflicting state laws have been enacted: at least seven states have passed laws banning use of the gun store MCC, while California has passed a law requiring it… Treasury should eliminate that uncertainty by making clear that, under federal law, payment networks and banks are expected to use the most specific MCC available, particularly for high-risk merchants,” continued the lawmakers. 

Specifically, the lawmakers are urging Treasury to: 

  1. Work with banking regulators to issue agency guidance making clear that the MCCs can promote banks’ safety and soundness when conducting merchant processing;

  2. Promulgate a regulation to clearly preempt state laws that purport to forbid financial institutions from meeting their obligations under federal law and make clear that compliance with safety and soundness expectations requires using the most accurate MCC available;

  3. Issue, via FinCEN, an advisory to payment networks and financial institutions about acts that may be predecessors to gun crime, and about the firearm-purchase scenarios that should trigger filing a Suspicious Activity Report or otherwise alerting financial regulators or law enforcement. 

The lawmakers also asked Treasury to answer a set of questions about its role in implementing the MCC code for gun stores and the financial agencies’ planned actions regarding the use of MCCs by April 11, 2024. 

Senators Ed Markey (D-Mass.), Mazie Hirono (D-Hawaii), Richard Blumenthal (D-Conn.), Kristen Gillibrand (D-N.Y.), Cory Booker (D-N.J.), and Chris Van Hollen (D-Md.) and Representatives Madeleine Dean (D-Pa.), Kevin Mullin (D-Calif.), Nydia Velazquez (D-N.Y.), Josh Gottheimer (D-N.J.), Barbara Lee (D-Calif.), Delia Ramirez (D-Ill.), Maxwell Frost (D-Fla.), Julia Brownley (D-Calif.), Dan Goldman (D-N.Y.), Jahana Hayes (D-Conn.), Ritchie Torres (D-N.Y.), Gabe Amo (D-R.I.), Raul Grijalva (D-Ariz.), Shri Thanedar (D-Mich.), Sheila Cherfilus-McCormick (D-Fla.), Andre Carson (D-Ind.), Earl Blumenauer (D-Ore.), Sean Casten (D-Ill.), Jan Schakowsky (D-Ill.), Bill Foster (D-Ill.), Jonathan L. Jackson (D-Ill.), Bobby Scott (D-Va.), Jake Auchincloss (D-Mass.), Seth Moulton (D-Mass.), and Adriano Espaillat (D-N.Y.) signed the letter. 

Senator Warren has led efforts to implement gun violence prevention reforms that protect American communities and save lives: 

  • In December 2023, Senator Warren and Representative Dean led lawmakers in a letter to American Express, Visa, Mastercard, and Discover, requesting that they explain why their companies have paused the implementation of a new Merchant Category Code (MCC) for gun and ammunition retailers that could help flag suspicious firearm purchases and prevent gun violence, gun trafficking, and domestic terrorism.

  • In November 2023, Senator Warren and Representative Maxwell Frost (D-Fla.) sent a letter to six major financial institutions calling on them to provide critical information on their efforts to end their financial investments in the gun industry. 

  • In March 2023, Senators Warren and Bob Menendez (D-N.J.) sent a letter to the U.S. Department of the Treasury and the U.S. Department of Justice (DOJ), urging the departments to issue guidance to financial institutions for the full implementation of the MCC that the International Organization for Standardization (ISO) approved in 2022 for gun and ammunition stores. 

  • In September 2022, Senator Warren and Representative Dean sent letters to the CEOs of MasterCard, American Express, and Visa urging them to support the creation of a new MCC for gun and ammunition retailers and to request information about their reported opposition to Amalgamated Bank’s application for such a code.