The Justice Department is not backing down in the face of criticism from bankers of its Operation Choke Point.

In a new blog post on its website, the department defends its ongoing efforts to crack down on banks and payment processing firms that it argues have failed to adequately safeguard access to the payment system.

The blog post highlights the recent approval by a federal judge of a settlement with Four Oaks Bank in North Carolina. The bank was processing transactions for numerous online payday lenders that were operating without state licenses. Justice officials alleged that Four Oaks collected $850,000 in fees despite repeated warnings that consumers were being defrauded.

The settlement places tight restrictions on Four Oaks' ability to provide banking services to merchants deemed high-risk by banking regulators. It also requires Four Oaks to pay $1.2 million.

"The result in this case demonstrates that banks and third-party payment processors cannot profit from violating federal law," writes the consumer protection branch of Justice's civil division.

The blog post notes that fraudulent merchants often need access to the banking system in order to get money from their victims.

"And when financial institutions choose to process transactions even though they know the transactions are fraudulent, or willfully ignore clear evidence of fraud, they are profiting from illegal activities as well as breaking federal law," the post says.

Since Operation Choke Point was launched last year, the DOJ has sent subpoenas to more than 50 banks and payment processing firms. Simultaneously, federal banking regulators and authorities in various states have also been targeting banks over their role as a gateway for merchants into the payment system.

Banks, payment processors, and other affected businesses have been complaining loudly that the government is casting too wide a net, and that legitimate businesses are losing their bank accounts. In April, Capital One Financial (COF) and Fifth Third Bancorp (FITB) said they are terminating their accounts with payday lenders.

The Justice Department responded to its critics in Wednesday's blog post.

"Of course, we recognize that most of the businesses that use the banking system are not fraudsters," the post says.

"We're committed to ensuring that our efforts to combat fraud do not discourage or inhibit the lawful conduct of these honest merchants. Our goal in investigations like Four Oaks is simply to enforce the laws that make the financial marketplace work for consumers."

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