On Compliance: Growing opportunities in cannabis banking

Serving marijuana-related businesses requires giving careful attention to BSA and suspicious activity reporting.

Today’s hemp, marijuana and marijuana-related businesses continue to grow as once-limited markets gain favor nationwide. As more states update their laws on how these products are regulated, MRBs are being established as respectable businesses in local communities—ones that require banking services. As a result, more credit unions now find themselves in a position to serve these local businesses but are learning that successfully navigating often evolving regulatory requirements that govern the industry can still be very tricky—especially as it relates to the Bank Secrecy Act and suspicious activity reporting.

Credit unions looking to do business in this arena need to know some key things about the industry they will be serving. Marijuana, hemp and industrial hemp are considered subspecies of cannabis. Industrial hemp has been removed from the list of “Schedule 1” substances and is technically legal from a federal standpoint. However, there is still some degree of the unknown at play as hemp can only legally contain 0.3% THC (tetrahydrocannabinol, the principle psychoactive constituent of cannabis) or less. Depending on the licensing of the farm, the plants may need to be destroyed.

Credit unions entering this space should do their homework to understand the industry and the associated risks. Some things to consider when deciding to bank MRBs are: Will the credit union service hemp and marijuana, or hemp only? What will the credit union do if it later finds an existing member is involved in an industry the credit union has chosen not to service? What types of products and services will be offered? Will the credit union have the infrastructure, like adequate staffing, to handle the monitoring of these high-risk accounts? These are just some of the considerations the board must consider when determining if it is willing to accept the risk in servicing MRBs. In addition, related policies and procedures should be drafted that address which types of MRBs the credit union will do business with.


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