Stop counting cars at the car wash: Use data to improve compliance outcomes

Even as the legal cannabis market continues to expand and state-level legalization continues to advance, many credit unions are hesitant to develop cannabis banking programs because of the associated risks and compliance requirements. But with the right technology and processes in place, bankers can put data and automation to work to turn these challenges into strengths. So, what does this have to do with counting cars at the car wash?

For those who don’t remember, back in the day, car washes were all-cash businesses. If a financial institution was concerned that a car wash might be conducting other activities in cash, it would send someone to count all the cars that went through the car wash. Then, the next day when the bank deposit came in, it would have a pretty good sense of what it should be. If it was a lot more, the financial institution would be right to be suspicious about what other activity might be going on.

The same thing applies to monitoring cannabis businesses. Fortunately, credit unions now have access to the data and technology they need to help capture and analyze sales reports, compare them to deposit activity, and make assessments based on validated information – all without manually monitoring every transaction.

Technology can also automate data collection as part of SAR requirements, bringing it together in a logical way that can then be transmitted directly to FinCEN. Applying outside data to what’s happening inside the credit union can help ensure cannabis-related businesses are operating compliantly.

Meeting the industry’s high standard of monitoring and compliance management can require additional staff, carefully managed onboarding requirements and processes, and data monitoring capabilities. It can all sound very daunting. But specialized compliance technologies can also reduce labor costs, improve efficiencies, and give credit unions a competitive advantage when serving this line of business. Reducing time spent on rote compliance allows cannabis banking teams to focus their time and energy on where they can bring the most value: building strong relationships, critical thinking, and judgmental decision-making. It can even help credit unions scale their programs while maintaining a great member experience.

Thorough data collection has benefits beyond monitoring and compliance requirements. It can empower credit unions to better understand their members, to not only understand their current needs, but also to anticipate and meet future needs, such as lending.

Legal cannabis is still relatively new, but a cannabis banking playbook exists to help credit unions serve their members compliantly. Credit unions shouldn’t let an old problem stop them from exploring a fast-growing industry. Just as in the days of the all-cash car wash, savvy banking institutions can adopt the tools and systems needed to ensure robust monitoring with the decidedly 21st-century benefit of data and technology.

Tony Repanich

Tony Repanich

As president and CEO of Shield Compliance, Tony Repanich leads day-to-day operations and serves as its principal product architect. Having served as a senior executive at a Washington state-based community ... Web: https://www.shieldbanking.com Details

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