DFI Open Forum on Banking the Marijuana Industry

On Tuesday June 24, the Washington State Department of Financial Institutions (DFI) along with the Washington State Liquor Control Board (WSLCB) hosted an open forum on banking the legal marijuana industry.

Also in attendance at the meeting was Lawrence Scheinert from the Office of Strategic Policy at FinCEN. Scheinert was on hand to discuss FinCEN’s guidance and to provide official FinCEN insight on the WSLCB licensing and enforcement process when it comes to completing due diligence and SARs.

Most of the meeting focused on the WSLCB’s licensing and enforcement process, which is extremely thorough prior to approving an applicant for a license. The testing, tracking, and enforcement processes developed by the WSLCB are also very robust.

The forum also provided a number of key points that credit unions should be aware of:

  • It is strongly suggested that all credit unions update their BSA policies to address marijuana banking, regardless of whether the credit union has plans to provide financial services to the industry. Credit unions can access CU PolicyPro model policy #2112 BSA – Marijuana-Related Business Accounts to review a fully detailed model policy.
  • FinCEN highly encourages credit unions to call the FinCEN helpline if they have questions about whether they need to complete a SAR. The helpline support staff will be able to discuss the case-by-case specifics the credit union is dealing with and provide guidance on properly completing the SAR. As Scheinert told the group, “One of the primary goals of SAR reporting is to provide law enforcement with good actionable information about a potential crime. It’s not a gotcha game.”
  • Under the FinCEN guidance, credit unions really are limited to only providing financial services to the regulated retail marijuana business. The medical marijuana business is mostly unregulated and unlicensed. Credit unions would not be able to easily comply with the FinCEN due diligence requirements for accounts owned by medical marijuana operations.
  • When it comes to performing initial due diligence for opening an account for a retail marijuana business, credit unions can submit a public records request with the WSLCB for all the information that was submitted with the initial application for licensing and the information that was developed during the WSLCB’s investigation prior to approving the license.
  • And when it comes to performing ongoing due diligence for a retail marijuana operation, credit unions can send the WSLCB a perpetual public records request for the business for which they hold the marijuana business account. The WSLCB will send the credit union monthly updates on the business. These include any violations, enforcement actions, or other changes related to the specific operation.
  • The DFI has created a marijuana page on its website. The webpage contains information about the DFI’s BSA expectations regarding marijuana-related businesses. In addition, the page contains links to various documents, including the DFI’s answers to FAQs related to business under I-502.

Compliance Question of the Week

What is the credit union’s liability if we offer an account that requires two signatures for transactions and we perform a transaction with only one signature?

The credit union would be liable if an item/transaction with only one signature was cleared. An account is a contract, and an account with two joint owners is a contract between three people: Joint Owner #1, Joint Owner #2, and the credit union. If the contract requires two signatures for transactions, the credit union would be breaching the contract by allowing a transaction with only one.

Legal Briefs

National Credit Union Administration (NCUA)

The NCUA has posted a new consumer compliance webpage to help credit unions comply with the new lending rules.

Consumer Financial Protection Bureau (CFPB)

The CFPB announced it is now recruiting for the CFPB Technology and Innovation Fellowship for 2015.

Federal Reserve Board (FRB)

The FRB announced changes to its Operating Circular 5, Electronic Access, which will make revisions to FedLine Web.

Federal Financial Institutions Examination Council (FFIEC)

The FFIEC launched a new cyber security webpage.                                        

US Government Accountability Office (GAO)

The GAO released a report on virtual currencies and the challenges that regulators and law enforcement officials are faced with.

National Mortgages Licensing System & Registry (NMLS)

The NMLS released its 2013 annual report regarding the State Regulatory Registry LLC and NMLS operations and performance.

Office of the Comptroller of the Currency (OCC)

The OCC released its spring, 2014 Semiannual Risk Perspective detailing risks that financial institutions are facing.

Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of June 26, 2014. The last update prior to this was June 25, 2014.

Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Posted in Compliance News.