A coalition of financial institutions released a report that offers best practices and standards to banks looking to begin servicing cannabis businesses.
The Cannabis Financial Industry group (CFIG) published a report on Thursday that is intended to be a guide for banks and credit unions who want to work in state-legal marijuana markets while still under federal prohibition.
The advice is designed to assist banks and credit unions within the current policy climate. However, CFIG states that the advice will still be applicable even if Congress passes legislation addressing unique financial challenges for the industry, such as the Secure and Fair Enforcement Banking Act (SAFE), which has been held up by the Senate due to a dispute between Democrats and Republicans over a section on regulatory oversight.
In a press statement, Saphira Galoob, CFIG’s Executive Director, said: “Since CFIG was launched earlier this year, members of the group have actively participated in congressional discussions as the SAFE Banking Act moves through the Senate. This has shed light on the cost of compliance, and the extreme due diligence, involved in the existing cannabis banking program.”
@CannabisFIgroup created this resource to assist financial institutions in better understanding the strict compliance requirements cannabis banking programs are required to adhere to, both now and in the future. This will be true even after #SAFEBanking has been enacted, or when other federal cannabis policies change.
CFIG (@CannabisFIgroup July 13, 2020
She said that the release of CFIG standards was timely, as the bipartisan bill would hopefully move forward with the urgency required as more states expand or establish their legal cannabis programs. It is important that legislators, regulators and banks interested in cannabis understand the reporting processes and ongoing anti-money-laundering efforts.
The report states that banks should consider six key factors when working with marijuana businesses licensed by the state.
It is important to understand the regulations and compliance policies in each state where they are interested, because there can be significant differences between the laws that have been enacted by the different states. CFIG stated that banks should consider reaching out state cannabis regulators in order to gain a better understanding of relevant policies.
The coalition suggested that financial institutions develop a cannabis-specific program. They should determine what types of businesses they will be servicing (e.g. The coalition said that financial institutions should start developing a specific cannabis program, determining what types of businesses (e.g.
Thirdly, the report advises financial institutions “to adhere to internal approval processes” when establishing a cannabis program and to structure an external approval process to accept clients. CFIG says that at this stage, it might make sense to work with marijuana regulators.
As the cannabis industry continues its strict self-regulation in spite of federal prohibition, it is important that legislators, regulators and banks interested in the cannabis sector understand the reporting processes and the ongoing anti-money-laundering efforts.
— CFIG July 13, 2020
Banks and credit unions must also ensure they have adequate resources before launching a cannabis program. They should, for example, have the necessary staff and processes to file suspicious activity reports (SARs), and onboard marijuana business clients.
Once the financial institution is ready to launch the program, it must hire and train its staff on the software required to run the program.
Final standards guide states that “the most critical part of having a marijuana banking program is to ensure it remains transparent and compliant with all relevant laws, regulations, and other legal requirements.” Financial institutions should therefore ensure timely compliance with SARs, monitor any regulatory changes and adopt new procedures as necessary.
Alan Hyatt is the chairman of CFIG & Shore United Bank .
He said: “As we emphasize in our banking standards for financial institutions, they must be able to understand an ever-shifting industry and regulatory environment. This requires a well defined, well structured, and well documented program to adhere the transparency, compliance, and adaptability that banking cannabis demands.” “We are looking forward to being a resource to lawmakers, regulators and our peers who currently bank or want to serve cannabis related businesses, as we continue to offer much-needed financial service to this growing industry. We hope Congress will finally help us in this endeavor by passing the bipartisan SAFE Banking Act.
Although advocates and industry stakeholders were also hopeful that the SAFE Banking Act would pass this Congress, their optimism has recently been dampened as the legislation is awaiting a markup by the Senate Banking Committee. The summer session is rapidly approaching.
The majority of Democratic senators believe that Republicans must broaden their coalition in order to pass the bill. However, the GOP believes that the measure will pass if Democrats back off on efforts to amend the section on banking regulations. Senate Majority leader Chuck Schumer (D) stated this week that is still a priority item on his legislative agenda.
The new report highlights a unique issue that has long affected the industry, namely the need for increased compliance when working with businesses which are legal in the states but strictly prohibited by federal law.
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The post As Marijuana Bank Bill Awaits Congressional Action, Financial Coalition Offers Banking Advice To Banks Wanting To Service The Industry first appeared on Marijuana Moment.
