A federal government agency has issued guidelines for companies that want to offer financial services to marijuana businesses that some states have legalized. So far, though, banks aren't all that keen on helping out.
The guidelines, issued by the Financial Crimes Enforcement Network, or FinCEN, in coordination with the U.S. Department of Justice, seek to clarify customer due diligence expectations and reporting requirements in such situations, according to a FinCEN statement.
Guidelines help law enforcement
The guidance allows financial institutions to provide services to marijuana-related businesses to some extent to promote financial transparency and mitigate the dangers of operating these businesses on an all-cash basis. Financial institutions would be required to file reports that would give law enforcement agencies greater insight into marijuana business activity and help them focus their efforts on high-priority concerns, the statement said.
FinCEN writes rules and regulations that banks, credit unions and other financial services companies must follow to help protect the U.S. financial system from money laundering and terrorist financing.
Marijuana businesses have only limited access to checking accounts, online banking capabilities, bank financing or other banking services. Instead, many operate on a cash-only basis, which can be dangerous for owners and their customers, according to the National Cannabis Industry Association.
Banks say thanks, but no thanks
In a separate statement, Frank Keating, CEO of the American Bankers Association, said the Washington, D.C.-based trade group appreciated the government's efforts but that the guidance didn't resolve the issues for banks.
"Possession or distribution of marijuana violates federal law, and banks that provide support for those activities face the risk of prosecution and assorted sanctions," Keating said.
Richard Hunt, CEO of the Consumer Bankers Association, an industry organization that represents retail banks that serve consumers and small businesses, also took a dim view of the developments.
"First, Congress must change federal law, which bans the sale and distribution of marijuana," Hunt said in a statement. "Then, all federal regulators must provide clear and precise guidance. Until then, the nation's 7,000 banks will be highly reluctant to participate in this new type of 'commerce.'"
What do you think? Should the banks take deposits from pot growers?
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