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Feds let banks serve pot industry

By Marcie Geffner · Bankrate.com
Thursday, February 27, 2014
Posted: 6 am ET

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?

Follow me on Twitter: @marciegeff.

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4 Comments
JW
February 27, 2014 at 1:11 pm

I agree w/ Craig and Rob. The war on pot was a war on us and has caused way to much harm to American families. Not just in ruining lives w/ jail but also in taking away money that should have gone to making our lives better, and by also keeping meds. away from people who desperately need them. Not only would this help stop the needles suffering of millions, it would also lift the states out of poverty,(ie w/ taxes and License fees), and it would in my opinion, save the world. With Love from the Universe, keep on keepin on. JW.

Joe
February 27, 2014 at 12:47 pm

We have made criminals out of our citizens long enough. This is all political BS. As long as alcohol and cigarettes are legal keeping MJ illegal defies common sense.

Rob
February 27, 2014 at 12:21 pm

"Should the banks take deposits from pot growers?"

Of course, business is business. And the fed should remove laws relating to marijuana and let the states decide its fate.

craig
February 27, 2014 at 11:23 am

It is time...time to legalize marijuane on a federal level. We lost the "war." It is time to stop the madness of this prohibition lunacy. Stop flooding the courts with marijuana cases, our jails and prisons with offenders and linning the pockets of defense attorneys.

It is time...

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