Marijuana and banks: Soothing the worries of the financial industry

Staff writerJuly 8, 2014 

Bankers who bank the marijuana industry – or who are considering providing services to the industry – may take some comfort from a copy of a letter sent Tuesday by Scott Jarvis, director of the state Department of Financial Institutions.

Writing to CEOs of state-headquartered banks, Jarvis attached a copy of guidance sent to him by the director of the Federal Deposit Insurance Corp., which regulates banks nationwide.

Director Doreen Eberley wrote that examiners have been given the latest guidance from the Department of Justice and the Financial Crimes Enforcement Network as it relates to banking marijuana-related businesses.

Rick Riccobono, director of banks at DFI, explained in an interview Tuesday that federal attitudes toward the question seem to be growing more conciliatory at the Department of Justice.

He describes the latest sense as, “We can’t change the law, but because we’re the guys enforcing it, we have no desire or the resources to prosecute folks who are using it in states where it’s legal, licensed, regulated and enforced.”

Marijuana remains listed as a dangerous drug under federal law.

Early on, Riccobono contacted the FDIC, Comptroller of the Currency and Federal Reserve concerning banks and the marijuana industry.

The latest guidance concerns filings that banks are required to make concerning any suspected suspicious activity.

Among obligations banks must attend under the Bank Secrecy Act, there are three types of filings that must be made if a bank suspects any suspicious activities. The first level would have a bank simply explaining that a customer is involved in the industry, and that the industry is legal in Washington although illegal in the U.S. The second level, with a higher priority, notes that there could be suspicious activity beyond simple involvement in the industry. The third requires a bank to explain why a customer or account has been terminated.

Few banks openly admit to offering services to clients involved with marijuana. The latest information, Riccobono said, could lead to easier access to, and more transparency by, the banking industry.

Banks may certainly hesitate because of moral objections, as they could with offering services to adult bookstores, for example, or perhaps they would decline accepting such clients because they might not want to offend current customers who would object.

But they need not worry about regulators.

And in their reporting, Riccobono said, banks should note that they are required to report clients who are engaged in ancillary businesses related to the marijuana industry.

“If they have knowledge that marijuana is involved, they have to report that,” he said.

This would apply, for example, to landlords who have leases with marijuana retailers, or electrical contractors or builders who have engaged in major projects with growers or processors.

“They have to file that. It’s a filing,” he said.

But Riccobono said he does not expect immediate results. As it is with the credit-card industry, which is not currently copacetic with the marijuana industry, it will be a step-by-step process as the banking industry grows to follow the sentiments of voters in Washington.

It’s also about the opportunity to earn money.

“The industry is going to be in the billions in the next few years,” Riccobono said.

“I firmly believe we will bank this industry.”

C.R. Roberts: 253-597-8535 c.r.roberts@thenewstribune.com

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