More U.S. financial institutions are saying yes to marijuana businesses. As of March 31, there were 493 banks and 140 credit unions providing banking services to marijuana-related businesses, according to the Financial Crimes Enforcement Network (FinCEN). That’s up from a total of 400 banks and credit unions actively serving marijuana businesses at the end of 2017 – representing a 55% increase.
FinCEN is the U.S. Treasury Department agency that collects and analyzes information about financial transactions in order to combat money laundering and other financial crimes. Banks and credit unions accepting deposits from marijuana businesses are required to file Suspicious Activity Reports (SARs) with FinCEN detailing those transactions.
As of March 31, FinCEN had received 81,725 SARs related to deposits from marijuana-related businesses. Most (61,036) involved businesses that appeared to be operating in compliance with state laws. Just over 6,000 raised “red flags” that suggest the businesses may not be operating in compliance with state regulations or federal guidance. The remainder (19,368) involved marijuana businesses that had their accounts closed by financial institutions, either because their activities raised red flags or because the institution no longer wanted to bank marijuana businesses.
There are nearly 13,000 banks and credit unions in the U.S. However, most are reticent about accepting deposits and providing services to marijuana growers, dispensaries and related businesses. This is largely due to the mismatch of state and federal laws regarding the cultivation, sale and use of marijuana and related products. The U.S. Department of Justice and FinCEN issued guidance in 2014 stipulating how banks and credit unions could serve marijuana businesses without running afoul of federal laws and regulations. Among other things, that guidance requires financial institutions to regularly file SARs detailing state-regulated cannabis customers’ activities.
The Secure and Fair Enforcement (SAFE) Banking Act, bipartisan legislation pending in the U.S. House and Senate, would remove federal obstacles to banking cannabis business. The bill has been approved by the House Financial Services Committee and is now awaiting a vote before the full House. While the Senate has not yet taken up the SAFE Banking Act, the Senate Banking Committee has scheduled a July 23 fact-finding hearing regarding banking challenges faced by state-regulated cannabis businesses.
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