A credit union that handles hundreds of millions of dollars in marijuana-related deposits each month manages the compliance risks in part by regularly filing suspicious activity reports, or SARs, a senior employee of the institution said in a congressional hearing Wednesday.
Rachel Pross, chief risk officer of Maps Credit Union in Salem, Oregon, told members of the House Financial Services Committee that 90 percent of the 2,770 total SARs her firm filed in 2017 and 2018 involved transactions for any one of the 500 state-registered cannabis businesses it counts as customers.
Maps, a community-chartered institution with roughly $750 million in assets on the books, began accepting cannabis-related customers in 2014 after Oregon authorized private marijuana possession and cultivation, according to Pross, and has seen a significant influx in cash since.
In 2017 and 2018, Maps’ 500 state-registered, cannabis-related customers deposited at least $529 million in cash altogether, according to Pross, who testified Wednesday as a representative of the Credit Union National Association, an industry group.
The credit union has also submitted currency transaction reports on thousands of deposits that exceeded $10,000 in one day over the same time frame, bringing the total number of Bank Secrecy Act-related reports filed on state-authorized marijuana commerce to at least 13,500 for the past two years.
“Maps is essentially providing free, highly-detailed information at least every quarter on cannabis-related monetary activity in the state of Oregon,” Pross said.
The credit union has tasked one full-time employee to monitor every 40 or so marijuana-related accounts, Pross said.
Cannabis-linked clients undergo criminal background checks during the onboarding process, and regularly provide financial statements and “day-to-day account transaction activity” after securing accounts at Mapps, she said.
But the credit union is only one of the roughly 400 financial institutions in the United States that, according to the Treasury Department, were serving state-licensed marijuana-related businesses, or MRBs, as of September 2017.
At least three banks and three credit unions in neighboring Washington state hold accounts for MRBs, and the number would likely increase if Congress were to mandate legal safeguards, Gregory Deckard, president of State Bank Northwest in Spokane, told lawmakers Wednesday.
Pross said her credit union filed the SARs to comply with guidance issued by the Treasury Department’s Financial Crimes Enforcement Network in 2014 after the Justice Department issued a related memorandum on its own limited enforcement priorities for marijuana.
Former Attorney General Jeff Sessions withdrew the memorandum in January 2018, but William Barr, President Donald Trump’s pick to replace him, has pledged to renew the previous administration’s policy of not enforcing the federal ban against marijuana in most cases.
At the hearing Wednesday, Rep. Gregory Meeks (D-NY) asked Pross whether creating legal safeguards for financial institutions to serve state-authorized MRBs would have any effect on her credit union’s operations.
“I think the most significant impact [would be] reduced legal risk,” Pross answered. “That is something that we deal with everyday—knowing that we have this tremendous legal risk in serving the industry.”
Rep. Blaine Luetkemeyer (R-MO) questioned why any banks would risk working with cannabis businesses while growing and smoking marijuana remains federally prohibited.
“This is the problem we have, that states have jumped the gun here,” Luetkemeyer said. “They should be contacting their congressmen, and we should be initiating this change if it’s wanted.”
Contact Daniel Bethencourt at email@example.com
|Topics :||Anti-money laundering , Know Your Customer|
|Document Date:||February 13, 2019|