3 Questions with Jenna Meyer

A chief concern we hear from banks and credit unions is that cannabis banking is much more intrusive than what a typical business banking relationship requires. They’re also uncertain about how they can manage compliance without sacrificing customer service. Here’s an overview of what financial institutions can expect when it comes to compliance requirements and how they can offer a collaborative experience with the cannabis-related businesses (CRBs) they serve.

1. Why is additional due diligence required to serve CRBs?

Banks and credit unions serving this industry must comply with a patchwork of state regulations, as well as guidance from the Financial Crimes Enforcement Network (FinCEN) to ensure that money going into and out of the CRB is from legal channels and that financial institutions are only banking legal funds. This due diligence includes:

• Verification that the CRB is duty licensed and registered.
• Review of the license application.
• Obtaining information about the CRB and related parties from the state licensing authority.
• Understanding the normal and expected activity of the business.
• Monitoring for negative news about the CRB and related parties.
• Monitoring for suspicious activity.
• Refreshing customer information on a periodic basis.

2. How can financial institutions manage compliance while delivering exceptional service?

Shield works closely with its banking clients to ensure their customer or member experience is as frictionless as possible. Our BSA/AML compliance platform can be integrated with the most commonly used accounting platforms and makes it easy for data to be requested and supplied in a secure fashion. Shield is a Validated Integrator with Metrc, so we can automate many data collection processes without requiring any manual intervention.

Shield also facilitates the conversation between the CRB and the banker, allowing multiple people on the team to work together on compliance. If there’s an issue, the financial institution can explain why something may not comply with its policy while allowing the CRB to provide justification or additional information. This helps the CRB understand that there’s room to work with the financial institution to address concerns as they arise.

3. How do changing regulations impact banking relationships?

Shield continually monitors the industry regulations and seeks feedback from its clients to ensure any regulatory changes (or examiner requests) are reflected in its software. For example, if a specific financial institution's examiner wants it to focus more on accounting data or more on seed-to-sale data and adding in their taxes information or non-plant touching sales, our banking clients have the option to configure the system and request exactly what they need to get from the CRB.

As cannabis becomes legalized in more states and eventually at the federal level, it’s hard to imagine that oversight of the industry will go away completely. Understanding how compliance and customer service can go hand in hand is critical to building long-term relationships with CRBs.

• CUNA Regulatory Compliance Certification School - April 24-29 (Chicago, IL)
• CUNA Credit Union Board of Directors Conference - May 1-4 (Honolulu, HI)
• Experience FinXTech 2022 - May 5-6 (Austin, TX)
• PA Bankers 2022 Convention - May 12-15 (Scottsdale, AZ)
• NJ Bankers Annual Conference - May 18-22 (Amelia Island, FL)
• Credit Union League of Connecticut Cannabis Banking Summit - June 7 (Hartford, CT)
• Independent Bankers Association of New York State (IBANYS) Annual Convention - June 13-15 (Verona, NY)
• 2022 COCC Partners Expo - June 15-17 (Mashantucket, CT)