The Value of Relationships
As we prepare to gather around the Thanksgiving table with friends and family, we are reminded of the importance of community. Mission-driven financial institutions are keenly aware of their role in the community and the importance of building strong local connections.
When it comes to building a cannabis banking program, relationships are paramount. To guard against the risks of this industry, banks and credit unions should be prepared to invest time, energy, and resources in establishing and maintaining strong relationships with key stakeholders. The following groups are particularly important:
Your Local Community
While reputational risk continues to decline as the overall acceptance of cannabis increases, there will be those who oppose this market. Financial institutions serving or considering serving cannabis-related businesses (CRBs) should be prepared to address concerns raised by members of the community. Having a solid justification for why the financial institution is serving the market, grounded in its service to the community, is critical to mitigating reputational risk and establishing strong relationships with the community.
Cannabis-Related Businesses
Unlike traditional banking relationships where customers are generally not exposed to compliance activities at the financial institution, CRBs must be active participants in their own compliance. This requires frequent interaction between the operator and the financial institution to ensure full transparency. Shield’s platform enables banks and credit unions to vet and onboard potential customers and access critical account and transaction data all while delivering a positive customer experience. Establishing a point person or a small team dedicated to this line of business can also help bankers become trusted partners with CRBs.
Board of Directors
Sometimes, resistance to serving CRBs can come from the Board itself. Educating board members about the risks and how the institution will meet its compliance obligations will allow them to evaluate the program, establish clear policies, and provide informed guidance to the management team.
Regulators
Maintaining open and transparent relationships with regulators is a cornerstone of cannabis banking. While regulators will not endorse a cannabis banking program, they can offer valuable feedback on their expectations and any concerns they may have.
Engaging with experts in the compliance, audit, and BSA/AML space who understand the cannabis industry and operational requirements can be instrumental in ensuring banks and credit unions are set up for success.
Have questions about cannabis banking? Contact Shield ›
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