WASHINGTON (7/29/14)--The Washington Department of Financial Institutions has offered information to credit unions in that state that wish to provide financial services to marijuana-based businesses. Washington voted in 2012 to legalize the sale or marijuana and related products to individuals over the age of 21 for recreational purposes. The state began issuing licenses to those businesses this month, and 20 other states have legalized some form of medical or recreational marijuana-related activity.
In a letter to the Washington DFI last week, Larry Fazio, director of the NCUA's Office of Examination Insurance, said the agency has provided the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) guidance to agency examiners, who are responsible for determining the compliance of financial institutions that provide service to marijuana-related businesses.
"Credit unions have been struggling with what we consider to be overreaching due diligence requirements in FinCEN's guidance for marijuana-related businesses," said Colleen Kelly, senior assistant general counsel for federal compliance for the Credit Union National Association.
"We have been hoping NCUA would provide definitive guidance to credit unions to relieve these ongoing due diligence concerns. I'm afraid this letter doesn't do it. CUNA will continue to encourage NCUA to provide additional compliance assistance for servicing these businesses."
FinCEN's guidance notes that U.S. Department of Justice Attorneys and law enforcement will devote enforcement resources to businesses that are distributing marijuana to minors, criminal enterprises, states where it is not legal, as well as several other scenarios.
In addition, the guidance warns financial institutions serving marijuana-related businesses to conduct due diligence by:
Financial institutions who suspect illicit activity are required to file a suspicious activity report (SAR). This obligation is unaffected by any state law legalizing marijuana-related activity, according to FinCEN's guidance.
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