news.cuna.org/articles/108506-bsa-conference-4th-corner-cu-talks-challenges-of-serving-legal-pot-biz
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Mark Mason, an attorney representing Fourth Corner CU of Denver, Colo., and Deirdra O’Gorman, president/CEO of Fourth Corner, speak at the CUNA/NASCUS BSA Conference. (CUNA Photo)

BSA Conference: 4th Corner CU talks challenges of serving legal pot biz

November 19, 2015

FORT LAUDERDALE, Fla. (11/19/15)--Attendees at the CUNA/NASCUS Bank Secrecy Act (BSA) Conference heard firsthand the difficulties credit unions will face trying to serve legal marijuana-based businesses from a credit union trying to do just that. Mark Mason, an attorney representing Fourth Corner CU of Denver, Colo., and Deirdra O’Gorman, president/CEO of Fourth Corner, spoke at the conference.

O’Gorman highlighted how serving marijuana businesses could be a lucrative source of income for credit unions, citing an October 2014 Washington Post article that said the cannabis business is growing so fast it could be worth $35 billion by 2020, more than the National Football League.

Medical marijuana is now legal in 23 states and the District of Columbia, and recreational use is now legal in three states (Colorado, Washington and Alaska) and the District of Columbia.

Fourth Corner CU was chartered by the Colorado Division of Financial Services in November 2014 with an multiple association common bond for licensed marijuana businesses, licensed hemp businesses, marijuana business trade associations and non-profit and charitable organizations.

Fourth Corner received a routing and transit number in August 2014, a Form 23 Surety Bond in December 2014 and a directors and officers liability policy in February 2015.

As a compliance-based institution, Fourth Corner has also developed a 140-point state-specific Field Compliance Assessment to vet marijuana-related businesses, as well as a 170-page anti-money laundering Risk Management and Compliance Manual.

Mason advised credit unions that are interested to start looking at the businesses firsthand.

“The only way you can really make sure that your potential member is compliant, we believe, is to get out from behind the desk and go out into the field, or to hire someone that really understands the rules of the industry, so you can make a determination if your prospective member is compliant,” Mason said.

The U.S. Department of Justice, Treasury’s Financial Crimes Enforcement Network and NCUA have all released guidance on serving marijuana businesses.

Fourth Corner is currently suing the Federal Reserve Bank of Kansas City, as well as the National Credit Union Administration after it was denied share insurance coverage and a Fed master account.

(Editor’s note: For more coverage of CUNA’s BSA Compliance Conference, see the following stories in today’s issue: BSA Conference: Bitcoin daily usage comparable with Discover, Western Union; BSA Conference: CUs must manage risks associated w/ serving MSBs; BSA Conference: Attendees hear the latest from NCUA, FinCEN, OFAC; and BSA Conference: Expert gives a glimpse into cyber black market.)