news.cuna.org/articles/113075-the-business-case-for-marijuana-banking
Sunny Seefried

The business case for marijuana banking

Serving a community need offsets compliance risks, Partner Colorado CU CEO says.

October 4, 2017

Sundie Seefried, CEO of Partner Colorado Credit Union in Denver, views marijuana banking as a great fit with credit union principles—and an endless exercise in risk mitigation.

Partner Colorado has been accepting deposits from marijuana businesses for nearly three years through a subsidiary, Safe Harbor Private Banking, Seefried told a general session audience at the CUNA Governance, Risk Management, and Compliance Leadership Institute in Denver.

Recreational use of marijuana is legal in Colorado. In accepting deposits from marijuana businesses, Partner Colorado is taking cash off the streets, Seefried says.

She told the audience stories of unbanked marijuana proprietors depositing thousands of dollars in cash into ATMs at 2 a.m.

“Safety was our No. 1 reason for getting into this,” Seefried says. “Last month, we processed nearly $100 million off the streets. Imagine what that kind of money looks like on the streets. It’s in the house next to you in elaborate safes. It’s in the cars next to you because it has be to transported to pay bills. It’s in the businesses next to you, again with elaborate safes. It’s in your neighborhood just like it’s in my neighborhood.”

Because the marijuana trade is legal in Colorado, serving marijuana-related also makes Partner Colorado relevant in its community.

“We looked at how it fit with the credit union philosophy—people helping people and serving the unbanked—and it fits with our mission,” Seefried says. “What credit union doesn’t talk about being relevant? If we serve our community and they vote this legal, is it our business to tell them what they can do, or is it our business to serve their needs?”

That said, Seefried acknowledges the credit union has taken on significant risk exposure. “It’s the biggest risk our credit union holds at this point in time.”

She has personally onboarded all clients during the programs nearly first two years. The program now has approximately 125 clients. “I designed the program to the highest compliance standard I possibly could,” Seefried says.

Colorado Partner is a state-chartered credit union, and the state has taken a very active role in working with the credit union to ensure risks are mitigated. The NCUA, being the Federal insurer is actively monitoring the program as it rolls out nationally and works with Partner Colorado on risk management every 90 days. Because it is an emerging market and risks continue to present, it becomes a constant evolving program; pushing to take mitigating strategies ‘one step further’. This will serve to ensure the safety and soundness of the program and credit union.

Colorado Partner is filing nearly 6,500 suspicious activity reports (SARs) reports annually with the U.S. Government’s Financial Crimes Enforcement Network.

“The program is so complex you always have to constantly train your employees to ask the right questions and go one step further,” she says. “That takes time in terms of training people up."

Still, Seefried is convinced she is doing the right thing in serving the marijuana community. Offering the service has improved the credit union’s bottom line, and members have been almost universally supportive.

“It’s hard to deny that we are banking the unbanked,” Seefried says. “And I think members understand that.”


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