Banks Creating Regulations for the Cannabis Merchants for Better Compliance
Growing and dealing in cannabis was illegal a few years back. However, the medical benefits of marijuana and hemp have legalised the production in many states. The legalisation of the plant has not only eased lives of dealers, but it has opened gates for money launderers. Complying with regulations is becoming a challenge for financial institutions. Hence, banks in the US are now issuing guidelines despite the regulatory patchwork from higher regulatory authorities for better compliance.
Spotty regulations and expensive efforts for compliance have restricted many dealers in the US, so various banks are working on offering banking services to several legal cannabis merchants in the country.
Federal and state laws for marijuana use despair and differences within states are preventing financial institutions from penetrating this sector which is now a legal business in several regions.
“Fewer than 700 banks and credit unions were actively providing banking services to marijuana-related businesses as of June…” https://t.co/uNobVtlyWs
— Scott Moritz (@FraudStrategist) October 26, 2020
According to the COO of Oklahoma State Bank, Mel Barnes, bankers are reluctant to enter the industry because of the intensive regulatory requirements. None of the other industries has compliance like that of the cannabis sector.
As per the reports from FinCEN and the AML unit of the US Treasury Department, less than 700 banks were dealing with marijuana dealers as of June. moreover, around 11 stats in the United States have legalised marijuana use for adults, but the sale and possession of the drug is illegal under the federal law.
As of December reports from FinCEN and other financial regulators, banks were not required to file SARs for people who wanted to grow hemp. In July, FinCEN announced that banks and other financial institutions have to conduct due diligence and oversee all the hemp-related business transactions.