National Credit Union Administration (NCUA) Chairman Rodney Hood advised that credit unions will not be punished simply for working with cannabis-related businesses that operate within full compliance of state laws.
“It’s a business decision for the credit unions if they want to take the deposits,” Hood said in an interview with the Credit Union Times last week.
“We don’t get involved with micro-managing credit unions,” he said.
While Hood’s statement doesn’t necessarily offer credit unions guaranteed protection against action from the Department of Justice, it does provide clarity as to the NCUA’s stance on cannabis banking.
In the same interview, Hood added that a financial institution that does choose to work with cannabis businesses must closely follow existing federal guidance and should take extensive measures to ensure that the businesses they are serving are not violating any rules set forth by the state. While FinCEN’s BSA guidelines, a strong BSA program, and an effective controls environment are a few key pieces of the puzzle, it's also important for the financial institution to implement a strategy to ensure that the businesses it engages with are complying with state law and not violating the Cole Memo Priorities.
Hood’s statement sends a message similar to what we’ve heard from our credit union clients following their own conversations with the NCUA. For most NCUA examiners evaluating cannabis banking, focus is placed on the credit union’s BSA program, along with a deeper look at the controls the CU has put in place to ensure the cannabis business members are complying with applicable state law. Given the unique and critical view placed on cannabis banking, making sure the program’s processes and controls are easily understood is the key to satisfying the NCUA’s expectations.
At Green Check, our clients use our compliance management system for cannabis banking to provide their examiners with everything they need to complete their review. Not only does this ensure that the program withstands regulatory scrutiny, but it greatly reduces the time, cost, and effort needed to prepare for an exam.
If your financial institution is interested in learning how to develop a cannabis banking program that aligns with existing federal guidance and implement a cannabis account monitoring strategy that can withstand examiner scrutiny, tune in on September 10th for Part 3 of our Cannabis Banking Webinar: How Do I Do It? You can register for the webinar here.