TOPIC: Marijuana Related Business

Registration Open for June Virtual Tour - Join us June 7, 8 & 10 and earn up to 3 CAMS credits

VERAFIN VIRTUAL TOUR 2021
Fraud Detection & BSA/AML Online Events


Verafin is proud to offer another edition of our Virtual Tour, the industry-leading online event with separate days exploring AML, Fraud, or High-Risk Customer Management. Join us daily on June 7, 8 and 10 for a 90-minute accredited session focused on one of these key themes — brought to you directly through the convenience of Zoom.

BSA/AML Compliance & Management Session:
Monday, June 7, 3:00pm – 4:30pm EST
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Fraud Detection & Management Session:
Tuesday, June 8, 3:00pm – 4:30pm EST
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High-Risk Customer Management Session:
Thursday, June 10, 3:00pm – 4:30pm EST
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Enroll for any or all of the online events that interest you! You can expect engaging discussions on industry hot topics, expert perspectives, and exciting innovations in financial crime management — with no registration fee.

To allow for greater flexibility and customization of your conference experience, each online event in the 2021 Verafin Virtual Tour has been individually accredited. This allows you to earn credits by attending the sessions most relevant to your interests.

Attendees are eligible for up to 3 CAMS credits, 6 CAFP credits, 6 CRCM credits, and may be eligible for up to 4.5 Continuing Professional Education (CPE) credits towards industry accreditation programs, such as CFE and CFCS.

To be eligible for credits, you must attend the session live. If viewing sessions as a group, all attendees must complete the registration process individually to ensure credits are issued accurately.

Register below to save your seat for this edition of the Verafin Virtual Tour and check your inbox and the conference webpage for regular event updates.

Register for all sessions now

    Infographic | Marijuana-Related Businesses - The Risks & Rewards of Banking a Growing Industry

    Infographic
    Marijuana-Related Businesses
    The Risks & Rewards of Banking a Growing Industry

    Download Now


    Marijuana-related businesses (MRBs) have been receiving a lot of attention lately. This growing industry is already worth more than $10 billion in the U.S., with that value projected to almost triple over the next five years, creating many questions for financial institutions around banking MRBs.

    This infographic provides a brief introduction to the world of MRBs, mapping marijuana law by state, examining the number of businesses that have been flagged as marijuana-related in the Verafin Cloud to date, and offering insight into related compliance risk.

    Download Now

      ACBB_Filling in the missing pieces to your customer solutions

      Take a few minutes and learn what's happening in the world of Same Day ACH & Faster Payments.  
      Compliance Anchor has upcoming webinars on Reg E, Banking Marijuana, 2021 NACHA Rules & a brand new 3-part Compliance School, coming in May.
      Also, feel free to register for ACBB's FREE, 60-minute Webinar, presented by Amy Smith of TCHPA.

        Demonstration | End-to-End High-Risk Customer Management & CDD/EDD - Join us Dec 16

        December 16 at 12:30 PM - 01:30 PM EST
        End-to-End High-Risk Customer Management & CDD/EDD
        Segmentation, Stratification, Surveillance & EDD Workflows for High-Risk Customers

        Register Now


        High-risk customer management is a significant challenge, as financial institutions must balance the needs of their business and customers with heightened regulatory expectations for customers in high-risk categories.

        Join us as product experts demonstrate how Verafin helps you effectively manage high-risk categories of customers, including private ATM owners, Cannabis-Related Businesses (CRBs) and more. Learn how our segmented and stratified approach to risk provides a more accurate assessment of your high-risk customers — saving you valuable time and resources.

        Register Now

          Infographic | Marijuana-Related Businesses: The Risks & Rewards of Banking a Growing Industry - Download Now

          Infographic
          Marijuana-Related Businesses
          The Risks & Rewards of Banking a Growing Industry

          Download Now


          Marijuana-related businesses (MRBs) have been receiving a lot of attention lately. This growing industry is already worth more than $10 billion in the U.S., with that value projected to almost triple over the next five years, creating many questions for financial institutions around banking MRBs.

          This infographic provides a brief introduction to the world of MRBs, mapping marijuana law by state, examining the number of businesses that have been flagged as marijuana-related in the Verafin Cloud to date, and offering insight into related compliance risk.

          Download Now

            Webinar - 1 CAMS Credit | 2020 Crime Trends & Technology: A Year in Review - Join us Dec 3

            Webinar
            December 03 at 12:30 PM - 01:30 PM EST
            2020 Crime Trends & Technology: A Year in Review
            What’s on the Horizon for Fraud & BSA/AML in 2021?
            A Special Presentation by Verafin Industry Experts

            1 CAMS credit

            Register Now

            From the unprecedented impact of the COVID-19 crisis to the historic 50-year anniversary of the BSA, 2020 has been a defining year in financial crime management. With year-end approaching, now is the time to reflect on lessons learned and the road ahead for 2021.

            Join us for a special CAMS-accredited, year-end webinar as experts discuss key trends from 2020, such as COVID-19-related fraud schemes, online account takeover, and recent industry calls to modernize the BSA/AML regime, as well as potential challenges for 2021 and the role of technology in mitigating financial crime.

            Register Now

            Verafin will provide attendees with a certificate of attendance for 1 CAMS Credit. Attendees are responsible for submission of the certificate and reporting of credits to ACAMS.

              Legalization by State UPDATED

              Cross-posting from the Cannabis Banking Group: 

              Good morning!  Based on the legalization measures this week and changes over the last quarter, we bring you an updated Legalization by State tracker!  We update this tracker on a quarterly basis to help you navigate legalization within your state and across the nation.  Have a great morning!

                Cannabis Banking: Regulatory Health Check

                Cross-Posting with the Cannabis Banking Group:

                Hello and Happy Friday!  In today's share, we have provided our Cannabis Banking Regulatory Health Check!  This document has been designed to assist you in performing an internal assessment of the adequacy of your Cannabis Banking Program in advance of your next regulatory examination.  Have a wonderful weekend!

                  Webinar - 1 CAMS Credit | Banking Cannabis-Related Businesses: Marijuana, Hemp and CBD - Join us Sept 15

                  September 15 at 12:30 PM - 01:30 PM EST
                  Banking Cannabis-Related Businesses: Marijuana, Hemp and CBD
                  Regulatory and Due Diligence Considerations for BSA/AML and Risk Management Programs

                  1 CAMS CREDIT

                  Register Now

                  The burgeoning U.S. cannabis industry is subject to a complex regulatory compliance landscape, with laws differing from coast to coast. As profits flourish, financial institutions are facing significant regulatory uncertainty regarding the risks and rewards of banking Cannabis-Related Businesses (CRBs).

                  Join Jim Richards, former BSA Officer at Wells Fargo, Heather Allen, First Vice President and BSA Officer at Peoples Bank, and Corey Lynch, Product Expert at Verafin, as they discuss the intricacies of banking CRBs. From informative industry perspectives to the latest developments, these speakers will keep you informed of the importance of effective procedures for banking CRBs.

                  Register Now

                  Verafin will provide attendees with a certificate of attendance for 1 CAMS Credit. Attendees are responsible for submission of the certificate and reporting of credits to ACAMS.

                    Cannabis-Related Business Questionnaire

                    Employee at a bank ($7.5BUSA)
                    Hello all! I was wondering if there are any individuals out there that work for an FI that requires MRB/CBD-related businesses to complete annual questionnaires regarding their expected activity and their involvement in the Cannabis industry? Or do you have these businesses complete one Questionnaire prior to establishing a relationship or when Cannabis-related activity is identified?

                    Any help would be appreciated! Thanks!

                      Demonstration | End-to-End High-Risk Customer Management & CDD/EDD - Join us Sept 2

                      September 2 at 12:30 PM - 01:30 PM EST
                      End-to-End High-Risk Customer Management & CDD/EDD
                      Segmentation, Stratification, Surveillance & EDD Workflows for High-Risk Customers

                      Register Now


                      High-risk customer management is a significant challenge, as financial institutions must balance the needs of their business and customers with heightened regulatory expectations for customers in high-risk categories.

                      Join us as product experts demonstrate how Verafin helps you effectively manage high-risk categories of customers, including private ATM owners, Cannabis-Related Businesses (CRBs) and more. Learn how our segmented and stratified approach to risk provides a more accurate assessment of your high-risk customers — saving you valuable time and resources.

                      Register Now

                        Marijuana, Hemp and CBD Legalization by State | Additional Detail

                        Good morning!  A few weeks ago, we posted a document that outlined cannabis legalization by state and with this being such a dynamic and moving market, we've added details to that document and it is attached for you.  I think the details provided for CBD bans, legality, and licensing are a perfect demonstration of how this seemingly lower risk industry is much harder to wrap your arms around than it may appear.  Have  wonderful day!

                          CRB Coffee Break | FRIDAY!

                          Good morning! Join us Friday for our CRB Coffee Break here on the Network! Each quarter we bring you the latest in cannabis banking from answers to tough questions to learning how your peers are addressing this issue to the future of the industry and its impact to financial institutions. 

                          This Friday we will cover:
                          • Cannabis Banking Highlights
                          • Compliance and Online CBD Sales 
                          • The Future of Hemp Banking
                          • Cannabis and Electronic Payments
                          • States to Watch in 2020
                          • Recent Cases and Questions
                           To Register: https://www.cbancnetwork.com/education/webinars/view/cbafc879-b9f9-4409-8600-5f7fe9635527

                            Cannabis Documentation by Entity Type

                            Happy Friday!  We receive quite a few questions on the documents you should be requesting from your direct/indirect MRBs, hemp and CBD entities and thought it might be nice to share the love!  Attached you will find a list of compliance documents that we suggest you require for each entity type to fully understand the business.  

                            Please let me know if you have any questions. Thank you so much and have a wonderful weekend!

                              Do FinCEN's Guidelines Make It Easier to Bank Hemp?

                              This is a question I've been receiving frequently in the last week.  I like that FinCEN has taken a step to advance the banking side of the industry forward. However, I liken last week’s guideline release to the MRB guidelines issued in 2014.  It’s a guide for what needs to be done, but not how to do it.  Further, the assertion that an attestation from a hemp customer is sufficient evidence of being licensed is neither a safe nor sound way of achieving that assurance.  Hemp and its derivatives are not considered to be illegal or controlled substances so long as THC levels are in line with regulatory definition and applicable statute.   We’ve seen how the regulators have interpreted the 2014 MRB guidelines: Banking Direct marijuana-related businesses is a risk-based decision. The regulators expect that a financial institution will take steps to ensure proper levels of due diligence are applied; ongoing monitoring can provide a mechanism to ensure transactions are commensurate with the type of entity, customers served, products offered and pricing set; and that a program is in place that facilitates the effective identification, management, monitoring and control of associated risks. Banking hemp and its derivatives are no exception (and in the case of CBD, you have the FDA perspective to factor into this process).  As a Risk, BSA or Compliance Officer responsible for establishing your Cannabis Banking Program, for developing the process by which key risks are identified and properly controlled, you have to look at these guidelines as simply that.  You are going to be sitting across the table from your regulator answering the tough questions.  You need to ensure you take the steps to protect your institution. 

                              Do I think the hemp and CBD markets are extraordinarily valuable and ripe with opportunity.  YES!  But,  do I think the guidelines ease requirements for banking hemp. Absolutely not.  That’s exactly why you need to have the knowledge and resources at your fingertips to back you up as you take on these entities. 

                              Be scared and do it anyway – but do it the RIGHT way.

                                Banking Hemp and CBD

                                A little snip from our Q2 INSIGHT:  

                                There continues to be a view within the banking industry that hemp and CBD businesses present lower risk than direct marijuana businesses. In terms of legality, hemp as defined and proven under the 2018 Farm Bill, is a legal agricultural commodity. 

                                Hemp-derived CBD is not considered a controlled substance but remains a sore point with the FDA.  To date, the FDA has not approved a marketing application for cannabis for the treatment of any disease or condition.  The FDA has, however, approved one cannabis-derived and three cannabis-related drug products. These products are only available with a prescription from a licensed healthcare provider.  Under the Food, Drug and Cosmetic (FD&C) Act, any product intended to have a therapeutic or medical use, and any product other than a food that is intended to affect the structure or function of the body of humans or animals, is a drug.  The legality of selling CBD products depends, among other things, on the intended use of the product and how it is labeled and marketed. Even if a CBD product meets the definition of hemp, it must still comply with all other applicable laws including the FD&C Act.  In other words, CBD cannot be sold as a dietary supplement, infused into food or pet food, or beverages.  Under the FD&C Act, cosmetic products and ingredients are not subject to premarket approval by the FDA except for most color additives.  Yet, we continue to see an increase in online and brick-and-mortar CBD retailers.  From a banking perspective, what do you need to be concerned about?  The first and most critical element is understanding legality of CBD within your state.  There are half a dozen states that have implemented CBD licensing requirements of varying degrees of coverage.  The FDA has issued letters of warning to several companies whose labeling or marketing practices qualify as “triggering terms” in that they purport to diagnose, treat, cure, or prevent disease or other ailments.  Due diligence must prove legality at the state level, conformance with THC thresholds and avoidance of triggering terms.  

                                Despite due diligence requirements to establish the burden of proof of legality for hemp and CBD, we have seen account opening and monitoring fees for such entities all but disappear.  How do you then manage your risk of banking such entities without the corresponding risk pricing? How do you ensure that your anti-money laundering and surveillance monitoring systems are effectively helping you to identify and manage risk? Hemp and CBD entities are largely treated as standard customers within such systems, identified through account opening workflows and whose behaviors are subject to the parameters set within the system. However, how do you ensure that the business activities of hemp and CBD customers are commensurate with the entity type, with products grown, processed, distributed, or sold?  How do you ensure that there are no THC funds being commingled with seemingly legal deposits?  These are key questions you to address when determining whether to offer depository services or loans to such entities, and in evaluating software providers that can help you effectively manage this risk.

                                Fortunately, the regulatory agencies have been slowly but surely setting standards for evaluation and risk management.  The Federal bank regulatory agencies clarified requirements for providing financial services to hemp-related businesses in December 2019.  In April 2020, the Conference of State Bank Supervisors published a Cannabis Job Aid that is inclusive of hemp, marijuana, state-by-state cannabis policy, and Indian Tribe hemp status.  The job aids are useful tools in understanding how the examiners define and view each entity, provides guidance to examiners for the evaluation process and provides specific policy citations for reference.  You can access the job aid at www.csbs.org/job-aids and use its contents as a self-evaluation checklist in advance of your next examination.  

                                As recent as June, the NCUA issued additional guidance addressing the servicing of hemp-related businesses.  Interestingly enough, the guidance indicates that NCUA examiners will be collecting data through the examination process in 2020 regarding the types of services credit unions are providing to hemp-related businesses. The guidance specifically notes that, “this data collection is intended only to help the agency better understand how it can assist credit unions serving hemp-related businesses.”  

                                These pieces of guidance are moving the industry forward in understanding the risks and opportunities of offering financial services to cannabis operators.  Each piece of guidance, existing and yet to come, will help shape the standards for safe and stable banking solutions for the cannabis industry and industries that will follow its path.  

                                  Banking Hemp | Why Recent Regulatory Guidance Matters

                                  With the passage of the 2018 Farm Bill and as the USDA has systematically approved state and Tribal plans for hemp cultivation and its end use, projections for the industry have been staggering. However, the projections may not be derived from where you may initially think.  Consider this:  “America’s hemp cultivators and producers remain focused for the most part on growing hemp for cannabidiol (CBD) production. However, overproduction of CBD-risk hemp biomass and flower during the 2019 season has drastically lowered prices for such plan material, as well as for extracted forms of CBD.  Consequently, there has been a pivot away from hemp-derived CBD by some farmers and processors, with a growing emphasis instead on hemp fiber and grain…While the CBD market has been ‘amazing’…it has its limits.[1]”  Scott Evans, Panda Biotech’s Executive Vice President, estimated that “50,000, maybe 100,000 acres of [CBD hemp biomass] production can satisfy the demand for that [CBD] market…Fiber and grain lends itself to more of a commodity, agricultural model. We can realistically plant millions of acres of this – three, four, five years down the road – and then we can use all that and apply it to industrial applications, textile applications.  And the plant’s so versatile, you can make so many products from it, that there will be enough demand to handle that kind of agriculture.” You read that correctly…50,000 to 100,000 acres of hemp production can satisfy the entire CBD market while millions of acres of hemp cultivated for fiber and grains can change the industrial landscape in which we operate!

                                  What does this mean for banking?  The NCUA got in front of hemp banking issues when it published Regulatory Alert 19-RA-02 last August, providing interim guidance for credit unions that were serving or considering serving hemp-related businesses.  The end of 2019 saw similar guidance jointly issued by the FRB, FDIC, OCC and FinCEN in conjunction with the Conference of State Bank Supervisors.  Between these agencies, we saw the regulatory approach to hemp differentiated from that of direct marijuana-related business.  Yes, CBD threw a wrench into things as it can have either hemp or marijuana origins, and the proof of origin and compliance plays into the due diligence you must employ to vet prospective customers, and determine whether a customer fits your risk appetite.  Add in the FDA’s oversight of this area and we have a prime recipe for confusion. But, this post is not about CBD. This post is about hemp and where it is headed.  As a legal agricultural commodity, it can be used as building material, it can replace petroleum-based products, and it can be used for textiles and consumption.   Segregating out hemp from marijuana not only opens the doors to industrial growth, but supports the product as mainstream and more acceptable to financial institutions to bank from both depository and lending perspectives.  Many of the farmers that have not been able to make a go on their historical crop focus may now turn to hemp for cultivation and processing.  There is much opportunity that can be had and in a world that has all but shutdown, we are all looking toward rebirth and recovery.  From your perspective, you may be looking for sticky deposits as you work through your financial analysis, and funding strategies going into the next quarter through the remainder of the year and beyond.  

                                  The regulatory agencies have seen this trajectory and have responded accordingly. The NCUA  issued additional guidance regarding the servicing of hemp-related businesses at the end of June. The guidance is largely comprised of the NCUA’s responses to frequently asked questions from the status of the USDA’s interim final rule to how the NCUA will address hemp within examinations conducted in 2020.  Interestingly, the NCUA communicated that “NCUA examiners will be collecting data through the examination process concerning the types of services credit unions are providing to hemp-related businesses.  This data collection is intended only to help the agency better understand how it can assist credit unions serving hemp-related businesses.”

                                  Perhaps FinCEN’s guidance issued in recent days will further define how regulators will approach the regulatory examination process and evaluation of a financial institution’s approach to addressing hemp-related businesses.  FIN-2020-G001 outlines due diligence requirements under the Bank Secrecy Act for Hemp-Related Business Customers. One of the more concerning pieces of the guidance is FinCEN’s assertion that a financial institution may confirm a hemp grower’s compliance with state, tribal government, or USDA licensing requirements by either obtaining a written attestation by the hemp grower or a copy of the license. Why not just require a copy of the license? This information is available and should be easy to produce. Would you feel comfortable taking a customer on their word that they are duly registered and licensed to grow hemp and that they do solemnly swear that no part of their business is related to direct marijuana activity? We aren’t so sure we’d bet the farm on that, especially for lending transactions where the source of repayment could be impacted by shutdown or seizure.  Further the guidance only suggests additional information that might be obtained to support your due diligence processes, such as crop inspection or testing reports; licensing renewal; or, updated attestations.  There are far greater considerations that must be addressed in establishing due diligence requirements for hemp customers to protect your institution from potentially bad actors in the market and throughout the regulatory process.  
                                  [1] https://www.hempbenchmarks.com/hemp-market-insider/the-turn-towards-hemp-fiber-a-growing-trend/

                                    FinCEN released long-awaited guidance for banking hemp-related businesses

                                    FinCEN released their much anticipated guidance around providing banking services to hemp-related businesses. This new guidance encourages financial institutions to provide banking services to hemp-related businesses and outlines BSA/AML expectations around customer due diligence (CDD) and suspicious activity reporting. This new guidance is the first to enhance the December 3, 2019 interagency statement on providing financial services to customers engaged in hemp-related businesses. 

                                    Read the full blog that breaks down the new guidance here.