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States Look to Feds for Advice on Marijuana Loans
WASHINGTON (12/12/13)--With the legalization of marijuana's recreational use in Colorado and Washington, concerns are now being raised about how merchants should be integrated into the financial mainstream.
State governors and congressional representatives said more guidance from regulators is needed, and they hope to get some answers from today's private meeting of the federal Bank Secrecy Act Advisory Group.
The Department of Justice (DOJ) approved the legality of the state's initiatives earlier this year. The Treasury Department now finds itself having to mitigate the risk of a currently cash-only business without watering down money-laundering protection.
Credit unions and other financial institutions are wary about being involved because marijuana possession is illegal at the federal level, thus subject to suspicious activity reports.
U.S. Rep. Denny Heck (D-Wash.) has been pressing for a "safe harbor from liability" of being accused of money laundering (The Seattle Times Dec. 11). He and U.S. Rep. Ed Perlmutter (D-Colo.) both are seeking a venue for financial transactions.  The two brought forth a "common sense" Marijuana Business Access to Banking Act, which remains in subcommittee.
Perlmutter said there is a need to "provide financial institutions assurance that they can make their own business decisions related to legal, financial transactions without fear of regulatory penalties or criminal prosecution."
A cash-only industry is an "open invitation to organized crime and tax avoidance," Heck told The Seattle Times.
Colorado Gov. John Hickenlooper and Washington Gov. Jay Inslee also want to implement a process so marijuana producers, processors and retailers operate like any other legal business (American Banker Dec. 11). This means processing payments via automated clearing house or credit and debit cards, and making deposits.
"Action by federal regulators to allow state-licensed marijuana businesses to fully access the national banking system would promote public safety and provide significantly better means of meeting the state and [U.S. Department of Justice] enforcement priorities," the two wrote in an Oct. 2 letter to the Treasury Department, the National Credit Union Administration, the Federal Deposit Insurance Corp., the Consumer Financial Protection Bureau, the Federal Reserve, and the Office of the Comptroller of the Currency.
They added, "Presently, there are a host of banks and credit unions in Colorado and Washington that we understand are willing to provide normal banking relationships to state marijuana licensees and who would submit to all special [enhanced due diligence] requirements of applicable federal banking regulators under their compliance programs for AML laws."


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