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Fourth Corner Credit Union last month asked a federal judge to have the Federal Reserve Bank of Kansas City issue the institution a master account so it could serve marijuana advocates and those groups that support the legalization of marijuana in Colorado.

In Fourth Corner's complaint, filed on Sept. 29, the credit union claims that the Federal Reserve Bank is engaging in an "illegal discriminatory procedure" by asking Fourth Corner for information that the Fed does not have the authority to ask for when an institution applies for a master account. Fourth Corner also argues that federal law "unambiguously creates a non-discretionary statutory obligation" that requires the Fed to issue a master account to all depository institutions.

Last June, the U.S. Circuit Court of Appeals for the Tenth Circuit, in a majority panel decision, overturned a U.S. district court's ruling in Fourth Corner's lawsuit against the Federal Reserve Bank, saying that the Fed does not have the discretion to deny the application as long as the applicant meets all of the requirements for a master account. The court relied upon Fourth Corner's promise that it would service marijuana-related businesses only if federal law permits it.

Fourth Corner initially applied for a master account with the Federal Reserve Bank of Kansas City in November 2014 after it received a state charter to serve the marijuana industry in Colorado.

There is also ongoing litigation between Fourth Corner and the NCUA over the credit union's request for federal insurance.

In the September edition of NAFCU's Compliance Monitor, Special Counsel for Compliance and Research Pamela Yu summarized problems affecting the financial industry's service to the legal marijuana industry as a result of conflicting state and federal laws. Despite booming business, Yu said the marijuana industry remains largely cash-based because "financial transactions involving proceeds from marijuana-related activity can still form the basis for federal criminal prosecution, despite growing legalization under state law."

The Financial Crimes Enforcement Network (FinCEN) guidance released in 2014 says an institution handling monetary transactions for a marijuana business must follow the same Bank Secrecy Act reporting and recordkeeping rules it follows in dealing with any other business.

NAFCU has raised concerns that the FinCEN guidance doesn't address the legal issue of whether an institution is violating federal law in providing services to marijuana businesses.