February 24, 2017

Feds to step up enforcement of marijuana laws

Financial institutions, including credit unions, that offer marijuana-related business accounts, should be aware that law enforcement agents are expected to enforce federal marijuana laws when coming into conflict with the now seven states and Washington, D.C., where recreational use of the drug is permitted.

The White House reported the news last week, which CNN called a reversal from the previous stance under President Barack Obama that the federal government wouldn't intervene in states where nonmedical use of marijuana is allowed. A total of 28 states and D.C. have legalized the substance in some form.

CNN noted that White House Press Secretary Sean Spicer was "careful to distinguish between use of medical marijuana and recreational marijuana."

In light of these developments, it is important for credit unions that offer, or are thinking about offering, marijuana-related business accounts to ensure they are meeting their compliance obligations under the Bank Secrecy Act.

Since marijuana is still illegal at the federal level, the Financial Crimes Enforcement Network created guidelines in 2014 for credit unions seeking to service marijuana-related businesses. However, NAFCU, financial institutions and members of Congress have noted that the guidance does not distinguish between state-sanctioned marijuana businesses and the indirect businesses that service the marijuana industry, so financial institutions have had to determine how to classify and treat indirect businesses.

"Most banks and credit unions have either closed accounts or simply refused to offer services to indirect and ancillary businesses that service the marijuana industry," stated a letter from a bipartisan group of senators urging FinCEN to update its guidance last December. The senators urged FinCEN to update its guidance "without delay."