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The SAFE Banking Act Update – Is Regulation for Banking CRBs on the Horizon?

Terri Luttrell, CAMS-Audit, CFCS
August 14, 2019
Read Time: 0 min

Many in the financial crimes community have been waiting for some sort of guidance on banking cannabis-related businesses. The Secure and Fair Enforcement (SAFE) Banking Act was introduced to address the cannabis banking issue and the accompanying lack of banking services to the cannabis industry, forcing significant amounts of cash to be stored in vaults or underground. It does not remove marijuana from the classification as a schedule 1 drug under the Controlled Substances Act but it does give certain safe harbor comfort for financial institutions who choose to provide traditional banking services to state-legalized cannabis-related businesses.

The current conundrum of banking cannabis-related businesses is that marijuana is still federally illegal, so any funds derived from these businesses and placed into the U.S. financial system is money laundering. While some financial institutions have taken on these risks and are currently providing services to these businesses in states that have legalized marijuana, most have not been willing to open the doors to federally illegal businesses.

The communities where cannabis has been legalized are flooded with cash associated with these businesses and have no place to deposit the funds, creating a major safety issue. According to the Denver Police Department in a statement to the American Banker’s Association (ABA), on average more than 100 burglaries have been reported each year in Denver since the state legalized recreational marijuana in 2012.

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The SAFE Act has bipartisan support, and if signed into law would allow banks to provide traditional services to cannabis-related businesses in states that have passed legalization of marijuana in some form. This would also allow CRBs to transact business in means other than cash and provide an auditable trail for financial institutions to better monitor for suspicious activity.

The SAFE Banking Act was referred to the Subcommittee on Crime, Terrorism, and Homeland Security in April of this year, and reported to the Committee on Financial Services in June. The ABA recently testified before the Senate Committee on Banking, Housing, and Urban Affairs that they fully support this legislation and urges the Committee to advance the legislation as soon as possible. With the backing of the ABA, perhaps this legislation will continue through the process and give much-needed relief to financial institutions wanting to provide services while safeguarding their communities. If your institution is concerned about this issue, contacting your U.S. Senator expressing the issues and concerns is a step in the right direction. We should support the ABA while they are doing their part to protect financial institutions.

About the Author

Terri Luttrell, CAMS-Audit, CFCS

Compliance and Engagement Director
Terri Luttrell is a seasoned AML professional and former director and AML/OFAC officer with over 20 years in the banking industry, working both in medium and large community and commercial banks ranging from $2 billion to $330 billion in asset size.

Full Bio

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