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Compliance and Transparency are Paramount to an Effective Banking Partnership – With an Added Layer of Service By Tina Sbrega S ecuring the right banking partner for your cannabis or ancillary business is critical and yet there are few options available. Less than 10% of all financial institutions in the country report providing banking services to this nascent industry. And there are numerous reasons why. First, as long as cannabis remains illegal at the federal level, too few financial institutions have made the de- cision to offer even the most basic of banking to Marijuana Related Businesses (MRB's), including operators, ancillary companies and even employees of this industry. e concern of potentially violating federal anti-money laundering and other laws by engaging in transactions with the proceeds of federally illegal cannabis operations is of major con- cern. While FinCEN (Financial Crimes Enforcement Network) provides banks and credit unions guidance on how to proceed in a compliant manner, the regulations are onerous and the penalties for failure to comply are significant. (FinCEN's role is to collect and analyze monetary activity in order to combat money laundering, terrorist financing, and other financial crimes.) e level of oversight and reporting is burdensome as FI's must file currency transaction and suspicious activity reports frequently and the reporting is extensive. A detailed chronicle of account activity is included in each suspi- cious activity report and must be filed every 90 days, regardless of whether the FI actually deems the account activity suspicious. e fact that it is illegal at the federal level deems it suspicious – simple as that. e FinCEN guidance further describes how FI's may do business with MRB's without triggering Bank Secrecy Act enforcement; it does not rule out enforcement actions by federal banking regulators or criminal law enforcement. e ongoing due diligence and account monitoring are much more extensive than the normal due diligence conduct- ed on all other customers/businesses. Pending Bills like the SAFE or MORE Act, may extend to more financial institutions a comfort level of banking the industry, but I am not certain it provides regulatory relief. At least for the foreseeable future, the cannabis industry will still be considered a high-risk business like money service and money transmitter businesses and not all FI's choose to bank these high risk industries. So once you have secured a banking partner, respect the fact that it won't be business as usual and there will be on- going monitoring of account activity. Where did the deposits derive from and where is the money going that is be- ing withdrawn? Every question, and more importantly every response, is to ensure that both the inflow and outflow of funds have been derived from and are going to legitimate business needs. An open and transparent relationship with your FI is necessary to ensure compliance. If this seems intrusive and you believe there are "workarounds", it's simply not worth the risk of losing your banking and potentially facing criminal charges. So when shopping for your banking partner, don't be offended, but rather be pleased there exists a due diligence process for both securing your accounts and ongoing monitoring. And while compliance is paramount to banking the legal cannabis industry, you should expect to have a high level of personal service extended to you and your team. S P O N S O R E D C O N T E N T B Y L I G H T H O U S E B I Z S O L U T I O N S , L L C