Earlier this year, the National Credit Union Administration (NCUA) issued its first enforcement action against a small, Michigan-based credit union (CU), for servicing cannabis clients without adhering to FinCEN’s guidance. Specifically, the CU was relying on manual compliance processes to monitor its 150 Marijuana-Related Business (MRB) customers.
The Stipulation and Consent to Cease and Desist Order requires the CU to:
- Implement an automated system to effectively monitor and identify all transactions for suspicious activity…;
- Engage a third party to determine if prior MRB activity warranted a SAR and if so, file any SARs recommended by the third party;
- Immediately develop and implement a system to ensure all Currency Transaction Reports are filed accurately…; and,
- Stop opening new MRB accounts effective immediately.
This Order emphasizes that manual compliance processes are likely inadequate for monitoring MRB activity. It also lays out what regulators expect automated compliance and/or suspicious activity monitoring systems to include to further support compliance with FinCEN’s MRB requirements. These include, at a minimum:
- Reconciliation of MRB Point of Sale, METRC, or accounting system data relative to member deposits.
METRC (Marijuana Enforcement Tracking Reporting Compliance) is a web-based, state-mandated software platform for end-to-end tracking of the cannabis supply chain, from seed to sale. This includes the production, manufacturing, testing, distributing, and selling of cannabis products.
- Ongoing monitoring of adverse public information affecting MRBs;
- Timely verification of changes in licensure status, including notification of a lapse in an MRB’s state licensure;
- Systematic monitoring of unusual ACH or wire activity for MRB accounts; and
- Monitoring of FinCEN “Red Flags” outlined in FIN-2014-G001, “BSA Expectations Regarding Marijuana-Related Businesses.”
Are you banking MRBs? Do your monitoring systems fit the bill? Learn more about FinCEN’s guidance and expectations for banking cannabis businesses by checking out our webinar, BSA/AML and Cannabis, which is available now OnDemand.
Deb joined Banker’s Compliance Consulting with twenty years of experience in the banking industry. Her past positions include teller, credit review analyst, assistant financial officer, BSA Officer, Compliance Officer, and Director of Compliance. She has worked for both a small community bank and a large billion-dollar bank.
Deb has Associate Degrees in Business Management and Accounting. She is a graduate of the American Bankers Association National Graduate School of Compliance Management, an honors graduate of Schools of Banking Compliance School, and a graduate of Schools of Banking Advanced School of Banking. Deb’s considerable knowledge and experience make her a valuable member of the Banker’s Compliance Consulting Team. Deb is a Certified Regulatory Compliance Manager (CRCM) and a Certified Anti Money-Laundering Specialist (CAMS).
Deb loves to spend her free time cycling, running, kayaking and weight lifting with her husband. Between them, they have three adult children and six grandchildren. Other interests include anything outdoors and anything she hasn’t done or seen yet!