First MSB Enforcement Action

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.

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Banking and 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.

Published
2021/04/26

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