Cannabis Compliance for Banks Part 1: It's Not a "one stop shop"

The number of Banks and Credit Unions actively serving Cannabis-Related Businesses (CRBs) grows by the month. By March 2019, U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) reported that 633 institutions were actively engaged in banking CRBs, up from 411 just 12 months earlier (based on Suspicious Activity Report (SAR) filings). The number is perhaps a bit inflated though, according to a June 2019 article in Marijuana Business Daily. The Maggie Cowee article estimates that the number of truly committed institutions is probably closer to 40. This could lead you to assume that somewhere between 40 and 633, many institutions are testing the water before they enter the pool. Is this where your institution is at?

At Trust Exchange, we have theory on the phenomenon. An institution’s compliance team can probably handle the extra workload and departmental cooperation of a CRB or two, but there’s a big difference between that and committing to the industry. It requires a level of expertise, persistence and execution that may be beyond the capabilities of the best compliance teams. It also requires a team that wears multiple hats, business services, BSA compliance, 3rd-party monitoring, etc. It’s a challenge that requires an institution to plan and execute in what we refer to as “Up and Out / Down and In” coordination. (see illustration below)

Fortunately for institutions looking to bank CRBs, the RegTech revolution has provided the tools to open the door to CRB banking compliant, safe and efficient manner. The challenge lies in the reality that there’s no such thing as one-stop shopping with CRB compliance service providers. Don’t let anyone convince you otherwise. There are, however, a handful of specialists that are the best at what they do. The team at Trust Exchange conducted extensive research, found and then partnered with the providers that will finely tune and scale your entire CRB. Need a provider that can plug into your core provider and monitor your CRB transactions in real-time? We have partnered with the best. Need a “boots-on-the-ground” inspection from someone who knows what “good” and “sketchy” looks like? We have partnered with the best. The most important (and convenient) part is that it all resides on the same platform as your institution’s ongoing 3rd-party compliance program, same login, same admin.

In the following posts we will introduce or partners one by one to tell you what they do better than anyone else. We are so proud that they chose the Trust Exchange Platform to provide their services. It’s an option you didn’t have before, using the same platform for both your 3rd-party compliance AND monitoring the compliance of your Cannabis Related Businesses.