The enhanced due diligence required on an initial and ongoing basis will help the institution mitigate account-related risk, only when done properly and consistently.

For example, if you are not offering on premise ATMs, then there would be no impact to your ATM servicer.ĭoes the policy identify how management will handle accounts that do not meet policy requirements? This question stood out because it highlights the importance of having standardized processes and evaluation criteria to enforce the institution’s policy statements. This will help you hone in on the specific conversations you need to have (and document!). The best way to accomplish this is by analyzing your current or intended cannabis service offering and determining which third party providers are needed to deliver each service. While having conversations with all key service providers is important in establishing a successful cannabis program, it’s critical to evaluate which providers will be specifically impacted, and therefore which providers you’ll need to explicitly communicate with. Has management confirmed with each impacted third‐party provider that they will service this program? The DBO provides examples such as your fiduciary bond provider, armored car company, ATM servicer, correspondent banks, and Visa. Given this national perspective, the DBO cannabis banking questionnaire can prove to be a helpful resource for institutions nationwide.Īs your institution reviews these helpful resources, we wanted to point out a few key items in the questionnaire that caught our attention: While specific to California state chartered institutions, the questionnaire issued by the DBO pulls directly from FinCEN’s guidance on cannabis banking, as well as the recently issued cannabis job aid put out by the Conference of State Bank Supervisors (CSBS). Not only does this recent guidance offer a tacit endorsement of compliant cannabis banking, it also provides a helpful tool in the form of a detailed questionnaire institutions can use to build or evaluate their cannabis program. As with any new line of business, uncertainty around potential risks and regulatory overhead associated with new initiatives can be some of the most difficult obstacles to overcome. This guidance is encouraging because it shows the CA DBO’s willingness to work with financial institutions that are currently, or want to begin, banking cannabis. The guidance, published on October 2, 2019, is specifically designed to help California state-chartered banks and credit unions build and maintain compliant cannabis banking programs. California’s Department of Business Oversight (DBO) recently issued guidance pertaining to cannabis banking.

Department of business oversight