Pueblo Bank & Trust, one of the nation’s major bank sponsors for privately owned ATMs, has told providers it will not allow machines to be placed in or near marijuana-selling businesses.
That prohibition is likely to continue, bank president Mike Seppala told The Denver Post, even if the federal government changes or softens rules prohibiting banks from doing business with the marijuana industry.
“Federal law says that it’s an illegal drug; we are federally regulated and abide by what the federal law says,” Seppala said in an interview. “We have made it clear we will not allow them in those establishments. It’s not that we can’t do it; we choose not to. Dispensaries and ATMs fly in the face of (federal law), and the whole purpose behind it is to keep the drug industry at bay.”
But should federal rules be softened to allow legal marijuana businesses to access banking services — as is expected to occur in the next several weeks, according to U.S. Attorney General Eric Holder — Pueblo Bank & Trust isn’t likely to budge.
“We don’t see any reason to change that unless required to,” Seppala said. “Not given the current makeup of my board and management, I can’t see loosening of our rule even if the federal government eases up.”
Marijuana remains an illegal drug under federal law, and banks are barred from doing business with that industry, even though recreational-marijuana sales in Colorado were legalized Jan. 1. ATMs require access to bank accounts for the transactions to be properly credited, but dispensary owners technically are barred from owning them — unless they were to create a different business just for the ATMs.
Pueblo’s staunch position is in part because ATMs not tied directly to a bank — there are more than 220,000 privately owned nationwide, but no specific number exists — can be an easy tool for money laundering.
“Absolutely, they are an easy money-laundering tool, and we will not be a sponsoring bank for any of them,” Seppala said. “But it’s an absolute given they have been utilized for money laundering.”
Colorado does not regulate privately owned ATMs, as some states do, nor does it require them to be registered or licensed, leaving unclear where they are located or who owns or operates them.
Bank-owned ATMs are federally regulated and must comply with specific rules. Private ATM owners must be vetted by the networks that allow them access, but it is banks that ultimately bear the responsibility of who’s allowed into the system.
The Denver Post recently reported that MetaBank in South Dakota, another major sponsor of privately held ATMs, instructed providers to remove the machines from marijuana dispensaries and avoid placing them there.
Other sponsor banks might have followed suit, but there is no comprehensive database of which banks sponsor ATM access.
Seppala estimates that Pueblo sponsors ATM providers who handle more than 5,000 machines, many of them located in states where medical marijuana sales are legal.