Officials at one of three banks where about $850,000 was seized from accounts federal authorities say marijuana businesses used to illegally funnel money said they were unaware of the conduct.
The seizures, which occurred in February but were made known Monday, involved eight bank accounts — three at Wells Fargo in Denver — and a safety deposit box, all of them used by licensed marijuana businesses and their owners, but apparently unknown to the banks.
The other banks were First American Bank in Chicago, with one account, and Fifth Third Bank in Michigan, which had four of the seized accounts.
Bankers say keeping track of customers’ business is not an easy affair, despite federal regulations to “know your customer,” a mandate that weighs heavily on the industry.
“All the bank can do is the due-diligence on it. With the checklists, now, from the federal government, they can check even deeper, but it still can surprise you,” Colorado Bankers Association CEO Don Childears said.
At Fifth Third, a bank whose public moniker is the “curious bank,” any accounts deemed connected to the drug trade — legal or not — are closed, spokesman Sean Parker said.
“We have a more consultive approach to banking, understanding the business our clients are in and how we can help them grow,” Parker said. “These accounts were likely opened before the rebranding and change in our activity to ask more questions.”
Wells Fargo had no comment.
But the seizure lays bare bankers’ concern with banking marijuana businesses: you never know.
“This shows you can’t really be certain who your customer really is,” Childears said, “and it emphasizes the point that you can’t reduce your risk to zero. There is risk even when you think you’re doing it right.”
The marijuana industry has complained of an inability to get banking services, leaving it at risk as a cash-only enterprise. But many actually do have accounts, though not necessarily in full view of the banks where they are located.
Investigators said some of the individuals involved in the seizure reported Monday allegedly agreed to make deposits in amounts that “would not raise any red flags with the bank.”
One dispensary operator “was having problems keeping bank accounts” since the cash deposits “smelled like marijuana, which the banks will not accept,” according to documents filed in U.S. District Court in Denver.
Four of the nine bank accounts were registered to a business name so generic they had no immediate connection to marijuana.
Four other of the accounts were listed in the name of an individual, much like any other regular consumer account across America.
The ninth was a safety deposit box at the Wells Fargo’s branch on Broadway in downtown Denver, where investigators say one of the dispensaries likely kept cash that smelled like pot.
David Migoya: 303-954-1506, firstname.lastname@example.org or twitter.com/davidmigoya