(Denver Post file)

Is pot banking happening? FinCEN says yes; bankers disagree

More than 100 banks nationally say they are working with legal marijuana businesses and their affiliates, the first indication that federal guidance on how that relationship should operate is taking hold, a federal official said Tuesday.

Yet, while banks filed hundreds of reports this year between February and August with the federal Financial Crimes Enforcement Network indicating a banking relationship with cannabis-related businesses, nearly as many filed reports saying they had terminated one.

FinCEN director Jennifer Shasky Calvery told a Washington, D.C., conference on anti-money laundering that the reports — called suspicious activity reports and required by federal law — show that banks are banking with pot businesses.

In all, 105 banks said their customers include at least one pot-related business, but an undetermined number of banks reported closing nearly 500 accounts as well.

“From our perspective the guidance is having the intended effect,” Shasky Calvery said, according to a copy of her prepared remarks made available on the agency’s website. FinCEN is a U.S. Department of Treasury bureau.

Bankers weren’t as optimistic.

“Nothing in her comments changes our mind: Only Congress can resolve the issue of banking marijuana businesses,” Colorado Bankers Association CEO Don Childears said.

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On Feb. 14, FinCEN and the U.S. Department of Justice issued guidance on how banks should deal with marijuana businesses in states where the trade is legal. Recreational marijuana is legal in Colorado and Washington state; medical marijuana is legal in 23 states and the District of Columbia.

While bankers groaned that the guidance did little to clarify whether they would not be held liable for banking pot businesses — and marijuana shop owners lamented that they still couldn’t hold a bank account because banks were too leery, forcing them to deal in cash — FinCEN said the guidance is working.

“Our overarching goal … was to promote financial transparency,” Shasky Calvery said, ” … making it less likely that the financial operations move underground and become more difficult to track.”

But, Childears notes, she’d earlier said “‘FinCEN does not purport to enhance the availability of financial services for illegal drug traffickers.’ Which is it?”

Officials in Colorado and Washington have petitioned federal officials for more clarity.

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Shasky Calvery’s statistics date to Aug. 8. The 105 banks represent less than than 1 percent of all the banks and financial institutions nationwide. She did not offer a breakdown by state.

Those banks filed 502 SARs that were marked “marijuana limited,” indicating the businesses did not violate any of eight rules the February guidance cautioned against, such as selling to minors or trafficking across state lines.

A single business could generate more than one SAR.

An unidentified number of banks filed 123 SARs that indicated a business had indeed broken one of those rules, Shasky Calvery said.

More telling, banks filed more than 475 SARs saying during the six months since the guidance was issued, they’d terminated a relationship with a marijuana-related business as part of anti-money-laundering programs.

Related: More coverage on banking regulations and marijuana business issues

The reports have been a gold mine for investigative agencies, Shasky Calvery said, with more than 1 million queries against the SARs database from more than 350 agencies.

What really matters is not FinCEN’s interpretation, but how bank regulators view this.

Earlier this year, the Colorado legislature passed a measure to allow the marijuana industry to create its own banking cooperative, a form of credit union. Any application would require approval from the Federal Reserve.

David Migoya: 303-954-1506, dmigoya@denverpost.com

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This story was first published on DenverPost.com