The U.S. Treasury Department has formally sent a proposal to the White House to begin collecting data on marijuana operations from banks — as well as industries it already tracks, including liquor stores, convenience stores, casinos and auto dealers — as part of its ongoing efforts to combat money laundering.
In a notice published in the Federal Register late last week, the U.S. Department of the Treasury’s Office of the Comptroller of the Currency (OCC) said it had completed initial procedural steps on the plan and would accept a final round of public comments as the White House. Review by the Office of Management and Budget (OMB).
The OCC first announced the proposal in June, saying it plans to track cannabis businesses as part of the annual Risk Summary Form (RSF) that financial institutions are required to submit. This is seen as another sign of federal recognition of the state’s legal marijuana market, even though marijuana remains a federally controlled substance.
“RSF collects data on different products, services, customers and territories (PSCs),” the latest notice said. To that end, the Treasury Department said it wants to add “marijuana-related businesses” to its list of monitored markets, along with five other new categories such as crypto assets and ATM operators.
The department said its money laundering risk system “enhanced the ability of examiners and bank management to identify and assess” risks associated with the bank’s products, services, customers and locations.
As new products and services become available, “banks’ assessments of money laundering and terrorist financing risks should also change.” So by making these changes to its data collection process, the agency says it will be better able to “identify those likely to be Institutions and areas within institutions that pose a higher risk, and allocate inspection resources accordingly.”
The final public comment period for the proposed changes is open until October 11.
In August, the National Cannabis Industry Association (NCIA) submitted comments after the proposal was initially published. It said the group is “pleased that the OCC recognizes the impact that cannabis-related business has on our financial system.”
The NCIA said it supports the department’s “efforts to improve data collection in this relatively new industry, increase the transparency of the industry from regulators, and help relieve some of the administrative burden on banks so that more institutions choose to serve the industry.”
“The challenges posed by the lack of banking are not limited to cannabis businesses, but also affect the entities that choose to work with and provide services to them; including financial institutions themselves. As such, the MLR risk assessment is OCC’s Bank Secrecy Act/Anti-Money Laundering and An important tool for OFAC’s oversight activities, as it allows the agency to better identify those agencies and areas within the agency that may pose a higher risk and allocate review resources accordingly.”
It’s unclear how the information collected on the RSF — which, if approved, would require financial service providers to report the number and total volume of their cannabis business accounts — is analyzed or disseminated by the OCC after the bank’s submission, but the new notice says, The data allows the agency to “better identify those agencies and areas within agencies that may pose a higher risk, and allocate testing resources accordingly.”
Information on the number of financial institutions working with cannabis-related businesses has been reported through Suspicious Activity Reports (SARs), which banks and credit unions must submit in accordance with existing guidance, and is publicly released by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) on a quarterly basis .
As of September 30, 2021, the number of banks reporting working with cannabis businesses has increased again—as of September 30, 2021, 755 banks and credit unions had submitted reports, according to FinCEN’s latest March update.
While marijuana remains a Schedule I drug under the Controlled Substances Act, the administration has tacitly acknowledged and normalized its existence as Congress works to advance legislation to end federal marijuana bans and reform banking policies related to the marijuana industry.
For example, the U.S. Census Bureau announced last year that it would begin collecting and compiling data on states’ income from legal marijuana.
The move — adding a cannabis issue to the annual reports filed by states — builds on another notice issued by the federal agency last year explaining that it would include state-level cannabis tax data in its quarterly reports.
Meanwhile, the U.S. Economic Classification Policy Committee, comprising the White House Office of Management and Budget, the Census Bureau, the Bureau of Economic Analysis, and the Bureau of Labor Statistics, recommended in 2021 policy changes to include cannabis businesses in the North American Industry Classification System (NAICS) The official name for this system for classifying and compiling employment and market data across industries in the United States, Mexico, and Canada.
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