Banks that do business with the marijuana industry should follow guidance from the Financial Crimes Enforcement Network in order to navigate the conflict between state and federal laws, a top-ranking official from the Office of the Comptroller of the Currency said Thursday.
"Probably the best advice we could give is that if you are a bank and you have marijuana-related businesses as customers, you should follow that Fincen guidance, because I think that would help to protect you," Daniel Stipano, the OCC's deputy chief counsel, said Thursday.
Still, greater clarity may be needed. U.S. policymakers should embrace a clear-cut policy stance on the issue of pot banking. "I think that the government writ large needs to speak with one voice on this," Stipano said.
Stipano was speaking during a panel discussion on bank litigation and enforcement at the Clearing House's annual meeting in New York.
His remarks are the latest sign of banking regulators' attitudes about how banks can provide financial services to the burgeoning pot business without violating money laundering or other federal laws. Twenty states and the District of Columbia have made marijuana legal for either medicinal or recreational purposes, but it remains illegal under federal law.
Fincen had released its guidelines in February, but for months the federal banking agencies refused to say whether they'd align themselves with the document. The Federal Deposit Insurance Corp. confirmed last month that it had aligned itself with the guidance, which allows banks to provide services to marijuana businesses.
The Fincen guidance lays out various steps such as determining whether a pot business is licensed, and conducting ongoing monitoring of the business for suspicious activity that banks are expected to take.
Still, bankers have had concerns about the legal risks.
Stipano seemed to acknowledge their concerns. He described the issue as a "classic conflict of laws" between states that have legalized the drug, such as Colorado and Washington, and the federal government.
The Justice Department has decided not to make prosecuting marijuana cases a priority, but political winds can change, Stipano said.
"At least on a theoretical level, if you sell marijuana, regardless of whether it's legal in your state, and you deposit the money in a financial institution, at least theoretically, you could say that that's money laundering." Stipano said.
But the issue extends beyond deposit accounts, he said.
"You start to think through this, and all of the employees, their paycheck comes from the sale of marijuana, and they deposit that in a bank somewhere," Stipano said. "And they pay back their mortgages from the sale of marijuana."
Additionally, the fear of working with banks is forcing many marijuana businesses to carry "bags of cash," he said.
"I think having this conflict of laws is creating a situation certainly for banks, but even beyond that it's a public safety issue."