The US Treasury Department has formally sent the White House its proposal to begin collecting data on marijuana businesses from banks – alongside industries it already tracks like liquor stores, convenience stores, casinos and car dealerships – as part of its ongoing efforts to combat money laundering activities. .
In a notice published in the Federal Register late last week, the Treasury’s Office of the Comptroller of the Currency (OCC) said it had completed the first steps of the process on the plan and would accept a latest round of public comment as the White House Office of Management and Budget (OMB) conducts a review.
The OCC first announced the proposal in June, saying it planned to track marijuana companies as part of an annual Risk Summary Form (RSF) that must be filed by financial institutions. It is seen as another sign of the federal government’s recognition of the legal cannabis market, even though marijuana remains a federally controlled substance.
“The RSF collects data on different products, services, customers and geographic areas (PSC),” the latest notice reads. To that end, the Treasury said it wanted to add “marijuana-related businesses” to the list of markets it monitors, along with five other new categories such as crypto assets and ATM operators.
The department said its Money Laundering Risk Management System “enhances the ability of examiners and bank management to identify and assess ‘risks’ associated with bank products, services, customers and locations.”
With the emergence of new products and services, “banks’ assessment of money laundering and terrorist financing risks should also evolve”. Therefore, by making these changes to its data collection process, the agency said it would be better able “to identify institutions and areas within institutions that may be at increased risk and allocate examination resources accordingly”.
A final public comment period on the proposed changes is open until October 11.
In August, the National Cannabis Industry Association (NCIA) submitted a comment following the initial announcement of the proposal. He said the organization was “pleased to see the OCC recognize the impact that marijuana-related businesses have on our financial system.”
The NCIA said it supports “the department’s effort to improve data collection on this relatively new sector, increase transparency in the industry for regulators, and help reduce some of the administrative burden on banks so that more institutions choose to serve the industry”.
“The challenges resulting from the lack of banking services are not limited to cannabis businesses, but also impact the entities that choose to engage with and serve them; including the financial institutions themselves. Therefore, the MLR risk assessment is an important tool for the Bank Secrecy Act / Anti-Money Laundering Act and OFAC oversight activities of the OCC, as it enables the agency to better identify institutions and areas within institutions that may pose increased risk and allocate review resources. Consequently.”
It’s not immediately clear how the information collected on the RSF — which, if approved, will ask financial service providers to report both the number of their marijuana business accounts and their overall volume — is analyzed or disseminated by the company. ‘OCC after being submitted by banks, but the new notice says the data allows the agency to ‘better identify institutions and areas within institutions that may pose increased risk and allocate resources examination accordingly”.
Information on the number of financial institutions working with cannabis-related businesses is already reported through Suspicious Activity Reports (SARs) that banks and credit unions are required to submit under existing guidelines, and the Treasury’s Financial Crimes Enforcement Network (FinCEN) publishes this data. on a quarterly basis.
The number of banks reporting working with marijuana businesses increased again towards the end of 2021 – with 755 banks and credit unions having submitted the relevant report as of September 30, 2021 – according to FinCEN’s latest update in March.
As Congress works to advance legislation to end federal cannabis prohibition and reform banking policies related to the marijuana industry, the government has tacitly acknowledged and normalized its existence despite the fact that cannabis remains a Schedule I drug under the Controlled Substances Act.
For example, the US Census Bureau announced last year that it would begin collecting and compiling data on the revenue states generate from legal marijuana.
The decision — to add a question about cannabis to annual reports submitted by states — builds on a separate notice the federal agency issued last year that explained it would incorporate cannabis tax data into the state level in its quarterly reports.
Meanwhile, in 2021, the United States Economic Classification Policy Committee – which includes the White House Office of Management and Budget, Census Bureau, Bureau of Economic Analysis and Bureau of Statistics – recommended a policy change to include cannabis businesses as an official designation in the North American Industry Classification System (NAICS), which is used to categorize and compile employment data and the market for industries in the United States, Mexico and Canada.
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