INTERVIEW: Marijuana Firms Slowly Gain Bank Access, Says Ex-U.S. Treasury Official

Topics: Cannabis, Compliance, Financial Crime, Financial Fraud & Anti-Money Laundering, Financial Institutions, Government, Litigation, Marijuana, Money Laundering, Risk Management, Thomson Reuters Regulatory Intelligence


A “fear factor” that has kept banks from serving marijuana-related businesses in the United States is easing amid changing attitudes on Capitol Hill. As a result, financial institutions are beginning to show greater interest, according to a former federal anti-money laundering official now working to connect marijuana firms with willing bankers.

Since retiring from his post in the office of compliance at the U.S. Treasury Department’s anti-money laundering unit, the Financial Crimes Enforcement Network (FinCEN) in 2012, Tom Fleming has run an AML consultancy and worked to bring state-sanctioned marijuana related businesses into the banking system. Fleming, who runs Florida-based Tom Fleming & Associates, spoke recently with Thomson Reuters Regulatory Intelligence (TRRI) about this issue.

Despite expanding legalization of recreational or medical marijuana in some states, many pot businesses struggle to find bankers because marijuana remains an illegal drug under federal law. Financial institutions fear U.S. Justice Department prosecutors might target them with money laundering charges for handling the proceeds of “illicit” activity. But that is changing, Fleming said.

Banks are in the early stages of moving away from wholesale exiting — or “de-risking” — of marijuana-related business, or MRB accounts, when such customers are discovered within their portfolios, Fleming said.

He described recent changes in attitude — both by banks and marijuana-related businesses — and emerging opportunities to partner without sacrificing anti-money laundering compliance. (Fleming’s responses were edited for length and clarity.)

TRRI: You have said that the “fear factor” banks must overcome in order to begin embracing MRBs seems to be easing. To what do you attribute this development? 

Tom Fleming: I think we are seeing a change in the environment here. I have started to hear from somewhat larger banks and financial institutions whereas previously only small community institutions were banking this industry.

More and more banks are realizing that they already have marijuana-related accounts on their books — and in many cases the account holders have other business accounts with the bank. The banks don’t want to start wholesale de-risking, but rather find a way to service the accounts and in some cases possibly add to their portfolio.

Also, since we first saw the Cole memos (which stated the Justice Department would not prioritize pursuit of state-licensed and compliant MRBs) in 2013 and FinCEN’s guidelines (requiring Suspicious Activity Report filings on MRB activity) the following year, I am not aware of any federal prosecution of a bank on this issue or any civil money penalties from FinCEN.

Initially, and to some extent today, the greatest fear of banks has been possible prosecution on money laundering charges. However, a small number of banks saw a way to bank the MRB industry using the principles of the Cole memos and FinCEN guidelines. Those documents laid the groundwork for offering banking services to the marijuana industry.


Each year legislation has been introduced trying to provide a safe harbor for banks to offer services to the industry, however the current versions of draft legislation will actually accomplish a safe harbor if passed.

TRRI: To what degree might the SAFE Banking Act currently being weighed by the U.S. House of Representatives change the banking environment for MRBs? 

Tom Fleming: The Secure and Fair Enforcement Banking Act of 2019, known as the SAFE Banking Act, is a reintroduction of a previous bill. Previous iterations of this legislation have been proposed to try to create a “safe harbor” for banks to accept the deposits of MRBs. Essentially these iterations created a safe harbor that was a safe harbor until it wasn’t.

This meant that the previously proposed safe harbor wasn’t tight enough, and a bank could lose the safe harbor under certain circumstances — not the type of incentive that would encourage banks to take on accounts. However, the 2019 version includes numerous improvements.

TRRI: How are interested banks approaching the MRB market? Are they dipping their toes into the water so to speak and taking on a few accounts to gauge examiner reaction? 

Tom Fleming: Yes. The majority of banks I have talked with intend to start banking marijuana businesses with a “pilot” program of only a limited number of accounts before determining if they would like to expand their portfolio in this line of business. Many banks already offering services to MRBs followed this same approach.

TRRI: Are MRB accounts potentially profitable? And have the attitudes of the MRBs changed in terms of recognizing that banks require extensive information necessary to meet their compliance obligations? 

Tom Fleming: First of all, MRBs are becoming aware that banking is a privilege, not a right, and just because their activity is legal on a state level does not mean they are entitled to an account.

They are learning that all bank customers must past the bank’s due diligence test and that banking relationships are based on trust — by both parties. I think a bank considering banking MRBs should educate the potential customers regarding the bank’s compliance obligations to help establish understanding and the needed trust relationship.

Transparency is key in any banking relationship, especially with higher-risk customers in general. An MRB should approach a bank, understanding that it is a high-risk entity, with a plan to demonstrate that it takes its own compliance obligations seriously and it is willing to work cooperatively with the bank to enhance both entities’ compliance obligations.