DOBI Commissioner Caride Adds Name to Coalition Letter on SAFE Banking Act

NJ Commissioner of Banking and Insurance Marlene Caride has joined regulators from 24 states and Puerto Rico in urging congressional leaders to pass legislation allowing financial institutions to do business with marijuana-related companies.

"We urge Congress to consider legislation that creates a safe harbor for financial institutions to serve a state-compliant business or entrusts sovereign states with the full oversight and jurisdiction of marijuana-related activity," said the regulators, led by Pennsylvania Secretary of Banking and Securities Robin Wiessmann, in a letter Monday.

"Establishing a safe harbor for banks to serve these entities would help reduce the risk associated with large cash-and-carry operations and bring the safeguards, activities, and sales associated with this business into the regulatory reporting compliance framework," they added.

The issue was front and center in credit union Capitol Hill meetings during last month’s CUNA Government Affairs Conference (GAC).

The House Financial Services Committee on March 28 approved the SAFE Banking Act of 2019 (H.R. 1595) which would shield banks, credit unions and insurers from federal regulatory penalties if they serve marijuana businesses legalized at the state level. The bill currently has 165 cosponsors including five members of the New Jersey delegation, Reps. Donald Norcross (D-1), Bill Pascrell (D-9), Mikie Sherrill (D-11) Albio Sires (D-8), and Bonnie Watson Coleman (D-12). 

Sen. Bob Menendez (D-NJ), a senior member of the Senate Banking Committee, introduced the Senate version of the bill last week.

The legislation would provide a safe harbor for depository institutions and credit unions by:

  • Preventing banking regulators from terminating or limiting deposit insurance because a depository provides services to a state-sanctioned and regulated cannabis business;
  • Prohibiting, penalizing, or discouraging a depository institution from providing financial services to a legitimate state-sanctioned and regulated cannabis business;
  • Recommending or incentivizing a depository institution to halt or downgrade providing any kind of banking services to these businesses or taking any action on a loan to an owner or operator of a cannabis-related business; and
  • Creating a safe harbor from liability and asset forfeiture for institutions and their officers and employees who provide financial services to legitimate cannabis businesses pursuant to state or tribal law.

The legislation does not require a depository institution or credit union to provide financial services to a cannabis-related legitimate business nor does it relieve or relax requirements to file Suspicious Activity Reports (SARs) under the Bank Secrecy Act and Financial Crimes Enforcement Network (FinCEN) guidance.