The Des Plaines, Illinois-based Millennium Bank entered into a consent order with the Federal Deposit Insurance Corp and the state’s Division of Banking last March due to the bank’s involvement with cannabis companies, according to an American Banker report.
The order forces the community bank to change its programs in order to comply with the Bank Secrecy Act, including monitoring and reporting suspicious activity and developing a written Customer Due Diligence Program within 90 days.
Although the order never mentions marijuana, a source familiar with the matter confirmed to the American Banker it was Millennium’s dealings with cannabusinesses that lead to the order.
The agreement allows the bank to neither admit nor deny the allegations.
“This sets a challenging precedent for banks currently, or considering, serving marijuana because there is no template that they can follow to be assured they won’t get into trouble,” Steven Kemmerling, the head of a company that sells customer-screening services to banks, said in the report.
Illinois legalized medical cannabis in January 2014. The following month, the Financial Crimes Enforcement Network (FinCEN) issued guidance to financial institutions interested in serving the legal cannabis sector. However, according to FinCEN, just 301 banks and credit unions have financial relationships with the marijuana industry — representing less than 3 percent of financial institutions nationwide.
The Federal Reserve Board, FDIC, and Office of the Comptroller of Currency all use the FinCEN guidance in their bank examinations. The guidance advises banks to verify where the businesses are licensed, understand its normal activity, and monitor the account for suspicious activity. They are required to report any red flags to FinCEN.