California’s North Bay Credit Union partnered with Austin Capital Trust Company and Silicon Valley FinTech MRBD to create the Credit Union Service Organization (CUSO) HigherGrowth, the Credit Union Times reported.
The new CUSO, which has been in development for more than two years, will enable credit unions and community banks to provide financial services to cannabis companies without those firms having to meet strict federal and state compliance requirements to have a commercial bank account, the report said .
“We have been banking cannabis since 2017 and have developed quite a robust infrastructure for staff and technology compliance,” said Chris Call, President and CEO of North Bay, in the report. “We have the capacity to expand our activities beyond our geographic presence. And it just comes down to having the right vehicle to offer these services to other institutions that want to bring in cannabis deposits. And that’s why we founded HigherGrowth to offer the infrastructure and know-how that we have developed over the past four years. “
Austin Capital’s platform will be used for digital onboarding and custody, and MRBD’s Application Programming Interface (API) technology will support the Anti-Money Laundering (AML), Know Your Customer (KYC) and Financial Crimes Enforcement Network ( FinCEN) include specified. MRBD will also provide automated workflows, payments, regulatory integrations and ongoing monitoring of operations. North Bay’s 18-strong compliance staff will work to ensure that state and federal compliance requirements are followed.
See also: MRB Direct Talks Cannabis Banking Compliance
With marijuana still illegal under federal law, only a small number of credit unions (CUs) and banks serve the industry, according to the report. Most states, however, have legalized marijuana use, either for medicinal purposes, recreational purposes, or both.
Call said that in states where cannabis is legal, the federal government has stepped back from oversight even though it can scrutinize the CU’s business through the National Credit Union Administration (NCUA), the report said.
“That’s why we’re creating CUSO – to relieve other credit unions of this review, as all of these reviews would be directed to CUSO,” Call said in the report. “[The NCUA] I just want to know that CUSO is profitable and does its business in a safe and sound manner, but they don’t have the same regulator of CUSO affairs as they do for credit unions. “
Also read: House adopts cannabis banking initiative
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