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News
ChapterTitle
Card acceptance money is being deposited. That same law also requires
banks to file reports whenever any customer makes
at pot shops deposits totaling $10,000 or more in cash in a single day.
In rendering its guidance FinCEN said financial
poised to rise institutions need to assess the risks of having marijuana-
related businesses as customers, just like they would
assess the risks of any other business. Just a few of the
to-do items would change. For example, banks, as part of
he production and sale of marijuana is big busi- the customer due diligence process, would need to verify
ness, one that is off limits to merchant acquirers with appropriate state authorities that the business is
and their sales partners. But that may be chang- licensed and registered to grow and/or sell pot. SARs for
T ing as the federal government and the credit cash deposits totaling $10,000 or more are still required.
card companies loosen strictures that have relegated However, FinCEN created two special reporting forms for
marijuana businesses to the underground economy for marijuana businesses: Marijuana Limited and Marijuana
generations. Priority; the latter is required when criminal activity is
suspected.
No one can say for certain how big the market is, but the
state of California estimates $14 billion worth of pot was The FinCEN guidance eliminates many concerns ISOs
grown there in 2011, which it said was several times the and their partners have had about getting involved with
value of the state's wine crop. In California, marijuana is marijuana merchants. A statement by Visa Inc. indicating
legal with a medical prescription. Ditto for about a dozen it wasn't opposed to legal pot shops accepting its cards
other states. In two states – Colorado and Washington – the virtually sealed the deal. In that statement, provided to
laws for purchasing pot (at licensed stores) and smoking the Denver Post in January, Visa said it "seeks to prevent
pot have been placed on equal legal footing with alcohol. our network from being used for unlawful purposes."
The result has been hundreds of marijuana dispensaries However, the statement continued, "Given the federal
popping up to serve millions of customers. Most typically government's position and recognizing this is an evolving
operate on a cash-only basis. That's because regardless of legal matter with different standards applicable in different
state laws, it's a federal crime to sell marijuana, and banks, states, our local merchant acquirers (banks) are best suited
fearful of what federal regulators might think, have to make any determination about potential illegality."
declined to (knowingly) serve these businesses.
So the stars seem to be aligning for acquirers to get a piece
Now with the federal government and card companies of billions of dollars in transactions that are done mostly
reassessing priorities, it's only a matter of time before with cash today. Colorado reported that on Jan. 1, the first
acquirers and their sales partners begin calling on these day of legal recreational pot use in Colorado, 24 registered
businesses. "The biggest obstacle has been the banks," said pot shops scattered across the state collectively rang up
Dee Karawadra of Impact PaySystem, a Nashville-based over $1 million in sales. The Colorado governor's office
ISO. has said statewide legal sales of marijuana this year could
Three major events reach $578 million.
The tide began to turn in favor of recognizing state Verizon defends
pot legalization efforts last year, when the U.S. Justice
Department updated its marijuana enforcement policy "in
state law," the production, sale and use of marijuana. the PCI DSS
light of recent state ballot initiatives that legalize, under
The update makes it clear that pot remains an illegal
drug under the federal Controlled Substances Act, but he Payment Card Industry (PCI) Data Security
that going forward the Justice Department will focus its Standard (DSS) has come under criticism lately
"limited investigative and prosecutorial resources" on as high profile data breaches continue to expose
cases involving trafficking across state lines, organized T flaws in retailers' data security systems. But
gangs, selling to minors, violence, and the use of public a report issued by telecommunications firm Verizon
land to grow or smoke pot. Wireless concluded that the PCI DSS is working.
The Justice Department's action was followed in January In the Verizon 2014 PCI Compliance Report, the researchers
2014 by written guidance from the U.S. Department of acknowledged the global standard is imperfect in entirely
the Treasury's Financial Crimes Enforcement Network safeguarding sensitive payment data. "Some even regard
(FinCEN) explaining how the new Justice Department the DSS, even in its latest 3.0 guise, as taking fundamentally
position effects its enforcement priorities under the Bank the wrong approach to security," Verizon said. Then it
Secrecy Act (BSA). The BSA targets money launderers; it asked a rhetorical question: "But is it effective in achieving
requires financial institutions to file suspicious activity security?" It answered the question with, "Our evidence
reports (SARs) when there are reasons to believe drug suggests it is."
10
ChapterTitle
Card acceptance money is being deposited. That same law also requires
banks to file reports whenever any customer makes
at pot shops deposits totaling $10,000 or more in cash in a single day.
In rendering its guidance FinCEN said financial
poised to rise institutions need to assess the risks of having marijuana-
related businesses as customers, just like they would
assess the risks of any other business. Just a few of the
to-do items would change. For example, banks, as part of
he production and sale of marijuana is big busi- the customer due diligence process, would need to verify
ness, one that is off limits to merchant acquirers with appropriate state authorities that the business is
and their sales partners. But that may be chang- licensed and registered to grow and/or sell pot. SARs for
T ing as the federal government and the credit cash deposits totaling $10,000 or more are still required.
card companies loosen strictures that have relegated However, FinCEN created two special reporting forms for
marijuana businesses to the underground economy for marijuana businesses: Marijuana Limited and Marijuana
generations. Priority; the latter is required when criminal activity is
suspected.
No one can say for certain how big the market is, but the
state of California estimates $14 billion worth of pot was The FinCEN guidance eliminates many concerns ISOs
grown there in 2011, which it said was several times the and their partners have had about getting involved with
value of the state's wine crop. In California, marijuana is marijuana merchants. A statement by Visa Inc. indicating
legal with a medical prescription. Ditto for about a dozen it wasn't opposed to legal pot shops accepting its cards
other states. In two states – Colorado and Washington – the virtually sealed the deal. In that statement, provided to
laws for purchasing pot (at licensed stores) and smoking the Denver Post in January, Visa said it "seeks to prevent
pot have been placed on equal legal footing with alcohol. our network from being used for unlawful purposes."
The result has been hundreds of marijuana dispensaries However, the statement continued, "Given the federal
popping up to serve millions of customers. Most typically government's position and recognizing this is an evolving
operate on a cash-only basis. That's because regardless of legal matter with different standards applicable in different
state laws, it's a federal crime to sell marijuana, and banks, states, our local merchant acquirers (banks) are best suited
fearful of what federal regulators might think, have to make any determination about potential illegality."
declined to (knowingly) serve these businesses.
So the stars seem to be aligning for acquirers to get a piece
Now with the federal government and card companies of billions of dollars in transactions that are done mostly
reassessing priorities, it's only a matter of time before with cash today. Colorado reported that on Jan. 1, the first
acquirers and their sales partners begin calling on these day of legal recreational pot use in Colorado, 24 registered
businesses. "The biggest obstacle has been the banks," said pot shops scattered across the state collectively rang up
Dee Karawadra of Impact PaySystem, a Nashville-based over $1 million in sales. The Colorado governor's office
ISO. has said statewide legal sales of marijuana this year could
Three major events reach $578 million.
The tide began to turn in favor of recognizing state Verizon defends
pot legalization efforts last year, when the U.S. Justice
Department updated its marijuana enforcement policy "in
state law," the production, sale and use of marijuana. the PCI DSS
light of recent state ballot initiatives that legalize, under
The update makes it clear that pot remains an illegal
drug under the federal Controlled Substances Act, but he Payment Card Industry (PCI) Data Security
that going forward the Justice Department will focus its Standard (DSS) has come under criticism lately
"limited investigative and prosecutorial resources" on as high profile data breaches continue to expose
cases involving trafficking across state lines, organized T flaws in retailers' data security systems. But
gangs, selling to minors, violence, and the use of public a report issued by telecommunications firm Verizon
land to grow or smoke pot. Wireless concluded that the PCI DSS is working.
The Justice Department's action was followed in January In the Verizon 2014 PCI Compliance Report, the researchers
2014 by written guidance from the U.S. Department of acknowledged the global standard is imperfect in entirely
the Treasury's Financial Crimes Enforcement Network safeguarding sensitive payment data. "Some even regard
(FinCEN) explaining how the new Justice Department the DSS, even in its latest 3.0 guise, as taking fundamentally
position effects its enforcement priorities under the Bank the wrong approach to security," Verizon said. Then it
Secrecy Act (BSA). The BSA targets money launderers; it asked a rhetorical question: "But is it effective in achieving
requires financial institutions to file suspicious activity security?" It answered the question with, "Our evidence
reports (SARs) when there are reasons to believe drug suggests it is."
10
