FRASER, Mich.–NCUA has issued a cease-and-desist order against a credit union here related to its servicing of cannabis businesses and inadequate filing of Suspicious Activity Reports (SARs).
As part of the order, the $69.1-million Live Life FCU has been ordered to stop opening any new accounts for marijuana-related businesses.
In October of 2019, the credit union told Crain’s Detroit Business it was seeing $500,000 per week in cannabis-related deposits and that its assets had doubled in 10 months as a result of serving the industry. The CEO was quoted by the publication as saying the move was “the best business decision” the CU had ever made.
The CEO further told Crain’s the compliance rules were “strenuous and complicated.”
Live Life FCU has signed the consent order without admitting grounds exist, according to NCUA, but has agreed to take a number of steps in response in order to avoid the time, cost and expense of administrative litigation, according to the consent order.
Terms of Agreement
According to NCUA, Life Live FCU has agreed to:
- Implement an automated system to effectively monitor and identify all transaction for suspicious activity in accordance with 31 C.F.R. §1020.210(a)(2)(v)(B), by April 30, 2021, and ongoing. “Your automated compliance and suspicious activity monitoring system must include functions to support your compliance with FinCEN requirements for Marijuana-Related Businesses (MRB),” NCUA said. Specifically, NCUA said that includes reconciliation of MRB Point of Sale, METRC, or accounting system data relative to member deposits; ongoing monitoring of adverse public information affecting MRBs, timely verification of changes in licensure status, including notification of a lapse in an MRB's state licensure, and more.
- Engage a third party to validate its automated compliance and suspicious activity monitoring system simultaneously with the implementation of the system.
- Immediately file all Suspicious Activity Reports (SARs) in accordance with 31 C.F.R. §1020.320, including continuous and initial MRB SARs. Live Life FCU as also ordered to develop and implement a system to ensure all SARs are filed accurately, completely, and on time by March 31, 2021.
- Immediately develop and implement a system to ensure all Currency Transaction Reports are filed accurately in accordance with 31 C.F.R. §1020.311.
- Immediately cease opening new MRB accounts.
- Cease its Money Services Business (“MSB”) program by March 15, 2021, including suspending transactional activity on existing MSB accounts.
- Engage a qualified third party to perform a retrospective review of MSB activity to determine the existence of suspicious activity warranting a SAR filing by March 15, 2021. At a minimum, the review must evaluate the criteria outlined in FIN- 2019-A003, "Advisory on Illicit Activity Involving Convertible Virtual Currency." File any SARs recommended by the third party.
Live Life FCU has approximately 1,625 members.