The state-legal marijuana sector operates in a largely cash-based economy—only about 400 banks and credit unions in the U.S. actively provide financial services to this sector—because marijuana remains illegal under federal law, despite the increasing number of states acting to legalize medical and/or recreational use. There is no carveout for state-legal activity and no safe harbor for financial institutions to serve customers engaged in such activity.

Until last week, though, banks and credit unions wanting to work with this sector could rely to some degree on guidance from the U.S. Department of Justice (DOJ) and from the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). Now, with the DOJ guidance withdrawn and the fate of the FinCEN guidance in question, the future of marijuana banking faces even more uncertainty.
Continue Reading The Challenges of Marijuana Banking Just Got Even More Challenging

Last week, the Federal Reserve issued proposed guidance that could dial back some regulatory expectations for directors of financial institutions. The proposed guidance, applicable to Fed-supervised entities like bank holding companies and state member banks, would clarify the role of boards of directors, and place more responsibilities back onto management instead. This breaks with a trend over the past several years in which regulators have urged more and more active and seemingly granular involvement from bank boards.
Continue Reading Outside Bank Directors Take Note: Could Regulators’ Expectations Be Changing (Again)?

Every other year, the Texas Legislature convenes for roughly six months in Austin. Given the tight timeframe and biennial nature, sessions of the Texas Legislature tend to be “fast and furious” (and also full of drama). There were a total of 6,631 bills filed in the 2017 Texas Legislative Session. The Texas House filed 4,333 bills, of which 700 passed. The Texas Senate filed 2,298, of which 511 passed. Texas Governor Abbott vetoed 50 bills prior to the June 18, 2017, veto deadline. Below are summaries and effective dates of the major new laws that affect financial institutions operating in Texas.
Continue Reading 2017 Texas Legislative Recap of New Laws Affecting Financial Institutions Operating in Texas

On June 15, 2017, the Federal Reserve Board (FRB) published in the Federal Register final amendments to Regulation CC (Availability of Funds and Collection of Checks). The amendments contain a number of changes that will affect financial institutions, such as modifications to check return requirements, additional warranties, and new indemnities, including a new indemnity for remote deposit capture (RDC). (Spoiler Alert: The indemnity for RDC has significant implications for financial institutions that offer RDC services.) The rule will become effective July 1, 2018.

Regulation CC implements the Expedited Funds Availability Act (EFAA) and the Check Clearing for the 21st Century Act (Check 21 Act). The FRB previously published a notice of proposed rulemaking to amend Regulation CC in February 2014.
Continue Reading Amendments to Regulation CC Affect Liability Considerations for Financial Institutions

The long-awaited  Tenth Circuit Court of Appeals decision in the case of Fourth Corner Credit Union v. Federal Reserve Bank of Kansas City was issued this week. In short: the would-be credit union, formed to serve participants in the state-legal marijuana sector, lives to fight another day—but minus its original purpose for existing.


Fourth Corner Credit Union was originally formed to solve an acute problem for marijuana-related businesses (MRBs) and individuals associated with MRBs: the inability to obtain mainstream banking services. Without access to bank or credit union accounts, MRBs remain chiefly cash-based businesses, left to their own devices to figure out how to store money and move it around, including how to pay employees and vendors, and to keep cash safe from theft. 
Continue Reading Fourth Corner Credit Union Obtains Pyrrhic Victory for Marijuana Banking

As the clock ticks toward the July 22 comment deadline for the proposed Dodd-Frank incentive compensation rules, entities that may be covered by the rules continue to evaluate the potential effects on their operations and their compensation practices. The rules could significantly affect how financial institutions provide incentive-based compensation to their employees. As proposed, the rules would impose obligations such as lengthy clawback periods; deferral of compensation; limitations on “excessive” compensation; specific governance requirements; and long recordkeeping periods.
Continue Reading Insurance Companies – Are You Covered? The Dodd-Frank Proposed Rules on Incentive-Based Compensation

Howard B. Iwrey, Michigan-based antitrust and trade regulation attorney with the law firm of Dykema Gossett PLLC, was quoted extensively in the Law360 article, “How Banks Can Build Strong Antitrust Compliance Programs,” which discusses various ways that banks can add new preventive measures against antitrust violations.

Banks and other financial institutions have been under a high level of scrutiny by the antitrust enforcement authorities for a number of years. Investigations and civil litigation have focused on, among other things, manipulation of the Libor and the foreign exchange markets.
Continue Reading Howard Iwrey Quoted Extensively in Article on Antitrust Compliance for Banks

Federal regulators published guidance Monday regarding the application of customer identification program (CIP) requirements to holders of prepaid cards and other types of prepaid access. Although the guidance is meant to clarify longstanding CIP rules—issued in 2003 to implement USA PATRIOT Act amendments to the Bank Secrecy Act (BSA)—the guidance has the effect of setting new standards for banks that issue prepaid access. This includes prepaid cards that third-party program managers sell and distribute, as well as cards that are used to provide employee wages, healthcare, and government benefits.
Continue Reading Federal Regulators Release BSA/AML Guidance for Prepaid Products