Was Your Cashless ATM Shutdown?

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Are Cashless ATMs the next target for Federal crackdown on cannabis payments “work-arounds” that break Anti-Money Laundering laws?

Every business wants to provide their customer the ability to purchase with whatever means is the most convenient for them. Whether it's with cash, credit cards, debit, or ACH withdrawal. Cannabis businesses are no different. But you don't have that luxury, do you?

None of us are strangers to the quandaries of an all cash business plan. Cannabis companies have been forced to find alternative ways to accept payments in the quest to be successful and please customers. The Cashless ATM is one of the oldest and most accepted ways that cannabis businesses have been able to provide customers with a way to make purchases using a card.

In 2014, hundreds of dispensaries had their Cashless ATMs shut down without so much as a word. Why did they get shut down? Simple, the program that was shut down had no transparency with the bank funding the transactions. This put the banks at risk and potentially could have been construed as money laundering. The businesses hid the nature of the accounts from the banks and processors supplying the ATMs. As soon as the banks became aware that their ATMs were set up and used to facilitate payments for cannabis, they shut them down.

With increased oversight there’s a good chance we're going to see an increased interest in how cannabis companies are accepting payments by financial institutions and the federal government in the months to come.

The problem is that Cashless ATMs CAN be set up to conceal the true nature of the transaction. Sometimes the machine and account set up to conceal the name of the business using it. They hide the type of transaction being routed through the machine. And they hide the type of purchase and/or product being purchased from the bank. Isn’t this exactly what the recent lawsuit is also alleging?

These acts flagrantly violate provisions of the Money Laundering Control Act of 1986 (the “MLCA”). Under AML regulations, transactions that are meant to “disguise or conceal the source, nature, location, ownership, or control” of criminal proceeds, or “facilitates… unlawful activity” violates the law. These actions warrant Federal criminal charges that can result in up to 20 years in prison and/or fines of at least $500,000.

Many cannabis businesses are not aware that their cashless ATM provider does not have a transparent relationship with their networks. Businesses risk bank fraud and money laundering charges.

Yes, there are cashless ATM services that are above board working in full transparency with the the funding bank and the networks.  However, there are more that are not and those providers are working on a short fuse before they are shut down.  Sure, you could just go on “business as usual”, and cross that bridge when you get there. Or you can take a proactive approach and look into the more compliant solutions available to you.

The fallout from last year's bank fraud lawsuit is likely to usher in a new era of Federal scrutinization. Violations may no longer only garner a slap on the wrist.

If you are not sure whether or not your Cashless ATM is legitimate simply:

Check you customer's receipt - is your business information 100% accurate?
Look at the descriptor on your bank statement from a transaction on your solution - what is the DBA?
Do you know who the bank is that funds your transactions?

If the answer to these questions is no then you may want to start looking for a compliant solution or risk having your card processing capabilities shut down without notice.  Not to mention held funds and any other repercussions. 

What are compliant options for cannabis businesses to accept payments?

Our PIN Debit solution for cannabis payment processing is a truly transparent and compliant solution. Former Federal regulators and the best payments legal teams in the country were brought in to help structure the program to ensure it meets the highest level of compliance.

The nature of your business and it's transactions are fully disclosed to both the banks and the processor. In addition you will have the confidence of knowing exactly what bank and processing platform you are working with. All financial institutions involved have taken all steps necessary to meet FinCEN guidelines and BSA AML laws and regulations. It is 100% compliant and approved by the served debit networks.

Cannabis businesses are issued a bank-backed merchant account to process PIN debit payments. The customer’s statement will show accurate business descriptors. There is no concealing or disguising of sources or products.

We also offer Bitcoin, ACH, and eCheck payment processing for cannabis. Want to learn more? Contact us:
https://www.bankcardinternationalgrou...