Up in smoke? How financial institutions can avoid marijuana industry risks

Marijuana is legal in more and more countries. However, financial institutions continue to face risks associated with marijuana-related businesses (MRBs) – particularly in the US. Palturai assists clients in the US in meeting regulatory requirements.

Companies are subject to obligations when doing business with MRBs

The main risk is inadvertently allowing money laundering transactions, which can lead to fines and reputational damage. But the risk that MRBs pose to your financial institution also mixes into other lines of business. In addition to money laundering, financial institutions with marijuana-related business transactions could face inaccuracies in SAR reporting, problems with government-guaranteed loan programs, increased borrower default risk, and specific risks associated with securitizing collateral and guarantors. A thorough understanding of a client’s interconnected business network is critical to mitigating today’s legal and compliance risks for financial institutions.

Palturai supports

Palturai provides an effective way to identify and monitor business partners who have a direct or indirect connection to marijuana-related businesses. The Palturai BusinessGraph solution improves the visibility of your customers’ and potential customers’ business network – and their potential involvement in the marijuana industry.

Palturai’s BusinessGraph provides insights that global industry leaders rely on to improve the safety and soundness of their financial institutions. By integrating this solution, legal and business relationships between companies and individuals are uncovered and these insights are made easily accessible as part of existing business processes. We enrich Know-Your-Customer (KYC) beyond current AML requirements, improving credit portfolio monitoring and reducing risk in merchant processing.

Many other use cases

In addition to the marijuana use case, there are many other possible applications of Palturai BusinessGraph in the financial services sector. In addition to improving KYC processes, users can identify and map ultimate beneficial owners (UBOs) in seconds and discover and flag customer-specific “trouble spots” such as bankruptcies, PEPs and sanctions in the corporate network. The solution also provides added value in cleansing customer master data and monitoring and automatically updating their information.

If you are interested in learning more about our solutions and other use cases, please contact us.