Authority Magazine
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Authority Magazine

Becky Postar Of HD Compliance On How They Are Helping To Promote Financial Inclusion

An Interview With Orlando Zayas

Most of us take it for granted that we can open a bank or a credit card. But the truth is, according to the World Bank, close to one-third of adults — 1.7 billion — are still unbanked, and have no access to a transaction account. About half of unbanked people include women in poor households in rural areas or out of the workforce. What can be done and what is being done to promote more financial inclusion? Authority Magazine is starting a new series about Companies Helping To Promote Financial Inclusion. In this series we are talking to leaders of companies and organizations who are helping to promote financial inclusion.

As part of this series I had the pleasure to interview of Becky Postar.

Becky Postar is a veteran banker with over 20 years of experience including both community and big banks. Most recently, she moved into cannabis banking and has become a subject matter expert in the cannabis industry specifically around laws, regulations and legislation. Becky is passionate about guiding financial institutions through the processes of implementing a risk-focused cannabis banking program, including the beginning steps of research, to implementation and supporting the financial institution through examinations.

Thank you so much for doing this with us! Before we dig in, our readers would like to ‘get to know you’. Can you tell us a bit about how you grew up?.

I was born in Winterset, Iowa and moved to Midland/Odessa, Texas when I was 10. I went from having corn and horses in the back yard to pumpjacks and cacti. Random fact: I started playing the violin when I was 3 and I still have my violin. I went to Texas Tech University where I got my Bachelor’s in Accounting.

I have a six-year-old daughter named Alexis and an 11 year old Yorkie named Mia.

When I want to really relax, I listen to anything by Ludovico Einaudi

Is there a particular book that made a significant impact on you? Can you share a story or explain why it resonated with you so much?

Half the Sky: Turning Oppression into Opportunity for Women Worldwide by Nicholas D. Kristof

This book researched women in several different underdeveloped countries and the underlining concept is that if you allow the female population to obtain an education/go to school, you can significantly reduce poverty and oppression.

Do you have a favorite “Life Lesson Quote”? Do you have a story about how that was relevant in your life or your work?

Theodore Roosevelt’s “Man in the Area”

“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”

It’s like the old saying, “’Tis better to have loved and lost than never to have loved at all.” Meaning, it is better to fail than to never tried something new and challenging.

In my personal life and my career, I have never taken the easy path. I love a good challenge especially if it scares me. I do not like to be bored and I do not like repetition.

How do you define “Leadership”? Can you explain what you mean or give an example?

The concept of leadership is simple, but the execution is difficult. Below are some characteristics that define successful leaders:

  • Positively motivating your team — it’s important to point out what went well in front of others. The mistakes can be dealt with behind closed doors.
  • Allowing your team to create and implement new concepts
  • Holding people accountable, especially yourself: You must admit when you fail or make a mistake.
  • Be willing and able to do what you have asked of your team
  • Identifying when someone may be in over their head and help out in a positive way
  • Encourage silly, fun things around the office, even if it takes a little time away from productivity because the team building is priceless

Can you share the most interesting story that happened to you since you began your career?

I have some very interesting stories as one of only a few female commercial lenders in West Texas, but that may be a different kind of “interesting” that what you are asking for.

For a conservative West Texas banker, the fact that I am now guiding financial institutions through banking the cannabis industry is very interesting. I love doing podcasts and interviews in the cannabis industry, which is way more casual and entertaining than the average banking association convention.

Learning about cannabis, or at least what we know today, and how it interacts with the endocannabinoid system inside the human body has been most interesting to me. I entered this space to conservatively protect financial institutions and found myself an advocate for decriminalization. The fact that that Schedule I Controlled Substances are defined as “drugs with no currently accepted medical use and a high potential for abuse;” however, physicians in 40 states are prescribing cannabis for various symptoms. Furthermore, an annual DEA report states that there have been no reported deaths directly related to a marijuana overdose. I cannot wait to see what we will discover once we are able to legally research cannabis (that is sold from local dispensaries, not what the DEA grows) in the human body to better understand the benefits and detriments on the human body.

Ok, thank you for all that. Now let’s move to the main focus of our interview. Let’s start with a basic definition so that all of our readers are on the same page. What exactly is Financial Inclusion?

Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs — transactions, payments, savings, credit and insurance — delivered in a responsible and sustainable way.

What does it mean to be “unbanked”?

To be unbanked is one not having a banking relationship (depository or lending). A business that must deal primarily in cash because it cannot deposit their cash into a bank and cannot obtain a loan from a federally insured financial institution. Also, the cannabis industry, as a whole, is considered “unbanked” even though several cannabis-related companies do in fact have a banking relationship. I will dive deeper into this in a later question.

For the benefit of our readers, can you explain some of the typical reasons why a person might be unbanked? Why can’t they just walk into the local bank and open an account? Why can’t they simply open an account online?

For the cannabis industry specifically, are the three main reasons why the majority of financial institutions are not willingly to offer banking services:

  1. The Rules Have Not Been Written: As of today, there is no federal banking guidance, but the regulators have been going to school and we are now seeing more findings from institutions that did not lay a strong foundation to support the program and institutions that have not effectively monitored their program. Although the rules have yet to be written, there is some limited FinCEN guidance, which includes the “Cole Memo” 8 priorities.
  2. Anti-money laundering (or AML): Under the USA PATRIOT Act, financial institutions are required to demonstrate that best practices are in place to monitor against money laundering. The cannabis industry is most difficult to monitor when it comes to money laundering because there are legal and compliant cannabis businesses operating alongside the illicit. However, it can be safely done.
  3. Know Your Customer through Initial and Ongoing Enhanced Due Diligence (or KYC and EDD): There is no software that will eliminate these time-consuming onboarding and ongoing monitoring procedures. There is some technology that can make it easier, but FI’s must do initial and annual site visit audits. A FI must not only know the majority owners of a cannabis business but all beneficial owners, even if only a 1% owner. FIs also needs to accurately monitor transactions through seed-to-sale or track-and-trace technology and vet the cannabis business’s deposits.

Can you tell our readers a bit about your work to promote Financial Inclusion? Without saying names, can you share a story about a person who was helped by your initiative?

By helping financial institutions, HDCS is helping to add additional banking services available to higher-risk industries, ensuring these institutions will continue to offer their services (by passing regulatory scrutiny) and we assist with lending programs as well.

Below are a few different ways we assist financial institutions regarding the cannabis industry.

  1. Assist with setting up a solid foundation of a cannabis banking program, which includes conducting a Risk Assessment and setting up Policies and Procedures specific for the cannabis industry.
  2. If a financial institution has an existing program, we can conduct an assessment of their current cannabis banking program and give recommendations, ideally before the FI’s next scheduled regulatory exam.
  3. We can take an existing small, pilot program and assist the financial institution on how to scale their cannabis banking program into a larger, profitable program, including a cannabis lending program.

This may be obvious to you, but it will be helpful to spell this out. Can you articulate to our readers a few reasons why it is so important for businesses to promote financial inclusion?

Financial inclusion is very important for many reasons; however, It is really up to financial institutions if they are willing to take on the additional risks of a cannabis program (or other higher-risk industries). There are three ways which could allow for significantly more institutions willing to enter this space:

  1. The NCUA and the FDIC states they will protect financial institutions
  2. The SAFE Banking Act is passed by the Senate and signed into law, which would protect financial institutions
  3. THC/cannabis is removed from the controlled substance act and is considered federally legal

Also, contacting your senator or supporting the activists lobbying for the industry could help make change.

Ok. Here is the main question of our discussion. You are an influential business leader. Can you please share your “5 Steps Business Should Take To Promote Financial Inclusion”. Kindly share a story or example for each.

Finding a local financial institution that offers both depository and lending services to higher-risk industries is difficult. There are over 5,000 banks and 7,000 credit unions in the US. Based on FinCEN Marijuana Banking Update (dated June 30, 2020) 706 financial institutions filed Marijuana Related SARs. Based on that information, it is safe to say that less than 700 financial institutions in the US are actively banking the cannabis industry. Even though 706 FIs filed Marijuana-related SARs, some of those institutions were filing “Termination” SARs, representing some of the SARs filed by institutions that do not want to bank the cannabis industry. So even though more FIs are entering the space, less than 6% of FIs are currently banking the industry. After SAFE Banking passes, a small percentage more will enter the space. After federal legalization passes, another small percentage more will enter the space as the cannabis industry will always be considered higher risk for money laundering by the regulators.

There will always be a banking shortage for the cannabis and other higher-risk industries. And significantly less than 700 of the FIs are providing loans to their cannabis related customers, including personal mortgages.

In the meantime (before the SAFE Banking Act passes or there is federally legalization) there are financial institutions banking higher-risk customers and here is how they are banking these industries safely:

  1. Work with a qualified consultant to help assist with laying the foundation of a comprehensive higher-risk compliance program (including lending). Ideally, a consultant that has a proven program (has been through several regulatory exams without findings)
  2. Proper vetting of cannabis-related businesses or other higher-risk businesses to ensure that the business is legal and compliant and ongoing monitoring to ensure the client remains legal and compliant.
  3. Proper monitoring, reporting and training of a higher-risk comprehensive program. There are several ways to do these things correctly, even for industries that are still considered federally illegal.
  4. Review your higher-risk compliance program annually through a Risk Assessment and adjust your program as needed.
  5. Make sure your policies match your procedures.

You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

I do believe once we are able to legally research the cannabis that is being sold out of local dispensaries on the human body, we will have a better understanding on the benefits and detriments of cannabis on the human body.

Expanding education is key for this. Until then, we are just going off of the limited research that the DEA allows and what is coming out of other countries like Israel and Canada.

One thing I am currently doing through my LinkedIn videos and blogs on the HDCS website is to educate the people that follow us on what we know about the cannabis plant and the changing legislation.

And remember the book Half the Sky? When I retire from cannabis banking, I would love to set up a foundation to help fund the women that are interested in obtaining an education.

Is there a person in the world, or in the US, with whom you would like to have a private breakfast or lunch, and why? He or she might just see this, especially if we tag them. :-)

I would love to have a conversation with former Secretary of State Condoleezza Rice. She was paving the way for women before it was cool.

And I always enjoy having a scotch with my good friend and business partner, Andy Montgomery.

How can our readers further follow your work online?

The HDCS website: https://www.hdcompliance.com/

My LinkedIn page: https://www.linkedin.com/in/becky-burrell-postar-8a67767/

This was very meaningful, thank you so much. We wish you only continued success on your great work!

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