With the SAFE Banking Act once again stalled in the U.S. Congress and several payment processors pulling back their support for cashless ATMs. Brian Fitzpatrick, CEO of cannabis fintech firm Qredible, says another approach may be necessary: blockchain.
That word buzzed around the industry a lot a few years ago, but Fitzpatrick’s approach aims to more directly involve the banks in the process from the start.
Read more from Green Market Report’s conversation with Fitzpatrick here.
What can you kind of tell me about the Qredible platform and how it can service the payment processing industry, especially with turmoil going on with the cashless ATM situation?
Fitzpatrick: The problem is marijuana is not federally legal. The Safe Banking Act doesn’t exist. It’s gotten through the House several times, but it keeps getting stalled at the Senate. There’s there’s a lot of debate here about whether banks should be in this business if this is not federally legal.
Now, I happen to believe that we’re making the problem worse by not approving federal banking. If I’m already buying marijuana off of the neighborhood dealer and I’m using cash, I might as well stick with the neighborhood dealer.
We believe we have to solve the issues of what the Bank Secrecy Act looks to provide. Banks are regulated by the Bank Secrecy Act. So, even if the Safe Banking Act were to pass and there was a federal safe harbor for banks, it doesn’t mean that the regulators are just going say, “Hey, it’s a free-for-all. Don’t worry about watching or looking.”
Absolutely we have to worry about that, because the Bank Secrecy Act covers a couple of different key parts. One of them is AML, the anti-money laundering requirements of monitoring transactions. And then secondly is something called KYC, know your customer.
What our platform is really designed to do is to help with that KYC monitoring. It does the due diligence upfront. A bank or credit union could send a link to their customer, and that link goes right to Qredible. Now they’re in a secure portal where that customer will then answer all the questions that banks have to answer upfront for their onboarding.
And we already collect a lot of information. What banks are asking, we’re asking that plus more. And it’s a secure portal. For example, a copy of your driver’s license will be securely uploaded in our platform and cannot be compromised.
There are a lot of solutions out there today that will do that upfront due diligence. And then once a year, they’ll do an audit on that company to make sure that everything that everything’s still copacetic. Well, guess what? Know Your Customer must be done every single day. Our platform is an active daily monitoring of all activities of that company – on their website, on their social media, on their their lab reports.
Banks also need to reduce their own cost of compliance. When this does become legal through this SAFE banking, the banks are simply going to make it really, really expensive, just as it is today. The smaller banks, state banks, and credit unions that are doing business are charging a lot of money.
So, we hope to not only make it safer, but we hope through technology that we’re able to bring the cost compliance down and then the benefit of that cost can be passed through to the end customer.