VeriLeaf: Bridging the Gap Between High-Risk Businesses & Financial Institutions

Compliance is always going to be required, but the process does not have to be painful for both the FI and the business. Business experience is everything – it’s a differentiator; it’s what keeps them coming back! ~ Justin Fischer, Co-Founder & CEO of VeriLeaf

Many know the massive Marijuana market growth in the roughly three dozen legal states over the past five years, but few know the boom happening with its close cousin, Hemp & Hemp-Derived CBD. With the passing of the 2018 Farm Bill, Industrial Hemp was legalized and granted federal regulation by the USDA. This has paved the way for individual states to pass their own legislation for licensing and procedures, and there are now 47 states actively participating. But unlike Marijuana, this isn’t celebrities or hippie farmers looking to build brands around a psychedelic plant, many of these businesses are existing farmers and retailers in our communities who are hoping this crop can bring them much needed revenue.

“Despite this huge opportunity to serve their community and bring in additional deposits, many financial institutions are turning their backs on this market due to the heavier compliance overhead. This has resulted in many long-standing bank relationships being terminated full stop,” explains Justin Fischer, CEO & Co-Founder of VeriLeaf.

Even though Hemp & CBD are federally legal and regulated, FI’s must still conduct the necessary due diligence to ensure these companies are operating legitimately. This includes inquiring and tracking on an ongoing basis information on the business’ operations, licensing, adverse issues, procedures, and negative news reviews. Many of the FI’s that currently operate in this space handle this process through a patchwork of emails, file shares, dropboxes, faxes, and e-signs, which become a mind-numbing deluge to the business owner who wasn’t expecting to have to manage their bank’s needs on a weekly basis.

“We have been working with community FIs for over 20 years, and we also have roots in farming – this is why we decided to step up and automate this process – creating a better experience for the business and the FI,” says Fischer.

The company provides completely configurable applications based on the FI’s compliance policy, target market (Hemp, CBD, Money Services, Alcohol, and more), and region that helps filter and streamline the onboarding process, as well as dynamic workflows to maintain SOPs for ongoing compliance. 

VeriLeaf also understands that these are still uncharted waters for many. For FI’s stuck on how they can get started, VeriLeaf’s Compliance Consulting team provides assistance in drafting plans, policy, and procedure documents with FI’s BSA teams. As traditional methods were lengthy and less effective, VeriLeaf has automated the application flow through an online and mobile app for FIs to funnel, filter, and pre-qualify businesses. With its platform, VeriLeaf helps the FIs generate leads and filter them through custom marketing microsites and pre-qualification elements, specific to the FI, on every application. The company reviews the full business formation, related individuals, marketing materials, website, negative news, and relevant licensing information. VeriLeaf’s compliance specialists even monitor this data and information on an ongoing basis to ensure compliance is being maintained. Through automated workflows, VeriLeaf provides FI an efficient process and smooth experience for businesses to interact and apply with them. The information is maintained in one central location, making it easy to share with auditors and examiners.

Fischer explains that these new markets are uncharted territory for most FIs and businesses. VeriLeaf offers a free online community and directory of vetted service providers for the businesses to swap ideas and communicate with trusted partners.

Due to its team expertise and well-versed leadership, VeriLeaf has been making huge waves in the industry. As a serial entrepreneur who comes from 3 generations of farmers, Fischer understands the challenges faced by both small-town banks and the farming community. In his career in the Fintech space, he has focused heavily on building enterprise-grade solutions with first-class customer experience, specifically for community FIs. He was previously an executive at Q2ebanking (QTWO). He explains that this is a new opportunity for the community FIs, “main street banks,” to connect with their peers and support a legal and booming new industry.

“I’ve seen first-hand the challenges the small business owner and farmer experience when trying to get a bank account as well as the flip side where the FI, who wants to help, is struggling to scale their risk mitigation process and has no choice but to decline these community members and sometimes existing account holders. We have to do something, and not just for Hemp, but all high-risk business markets that our community FIs are serving,” says Fischer.

One of VeriLeaf’s FIs saw more than $7M in new deposits from a handful of customers in less than 90-days.

VeriLeaf has become the go-to expert for Hemp and CBD policies through the work of their Head of Compliance, Jessica Caballero. VeriLeaf has even been approached by government agencies such as CSBS and the FDIC to help train their regulators on hemp policies.

“We have an amazing resource with Jessica, someone who has been a regulator and is also very experienced in community FI software,” states Fischer.

Jessica leads Verileaf’s Compliance Consulting team, who have been consulting with FIs to develop and implement their hemp programs. Moreover, the company continues to add additional workflows, and now supports insurance, lending, and merchant accounts applications as well as private ATM due diligence.

“We understand the landscape of both our financial institutions’ clients and their businesses, and we truly want to help them both create opportunities to succeed,” concludes Fischer

This article was originally published in Banking CIO Outlook: Top 10 Regtech Solutions Providers – 2020

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