People with low-level drug convictions would be exempted from a ban on working with a credit union under a draft rule released by the National Credit Union Administration (NCUA) on Monday.
The proposal, described in a notice published in the Federal Register, notes that existing policies prohibiting participation in a credit union by people with various criminal convictions require excessive regulatory enforcement and that lifting certain employment bans can “expand career opportunities for those who have demonstrated remorse and responsibility for past indiscretions.”
NCUA, an independent federal agency that charters, regulates and insures credit unions, is proposing to rescind the policy and replace it with updated guidance that includes a significantly expanded list of exceptions to provide people with employment opportunities in the financial services industry, and those exemptions would include allowing participation by those with simple drug possession convictions.
“There are a host of significant extrajudicial consequences for individuals with nonviolent drug possession convictions, including not only employment bans but the loss of Federal financial aid, eviction from public housing, disqualification from occupational licenses, loss of voting rights, and denial of public assistance,” NCUA wrote. “Moreover, research shows that drug convictions are a disproportionate burden on people of color.”
Additionally, state-level marijuana legalization efforts have generated “some uncertainty and confusion” for employers, the notice said.
“While not discounting the public health implications of illegal drug use and possession, the Board maintains that covered persons with single convictions or program entries for simple drug possession pose minimal risk to insured credit unions,” the agency noted.
In order to qualify for the proposed exemption, an individual would have to meet three qualifications: the person doesn’t have any other disqualifying convictions on their record, the drug conviction was a misdemeanor that didn’t involve trafficking a controlled substance and a minimum of five years have passed since the conviction.
NCUA stipulated that under the new rule, convictions that have been expunged cannot be “used for any subsequent purpose,” including “an evaluation of a person’s fitness or character.”
The agency said it also plans to carve out employment exceptions for individuals with convictions for writing insufficient funds, or “bad,” checks, small-dollar theft and the use of a fake identification card.
NCUA is accepting public comments on the proposed changes through September 27.
The move comes as legislation to increase state-legal marijuana businesses’ access to banking services is gaining momentum in Congress.