Friday, February 14, 2014

DOJ finally issues banking guidance for marijuana industry

Posted By on Fri, Feb 14, 2014 at 3:06 PM

Update: The Colorado Bankers Association rejected the rationale that the memo changes anything:
The guidance issued today by the Department of Justice and the U.S. Treasury only reinforces and reiterates that banks can be prosecuted for providing accounts to marijuana related businesses.

“In fact, it is even stronger than original guidance issued by the Department of Justice and the Treasury,” said Don Childears, president and CEO of the Colorado Bankers Association. “After a series of red lights, we expected this guidance to be a yellow one. This isn’t close to that. At best, this amounts to ‘serve these customers at your own risk’ and it emphasizes all of the risks. This light is red.”

Bankers had expected the guidance to relieve them of the threat of prosecution should the open accounts for marijuana businesses, but the guidance does not do that. Instead, it reiterates reasons for prosecution and is simply a modified reporting system for banks to use. It imposes a heavy burden on them to know and control their customers’ activities, and those of their customers. No bank can comply.

Today, the U.S. Department of Justice issued its love letter to the banking industry, letting it know it could accept legitimate marijuana businesses as clients. It tells federal prosecutors in not-so-explicit terms that they don't have to sweat the institutions as long as eight priorities — the same ones listed in an August letter stating Washington and Colorado would not be sued over pot — are protected.

Here are those:


"That guidance seeks to mitigate the public safety concerns created by high-volume cash-based businesses without access to banking and the financial system," says Colorado U.S. Attorney John Walsh in a release, "while at the same time ensuring that criminal organizations, gangs and drug cartels do not have access to the financial system to launder criminal proceeds. The Colorado U.S. Attorney's Office will follow this guidance. In addition, the Department of Treasury (FinCEN) today is issuing a guidance memo to the banking industry on this subject.”

The Indy did not receive a copy of FinCEN's release, so here's the Denver Post:
"Law enforcement will now have greater insight into marijuana business activity generally," FinCEN said in a news release, "and will be able to focus on activity that presents high-priority concerns."

Banks currently must file a suspicious activity report any time they suspect a transaction has a drug connection. Under the new guidance, banks would have three tiers of SARs specific to marijuana businesses dependent on levels of concern. ...

The marijuana-specific reports are either "marijuana limited," "marijuana priority," and "marijuana termination," which identifies the business as operating normally or having some measure of truly suspicious activity.

Guidance Regarding Marijuana Related Financial Crimes
by Bryce Crawford

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