Department News COMPLIANCE
To Inhale or Not Inhale, Tat is the Question By Bryan Bradley, Vice President of Compliance Services
It is no secret that Missouri has legalized medical marijuana (although it remains illegal as a controlled substance on the federal level), and industrial hemp is now legal nationwide (in accordance with U.S. Department of Agriculture or state agriculture department rules). Before marijuana-related businesses opened their doors in Missouri, bankers across the state discussed and decided on whether their banks would accept MRBs as customers. In some cases, banks continue to assess the risks and rewards of banking MRBs. Regardless of a bank’s decision on whether to bank MRBs, there are some unwritten expectations from regulators that banks should consider. Despite very little “official” regulatory guidance available on the subject, MBA Compliance Services staff has a few suggestions, based on feedback from banks, regulators and industry professionals.
We are seeing various approaches when it comes to banking MRBs, ranging from a bank going “All In!” to “No Way!” Either way, a bank must adopt policies and procedures that conform to its decision.
If a bank decided to go all or partially in, we are hearing that examiners expect to see banks adopt policies and procedures that consider the infamous “Cole Memo” and FinCEN’s guidance FIN-2014-G001. Tis includes addressing initial and ongoing due diligence of the MRBs’ adherence to the Cole Memo and filing of MRB-related suspicious activity reports. If a bank determines it will not bank MRBs, recent BSA examinations have revealed that regulators still want to see MRBs addressed in a bank’s BSA/AML policies and procedures. A simple board resolution stating “we will not bank MRBs” is likely to be seen as insufficient by examiners.
Until the regulators provide banks with more formal guidance, implementing the following (along with other pertinent bank- specific information) may help banks that want no part of MRBs to get ahead of any examiner criticism. • Identify and define MRBs, CBD and hemp in the BSA policy.
• Include a statement of which of those categories, if any, the bank will accept as customers and in what capacity (deposits, loans, etc.).
• Detail the due diligence being taken to ensure that no MRBs open or maintain an account at the bank. For example, detail the bank’s initial screening procedures, like asking key questions at account opening of both consumer and commercial customers.
• List the ongoing due diligence steps taken by the bank to screen existing customers to determine if any activities are related to an MRB. An example of one step might be comparing the list of approved MRBs to the bank’s customer database on an ongoing basis as MRB licensees can change over time. Banks also may want to review lists from other states that have licensed MRBs.
• Explain the action steps the bank will take if it uncovers a customer operating in some MRB-related capacity. For example, will the account be closed and when, will SARs be filed, etc.
Several bills that would potentially resolve these legal conflicts are currently under consideration in Congress.
This article is for information purposes and does not contain or convey legal advice. The information should not be used or relied upon in regard to any particular situation without consultation with your bank attorney. MBA Compliance Services and its Compliance Force program offer various programs to aid banks with compliance needs. For more information, call 573-636-8151.
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