FEATURE


Given the vastly different treatment of marijuana under federal and state law, financial institutions are left in the uncomfortable position of having to choose between strict compliance with federal law and turning away customers involved in marijuana activities legalized by the states.


The FinCEN guidance requires SAR filings for all MRBs, even


those operating in accordance with state law. There are three types of SAR filings mandated by the FinCEN guidance. First, a financial institution must file what is known as a “marijuana limited” SAR within 30 days of commencing a relationship with an MRB, with additional marijuana limited SARs required quarterly thereafter. Second, if at any time a financial institution reasonably believes, based on its diligence, that one of the DOJ enforcement priorities from the Cole Memorandum may be violated, a “marijuana priority” SAR must be filed. Finally, whenever a financial institution terminates its relationship with an MRB for any reason, a “marijuana termination” SAR must be filed. While the FinCEN guidance is helpful, it has its limitations.


For example, the term “marijuana-related business” is not specifically defined and banks are left to decide on their own when a customer’s involvement in the marijuana industry reaches the point at which enhanced diligence and SAR filing is appropriate. In addition, the FinCEN guidance does not provide detail regarding the types of policies and procedures a bank should put in place to address the requirements of the guidance. Any financial institution considering banking an MRB will need to update its BSA Policy and adopt procedures and documentation to ensure compliance with the FinCEN guidance, but it is up to those financial institutions to determine what is appropriate. Even those banks not interested in providing services to MRBs should consider updating their BSA Policies and Customer Identification Programs so they have safeguards in place to prevent the bank from unknowingly banking the marijuana industry. At the time of writing, the Secure and Fair Enforcement


Banking Act (SAFE Banking Act) has been working its way through Congress, providing hope that action will be taken to provide clarity to financial institutions regarding MRB banking. If the SAFE Banking Act is signed into law, it will provide a safe harbor for financial institutions choosing to bank MRBs and require federal banking regulators to issue guidance and examination procedures so the compliance expectations for banking the marijuana industry are clear. Until then, any bank providing services to MRB customers is doing so at its own risk, although that risk may be mitigated somewhat by adopting and implementing robust policies and procedures designed to comply with the FinCEN guidance.


MIB Community BANKING 11


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