Page 19 - 1Q 2018 Reporter
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Up in Smoke? continued
use. Despite Sessions’ efforts, the rider was rescission by proposing to prohibit local and
approved and remained in effect until February state law enforcement from assisting federal
8, 2018, at which point all federal appropriations prosecutorial efforts in marijuana-related cases.
require renewal. While an industry representing $6.7 billion
Financial institutions are left in a precarious in sales at the end of 2016 and projected to
position regarding banking MRBs. Arguments reach $20 billion by 2021 is nothing to sneeze at,
abound on either side, with more conservative banks must mind the consequences of engaging
voices advocating that banks not engage with with MRBs. Should the federal government
MRBs in any respect, and voices of those less risk- proceed with efforts to enforce the CSA,
averse providing suggestions for banks in managing repercussions could include asset forfeiture,
MRB relationships. The latter voices view recent criminal aiding and abetting, and racketeering
events as merely one more stepping stone to full charges, not to mention violations of the
legalization. Regardless of which side your bank Bank Secrecy Act and regulations pertaining
may take, there are strong arguments being made to anti-money laundering. Indeed, Sessions
by key players that the federal government must mentions these specific laws by name in his
provide a legitimate infrastructure in which to bank announcement, thus making it clear that the
MRBs. Issues made worse by precluding MRBs from Department of Justice may scrutinize financial
establishing a banking relationship include increased institutions choosing to bank MRBs. Investors
risk for money laundering and other criminal activity, could also be subject to prosecution or civil
security concerns around large cash amounts, lack liability.
of ability to track a large segment of the economy, Banks with a less conservative approach and
and lack of accurate taxation. those already tied up in the industry can mitigate
Efforts under way to alleviate the disconnect risk through use of technology platforms to track
between state legalization, federal prohibition, and monitor accounts, comprehensive and real
industry need, and banking compliance include time cash transaction monitoring, use of multiple
both federal and state level initiatives. The Attorney sources for data comparison, ensuring complete
Generals of nineteen states signed a letter to transparency and documentation, performing
congressional leaders urging them to pass regular and thorough risk assessments of
legislation to permit a safe harbor for banks to policies and procedures for banking MRBs,
provide services to MRBs. The U.S. Attorney from and working with customers and colleagues to
Colorado has indicated that their office will continue remain proactive in employing best practices
efforts as they were before Sessions issued the and ensuring communication. Finally, refer to
rescission, and California and Massachusetts have the FinCEN guidance on banking MRBs and
proposed laws in the last few weeks as a result ensure the timely and accurate filing of reports in
of the rescission. California’s proposal focuses accordance with that guidance.
on permitting banks to provide services to MRBs,
while Massachusetts takes a more direct aim at the
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March 2018 IllInoIs RepoRteR
