Cannabis Money Laundering Update
Cannabis Money Laundering Update focuses on Federal, California and New York updates to anti-money laundering provisions.
Banking and Marijuana, Redux: Utah Department of Financial Institutions Commissioner Declares Opposite Position to New York’s Encouragement of Banking Services for Marijuana Businesses Licensed Under State Law
As we just blogged, the New York State Department of Financial Services (“NYDFS”) has published guidance to “clarify the regulatory landscape and encourage” New York, state-chartered banks and credit unions to “offer banking services” to “marijuana-related businesses licensed by New York state[,]” thereby identifying New York as a state friendly to financial services for marijuana-related businesses. In stark contrast, Ed Leary, Commissioner of the Utah Department of Financial Institutions (“UDFI”), recently articulated the polar opposite position, thereby exemplifying the increasingly bewildering patchwork quilt of approaches to banking and anti-money laundering (“AML”) policy in regards to state-licensed marijuana businesses.
In a presentation on August 17, 2018, to members of the National Association of Industrial Banks and the Utah Association of Financial Services, Commissioner Leary advised that UDFI will not ask any financial institutions regulated by his department to provide banking or payment processing services to cannabis-related businesses. To the contrary, if any examination conducted by UDFI identifies evidence of cannabis-related banking activities, UDFI will cite the conduct as an apparent violation of federal law.
Cannabis Money Laundering Update
New York State Encourages Banking for State-Licensed Medical Marijuana Businesses – Whereas a Maine Company Runs Into Trouble, Despite State Law Legalizing Medical Marijuana
To state the obvious, growing and dispensing marijuana is still illegal under federal law. As a result, being involved in even a state-licensed marijuana business can be risky. Moreover, obtaining financial services for such a business is sometimes impossible, primarily due to the federal anti-money laundering (“AML”) obligations imposed upon financial institutions by the Bank Secrecy Act (as we have blogged).
This post discusses two recent developments related to state-licensed medical marijuana operations, which serve as contrasting bookends to the spectrum of potential risks and opportunities presented by such businesses. On the risk-end of the spectrum, we discuss the recent difficulties encountered by a Maine business, and how dubious the seeming safe harbor of state legalization of marijuana can be in some cases. On the opportunity-end of the spectrum, we discuss recent guidance issued by the New York Department of Financial Services, which has declared its support and encouragement of state-chartered banks and credit unions to offer banking services to medical marijuana-related businesses licensed by New York State.
Source: Money Laundering Watch
Cannabis AML Resources
- Bank Secrecy Act/ Anti-Money Laundering Examination Manual
- New York Department of Financial Services BSA/AML and OFAC Regulations
- SEC Anti-Money Laundering Source Tool for Broker-Dealers
- The Financial Action Task Force
- U.S. Department of Justice - Asset Forfeiture and Money Laundering
- U.S. Department of Justice – Offshore Compliance Initiative
- U.S. Department of Justice U.S. Attorneys Manual – Title 9: Criminal Money Laundering