Marijuana Banking: Big Problems With Stashing The Cash
Above The Law - Because marijuana is a Schedule I controlled substance, it is still a federal crime to use, possess, or distribute it. In turn, handling proceeds from cannabis sales triggers anti-money laundering laws for banks. The Bank Secrecy Act, enforced by the Financial Crimes Enforcement Network (FinCEN), mandates that banks monitor customer accounts for suspicious activity associated with crime or terrorism. That Act requires banks to investigate their customers and to neither negligently nor knowingly do business with bad actors. FinCEN mandates that financial institutions file Suspicious Activity Reports (SARs) with the federal government when they know or suspect an account holder engages in illegal activity. These laws have caused nearly all banks to deny bank accounts to marijuana businesses and to immediately shut down those bank accounts once discovered.
- Verify with state authorities that a business is duly licensed and registered.
- Review the cannabis license application and related documentation to ensure that the business is state-licensed to operate its marijuana-related business.
- Secure available information about the business and related parties from state authorities.
- Understanding the normal and expected activity for the marijuana business, including the products sold and types of customers served.
- Monitor publicly available sources for adverse information about the cannabis business account holder and related parties.
- Periodically refresh information obtained as part of customer due diligence, using methods and timetables commensurate with the risk.
“If you choose to consume, please do so responsibly.”