On December 14, 2016, a group of bipartisan Senators sent a letter to the acting director of the Financial Crimes Enforcement Network (FinCEN), seeking clarification related to the regulator’s expectation concerning banks providing services to businesses that provide services to state legalized marijuana businesses.
In 2014, FinCEN and the Department of Justice each issued guidance to the financial industry related to expectations associated with providing services to marijuana-related businesses (MRBs). The Senators’ December 14 letter requests that FinCEN elaborate on that guidance, specifically as it relates to banks’ ability to offer services to businesses that provide services to MRBs.
According to the letter, FinCEN’s 2014 guidance “did not distinguish between state sanctioned marijuana businesses and the indirect businesses that service the marijuana industry, leaving it up to financial institutions to determine how to classify and treat indirect businesses.”
While it is true that FinCEN’s 2014 guidance does not focus on indirect relationships, the guidance does briefly acknowledge and address the issue. In fact, in footnote 7 of the guidance, FinCEN states that “where services are being provided indirectly, the financial institution may file SARs based on existing regulations and guidance without distinguishing between ‘Marijuana Limited’ and ‘Marijuana Priority.’ Whether the financial institution decides to provide indirect services to a marijuana-related business is a risk-based decision that depends on a number of factors specific to that institution and the relevant circumstances. In making this decision, the institution should consider the Cole Memo priorities, to the extent applicable.”
To read more about what financial institutions should do before providing services to MRBs, click here.