Justice Department To Clarify Bank – Marijuana Company Transaction Rules

DISTRICT OF COLUMBIA: The Justice Department is drafting legal guidance to help clarify how the banking industry can do business with newly legal marijuana businesses in states such as Colorado, according to people familiar with the matter.

The planned legal memo won’t draw clear lines about what banks can and can’t do, but will instead emphasize that prosecutors’ priorities are to go after businesses that use local, retail marijuana sales as part of a larger criminal activity, such as diverting pot to states where it is still illegal, use the proceeds of such sales to fund illegal activity, or use the pot business as cover for other illegal activity, according to a person familiar with the draft. The person cautioned the language of the document is still being revised and could take weeks or months until it is finalized.

That sort of general framework isn’t likely to satisfy many in the financial sector, who have pushed government agencies, including the Justice Department, the Drug Enforcement Administration and the Federal Bureau of Investigation, to draw clear lines for how to oversee bank accounts for businesses that sell marijuana legally under state law.

Under federal law, simply accepting regular business deposits from a known marijuana seller is a violation of money-laundering laws. Banks are also required to fill out suspicious-activity reports for such transactions.

“There’s a great deal of guidance that banks would want to hear about in terms of banking with these types of businesses,” said Richard Riese, vice president for compliance at the American Bankers Association. He added those concerns extend beyond just law enforcement agencies, to how regulators like the Federal Deposit Insurance Corp. might scrutinize such transactions.

 

Read full article @ WSJ