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#2048088 - 11/04/15 08:11 PM Marijuana related business
BSAAnonymous Offline
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A customer owns a medical practice building. S/he will be renting space in the building to a medical marijuana dispensary company. That rental income the customer will be receiving from the medical marijuana dispensary would constitute a "Limited SAR filing" according to FinCEN guidance?

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#2048496 - 11/06/15 05:42 PM Re: Marijuana related business BSAAnonymous
Elwood P. Dowd Offline
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FinCEN's published guidance does not answer your question or many other relevant questions like yours; e.g. should we file SARs on a consumer customer who is employed by a marijuana related business even in a non managerial role; e.g. a janitor? An investor in a marijuana related business; e.g. a 1% shareholder? A provider of essential services to a marijuana related business; e.g. the power company?

" Operation Chokepoint" refers to a very specific DOJ/FDIC fiasco not directly related to this issue, but it illustrated the government's comprehension of certain realities: If banks are hesitant to provide financial services to a particular class of customer, that customer will find it difficult to survive. The government just intends to let these businesses (and the banks) twist in the wind. (Consider it to be government sponsored "de-risking.")

By failing to provide guidance to the industry the powers that be have delegated interpretive authority to individual field examiners. Only a G-something field examiner could answer your question with any authority. Note, the next one might answer it differently.
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#2048561 - 11/06/15 07:20 PM Re: Marijuana related business BSAAnonymous
BSAAnonymous Offline
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I actually called FinCEN for guidance and they indicated that rental income doesn't continue a SAR filing. The FinCEN rep also said the guidance was very gray and additional guidance will be posted. Meanwhile, they don't want us to de-risk.

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#2048631 - 11/06/15 09:58 PM Re: Marijuana related business BSAAnonymous
Princess Romeo Offline

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Quote:
I actually called FinCEN for guidance and they indicated that rental income doesn't continue a SAR filing. The FinCEN rep also said the guidance was very gray and additional guidance will be posted. Meanwhile, they don't want us to de-risk.


Between the line reading - "Rental income and other expenditures generated by Marijuana businesses produces taxable revenue that we don't want to de-stabilize."

JMHO
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#2048648 - 11/07/15 11:54 AM Re: Marijuana related business BSAAnonymous
Elwood P. Dowd Offline
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BSAAnonymous

I was intrigued that a FinCEN representative was understood to make a direct statement that no SAR filing was necessary on the "landlord" scenario. At the Helpline's inception, I was told that FinCEN personnel would simply not answer "should I file" questions. The list of reasons offered was long and well-reasoned. One was the simple fact that (as noted in the Examination Manual) SAR filing decisions are subjective. Another was that the caller might have inadvertently omitted a critical fact from the question.

To test, I submitted the scenarios mentioned above via e-mail and asked if a "marijuana limited" SAR was necessary. I got a voice mail response before the end of business on the same day. The response relied wholly on Footnote 7 in FIN-2014-G001. In regard to whether to file on the marijuana related business' landlord. It says:

In such circumstances 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.”

It does not say a SAR filing is unnecessary; it says the bank is not required to choose between marijuana related SAR labels. So, any SAR filing decision is still left to the bank. The person who returned my call did a decent job of walking the line, saying only that any SAR filed in these scenarios would not be filed as a "marijuana limited" SAR. There was no statement that the SAR filing was unnecessary. My respondent said the same would be applicable to the employee, investor, and provider of essential services examples. There was no "file" or "do not file" direction. There was a somewhat gratuitous observation that there should be ongoing monitoring where these connections exist.
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#2048758 - 11/09/15 05:19 PM Re: Marijuana related business BSAAnonymous
Princess Romeo Offline

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In other words - "Your guess is as good as mine." There are small towns in Northern California and, I believe, eastern Kentucky, where every single business has marijuana related revenue flowing through them. Be it the local grocery store where marijuana dispensary employees buy their food, or the local utilities that are supply water, sewage services and electricity to marijuana businesses, or any other business that sells anything to either the business itself or the employees of the MJ business.

It's a very tangled web at this point and further illustrates the ridiculous situation where state law has decriminalized something that federal law still considers a "Schedule 1" drug. This is further complicated by the fact that, this "Schedule 1" drug can be grown just about anywhere - no special equipment is needed to manufacture it, yet cocaine is a "Schedule 2" drug and anabolic steroids are "Schedule 3."
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