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#2159165 - 01/04/18 03:47 PM Sessions to rescind Cole Memo?
John Burnett Offline
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Reports on the Chicago Tribune and CNN sites indicate that AG Jeff Sessions plans to announce today that he is rescinding the Cole Memo that limited federal intervention in marijuana-related business in states that have made pot legal in varying ways, and will now leave it up to federal district attorneys to determine the level of their enforcement efforts of the federal laws banning the use, growing or sale of "weed."

Depending on the patchwork of DA stances that are likely to develop, it seems that it is only a matter of time before banks that have been willing to bank marijuana-related businesses will start reassessing their positions.
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#2159212 - 01/04/18 07:10 PM Re: Sessions to rescind Cole Memo? John Burnett
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Any update on this?
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#2159214 - 01/04/18 07:14 PM Re: Sessions to rescind Cole Memo? RockChucker, CAMS
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#2159253 - 01/04/18 09:05 PM Re: Sessions to rescind Cole Memo? John Burnett
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Thanks for posting about this John, and thanks for the links Reads Regs. It will be interesting to see what happens.
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#2159309 - 01/05/18 09:17 AM Re: Sessions to rescind Cole Memo? bcompliance
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The second Cole memorandum, officially rescinded in the announcement linked by Reads Regs, was the companion piece for FIN 2014-G001 issued on the same day. The writings were clearly a product of DOJ-FinCEN fraternization facilitated by the fact that FinCEN's then director was a DOJ alumnus.

Now, the FinCEN guidance has no legal support. In addition, FinCEN has only an "acting" director. (I heard about a week ago that they were very near naming a new director. What a mess to walk into...) Congressional action that prohibited the use of federal funds for marijuana related prosecutions expired on September 30.

My sympathy for the banks that walked out on this politically supported limb is nonexistent. Those individuals whose names are all over their bank's decision to bank marijuana related businesses will be competent to assess "prosecutorial risk" for the first time when DOJ indicts its first banker. Their future actions should be based on their own best interests, not a bump in their bank's fee income.
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#2159311 - 01/05/18 12:26 PM Re: Sessions to rescind Cole Memo? Elwood P. Dowd
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Originally Posted By Ken_Pegasus
The writings were clearly a product of DOJ-FinCEN fraternization facilitated by the fact that FinCEN's then director was a DOJ alumnus.


Originally Posted By Ken_Pegasus
In addition, FinCEN has only an "acting" director. (I heard about a week ago that they were very near naming a new director. What a mess to walk into...)


I believe that Ken Blanco took the helm in December. As he is also a DOJ alum, it will be interesting to see what collaboration comes from FinCEN and the DOJ on this in coming months.

https://www.fincen.gov/news/news-releases/treasury-announces-ken-blanco-fincen-director
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#2159316 - 01/05/18 01:14 PM Re: Sessions to rescind Cole Memo? John Burnett
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It will be interesting to see how FinCEN reacts following Cole memo rescission. I agree with Ken that the guidance now lacks legal foundation, but the reality is that the marijuana industry, both medical and recreational, has grown very quickly in several jurisdictions with many banks deciding to bank indirect marijuana relationships (real estate companies, etc.). Do we expect to see a mass exodus of banks from banking these customers? Do we expect supervisory regulators to push banks to de-risk in this area? Is FinCEN going to formally rescind 2014-G001?

This will be interesting to watch, but Sessions and the DOJ has precipitated a terrible mess.
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#2159326 - 01/05/18 01:49 PM Re: Sessions to rescind Cole Memo? Elwood P. Dowd
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Originally Posted By Ken_Pegasus
.....My sympathy for the banks that walked out on this politically supported limb is nonexistent. Those individuals whose names are all over their bank's decision to bank marijuana related businesses will be competent to assess "prosecutorial risk" for the first time when DOJ indicts its first banker. Their future actions should be based on their own best interests, not a bump in their bank's fee income.


Very well said, I agree 100%
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#2159328 - 01/05/18 01:51 PM Re: Sessions to rescind Cole Memo? John Burnett
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Will we see banks reversing earlier decisions to bank MRBs, de-risking rapidly? Or will they proceed cautiously, keeping eyes and ears open for hints from federal DAs concerning their priorities? I don't envision a return to the fabled era of Elliot Ness and his war on illicit liquor merchants during Prohibition. And we'll see whether this move by Sessions helps repair his relationship with the president, or kills it. There hasn't been anything from the White House to suggest how the president feels about marijuana.

What we can say for certain is that this reversal of Justice's stance will be a hot topic in the board room of every bank that has banked MRBs, and probably any bank that ever considered doing so.
Last edited by John Burnett; 01/05/18 01:54 PM.
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#2159361 - 01/05/18 03:26 PM Re: Sessions to rescind Cole Memo? McFly
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Agreed. I put a question out to FinCEN on how they see this impacting the guidance and their rumored pending guidance for providing relief from filing SARs on "indirect" marijuana situations (a FinCEN Rep. told me this over the phone). I'll try to keep everyone updated in this thread, but I imagine they'll also have to respond publicly at some point in time...
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#2159408 - 01/05/18 06:01 PM Re: Sessions to rescind Cole Memo? Pat Patriot Act
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It would seem difficult for FinCEN to provide this guidance to not file SARs on indirect MRBs and square it with Sessions/DOJ comments. The way I read it, marijuana is illegal, banking direct or indirect criminal proceeds violates BSA, and DOJ attorneys have prosecutorial discretion to prosecute BSA violations as they see fit. I'm not sure FinCEN has the authority to allow banks to withhold SAR information they may have about indirect MRBs without explicit authorization from the DOJ.
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#2159419 - 01/05/18 06:57 PM Re: Sessions to rescind Cole Memo? John Burnett
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This may just be a coincidence, but I have already received a request today from IRS-CID to provide documentation related to a SAR filed about six months ago on an ancillary MRB.
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#2159423 - 01/05/18 07:14 PM Re: Sessions to rescind Cole Memo? Elwood P. Dowd
fmissle Offline
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Originally Posted By Ken_Pegasus
The second Cole memorandum, officially rescinded in the announcement linked by Reads Regs, was the companion piece for FIN 2014-G001 issued on the same day. The writings were clearly a product of DOJ-FinCEN fraternization facilitated by the fact that FinCEN's then director was a DOJ alumnus.

Now, the FinCEN guidance has no legal support. In addition, FinCEN has only an "acting" director. (I heard about a week ago that they were very near naming a new director. What a mess to walk into...)


What are the views on filing "Marijuana Limited", "Marijuana Priority" or "Marijuana Termination" filings? It seems that with the recission of the Cole memo, those Cole Memo "priorities" that the filing terms refer to aren't really applicable anymore.

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#2159427 - 01/05/18 07:34 PM Re: Sessions to rescind Cole Memo? John Burnett
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Personally, I would contact FinCEN and see how they told me to proceed and then document their response for future reference.
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#2159456 - 01/05/18 09:13 PM Re: Sessions to rescind Cole Memo? John Burnett
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bcompliance,

Please share your experience. I will also be calling soon as we file a limited SAR every 90 days.
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#2159460 - 01/05/18 09:28 PM Re: Sessions to rescind Cole Memo? John Burnett
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I'll let you know if I hear anything.

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#2159504 - 01/06/18 09:10 AM Re: Sessions to rescind Cole Memo? fmissle
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January 2 Forbes article discussing the "growing" number of banks offering services to MRBs.

Any bank that has had a documented boardroom discussion on this topic needs to update the information previously offered. (Some boards deserve a chance to give themselves a pat on the back for the wisdom of their prior decision.) For banks servicing MRB's, the effects of this sea change should be explained by the bank's legal counsel. Then, the board needs to put continued involvement to a vote. The obvious suggestion is that it should be a recorded, roll call vote.

Unless FinCEN wants to be accused of rearranging the deck chairs on the Titanic, it isn't going to publish any interpretations of the nuances of guidance that has just been rendered meaningless.

John's analogy to prohibition is rock solid. All that has happened here is that the marijuana pendulum is approaching the top of its arc. It will start back the other way soon, but banks won't be able to stall their current decisions.
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#2159567 - 01/08/18 04:59 PM Re: Sessions to rescind Cole Memo? TryingtoComply
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Originally Posted By TryingtoComply
bcompliance,

Please share your experience. I will also be calling soon as we file a limited SAR every 90 days.


We don't bank MRB's, I was just giving my opinion on what I'd do if we did.
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#2159894 - 01/10/18 12:27 AM Re: Sessions to rescind Cole Memo? John Burnett
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snorkeling in warm, clear wate...
We're discussing the impact of the Sessions memo on filing Priority and Termination SARs and whether to continue to use the keywords or stop filing if there's no other reason to file. For now, the Cole memo is dead but it looks like there are some members of Congress ready to fight back so I don't plan on changing anything we're doing on our SAR filings at this point.

FWIW, we've never banked marijuana so this is the only piece I'm watching closely - we file a significant number of Priority and Termination SARs based on our geographic locations. I don't want us to engage in defensive filing if that's the only reason for the SAR, but... my recommendation is currently sitting in Legal.
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#2159896 - 01/10/18 10:05 AM Re: Sessions to rescind Cole Memo? HMS Pippii
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It's blithely continuing to file "marijuana limited" SARs that would indicate a lack of awareness...
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#2159978 - 01/10/18 07:12 PM Re: Sessions to rescind Cole Memo? Elwood P. Dowd
fmissle Offline
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Originally Posted By Ken_Pegasus
It's blithely continuing to file "marijuana limited" SARs that would indicate a lack of awareness...


Right. My e-mail request to FinCEN was to ask if we should cease using those terms in the narrative now, since the memo it's based on has been rescinded.

We don't bank MRB, but do have Termination ones that we file every few months.
Unless guidance is issued, I think I'll probably include something like
"This narrative is also including the term "Marijuana Termination" in order to faciltate compliance with FIN-2014-G001. Although the "Cole Memo" as referenced in the FIN has been rescinded, FinCEN has not provided updated guidance."

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#2159986 - 01/10/18 07:41 PM Re: Sessions to rescind Cole Memo? John Burnett
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As a discussion point, does that statement provide any relevant information for law enforcement or is its purpose a disclaimer to try and avoid criticism from examiners? If it is the latter, I'd consider noting our reasoning in the SAR documentation rather than the narrative based on the following from the FinCEN Electronic filing instructions on the completion of Part V.

Provide information about the financial institution’s business policies and practices only if it is necessary for a complete understanding of the suspicious activity. DO NOT include legal disclaimers in the narrative.
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#2159992 - 01/10/18 07:57 PM Re: Sessions to rescind Cole Memo? BrianC
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What if your state has legalized marijuana for medical purposes only? I read that Congress had passed a budget rider that prohibits the DOJ from using federal funds to crack down on medical marijuana businesses in states that have legalized it for that purpose and that Session's move won't change anything for them. Does the FinCEN SAR guidance for the three SAR types of marijuana related activity still apply or does it not apply for medical marijuana?

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#2159995 - 01/10/18 08:04 PM Re: Sessions to rescind Cole Memo? John Burnett
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Only FinCEN can say how their guidance will apply. The Rohrabacher–Farr amendment to which you refer was initially passed in 2015 after the FinCEN 2014 Guidance so it is not referenced nor applicable to that guidance. The February 2014 Guidance specifically refers to the Cole Memo which does not exist so it's applicability is anyone's guess at this point.

A lot of eyes are on the Rohrabacher–Farr amendment. The current federal budget which contains this appropriations limitation on funding for the DOJ's activity expires on January 19, 2018. There is no guarantee that it will survive the next budget depending on the political wrangling in advance of trying to avoid a government shutdown.
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#2159998 - 01/10/18 08:07 PM Re: Sessions to rescind Cole Memo? BrianC
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So have states that have legalized medical marijuana been required to file 3 types of SARs in the past years?

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