Pubdate: Sat, 15 Feb 2014
Source: Dallas Morning News (TX)
Copyright: 2014 The Associated Press
Contact: http://www.dallasnews.com/opinion/send-a-letter/
Website: http://www.dallasnews.com/
Details: http://www.mapinc.org/media/117
Author: Pete Yost, The Associated Press

BANKS GET U.S. GUIDELINES FOR LEGAL MARIJUANA DEALINGS

Many Institutions Fear Prosecution Even in States Where It's OK

WASHINGTON (AP) - The Obama administration gave banks a road map 
Friday for conducting transactions with legal marijuana sellers so 
the new businesses can stash away savings, make payroll and pay taxes 
like any other enterprise. It's not clear banks will get on board.

Guidance issued by the Justice and Treasury departments is the latest 
step by the federal government toward enabling a legalized marijuana 
industry to operate in states that approve it. The intent is to make 
banks feel more comfortable working with marijuana businesses that 
are licensed and regulated.

Others have a keen interest, too, in a regulated financial pipeline 
for an industry that is just emerging from the underground.

Marijuana businesses that can't use banks may have too much cash they 
can't safely put away, leaving them vulnerable to criminals. And 
governments that allow marijuana sales want a channel to receive taxes.

But a leading financial services trade group expressed misgivings, 
and others, too, said the guidelines don't go far enough in protecting banks.

"After a series of red lights, we expected this guidance to be a 
yellow one," said Don Childears, president and CEO of the Colorado 
Bankers Association. "This isn't close to that. At best, this amounts 
to 'serve these customers at your own risk,' and it emphasizes all of 
the risks. This light is red."

Washington, Colorado

Washington and Colorado in 2012 became the first states to approve 
recreational use of marijuana. A group is hoping to make Alaska the 
third state in the nation to do so.

Currently, processing money from marijuana sales puts federally 
insured banks at risk of drug racketeering charges, so they've 
refused to open accounts for marijuana-related businesses.

Friday's move was designed to let financial institutions serve such 
businesses while ensuring that they know their customers' legitimacy 
and remain obligated to report possible criminal activity, said the 
Treasury Department's Financial Crimes Enforcement Network, or FinCEN.

But in response, the American Bankers Association said, "Guidance or 
regulation doesn't alter the underlying challenge for banks. As it 
stands, possession or distribution of marijuana violates federal law, 
and banks that provide support for those activities face the risk of 
prosecution and assorted sanctions."

The group says banks will be comfortable serving marijuana businesses 
only if federal prohibitions on the drug are changed in law.

Denny Eliason, a lobbyist for the Washington Bankers Association, 
said it will take some time before banks decide whether to take 
advantage of the guidance. He called it a good first step but said it 
sets forth a complicated process for the banks to follow - for 
example, by filing suspicious activity reports designated "marijuana 
limited" in the case of business that seem to be complying with the 
rules, and "marijuana priority" for those acting questionably.

"They' ll have to have a real awareness of the activities of their 
customers," he said.

Bank by bank

State banking regulators in Colorado and Washington appear to believe 
that mainly small and medium-size banks will be interested in 
handling financial transactions with legal marijuana stores, not the 
big ones, a FinCEN official said, speaking only on condition of 
anonymity to talk about internal deliberations.

"This is a decision that each financial institution needs to make on 
its own," the official said. "We feel quite comfortable that we have 
acted within the scope of our authority" and therefore don't expect 
legal challenges to the new procedures.

FinCEN writes the rules that U.S. financial institutions must follow 
to help protect the system from money laundering and the financing of 
terrorism. The office said it expects financial institutions to 
perform thorough customer due diligence on marijuana businesses and 
file reports that will be valuable to law enforcement.
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MAP posted-by: Jay Bergstrom