Legal Seminar, Denver, CO

071018 Discussion Draft

would suffice to show that such a third party has the intent necessary to be convicted of aiding and abetting.” Id. at 1240, n.8. But where, exactly, are those limits? o Conspiracy to commit a violation of the CSA also presents a risk of sanctions under a separate criminal statute. See 21 U.S.C. § 846. o And of course, the BSA and its money-laundering targets also remain a threat when funds are connected to criminal activity. (See below). i. Reflecting these money-laundering risks, FinCEN issued guidance on February 14, 2014, that clarifies how financial institutions may provide services consistent with BSA obligations. See FIN-2014-G001 (Feb. 14, 2014), o Rather than drawing a clear line in the sand, the FinCEN guidance purports to rely on CDD protocols and SAR filings in light of the Cole Memo priorities, invoking prudential considerations that go beyond mere objective compliance with regulations. o Customer due diligence in this context includes: “(i) verifying with the appropriate state authorities whether the business is duly licensed and registered; (ii) reviewing the license application (and related documentation) submitted by the business for obtaining a state license to operate its marijuana-related business; (iii) requesting from state licensing and enforcement authorities available information about the business and related parties; (iv) developing an understanding of the normal and expected activity for the business, including the types of products to be sold and the type of customers to be served (e.g., medical versus recreational customers); (v) ongoing monitoring of publicly available sources for adverse information about the business and related parties; (vi) ongoing monitoring for suspicious activity, including for any of the red flags described in this guidance; and (vii) refreshing information obtained as part of customer due diligence on a periodic basis and commensurate with the risk.” o Enforcement priorities from the Cole memo should also be considered in focusing these activities. o Requirements to file a SAR continue to be triggered, since the funds generated by a marijuana-related business would still be illegal activity, regardless of whether state law permits it. i. A “Marijuana Limited” SAR filing is required when the financial institution believes that an illegal activity permitted by state law not implicate Cole Memo enforcement priorities. ii. Such a filing should be limited to: (i) identifying information of the subject and related parties; (ii) addresses of the subject and related parties; (iii) the fact that the filing institution is filing the SAR solely because the subject is engaged in a marijuana-related business; and (iv) the fact that no additional suspicious activity has been identified. Financial institutions should use the term “MARIJUANA LIMITED” in the narrative section.” iii. Thereafter, continuing activity reports are required: “The continuing activity report may contain the same limited content as

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