Customer Due Diligence for Marijuana-Related Businesses

In case you missed it Arizona, Mississippi, Montana, New Jersey and South Dakota voted to legalize recreational marijuana during the last election cycle.  This adds to the growing list of States that have already done so.  If you don’t currently bank marijuana-related businesses (MRBs), we believe it’s only a matter of time before you are faced with this decision because even if your state hasn’t legalized recreational marijuana, you likely border a state that has or will in the near future.

Banking MRBs obviously increases your risk-profile, but implementing appropriate customer due diligence procedures and processes can help you mitigate and manage that risk.

Listen how Kevin explained this in a recent webinar.

If you’d like to learn more we have a “BSA/AML and Cannabis” webinar coming up on February 18, 2021.  Some of the topics we will cover include:

  • New Guidance From FinCEN on Banking Cannabis Producers
  • What Was Updated & What Should You Do?
  • Hemp, CBD and Marijuana… Know The Difference
  • Enhanced Customer Due Diligence Expectations
  • How To Appropriately Address Cannabis in YOUR Risk Assessment
  • What Should You Be Doing Differently Before Your Next Examination?

Find all BSA Resources HERE!

Published
2021/01/19

FinCEN’s 314(b) Fact Sheet

Fact sheet bankers compliance consulting bsa/aml

You may have noticed the recent trend encouraging financial institutions to share information related to BSA/AML investigations.  Information sharing was a prominent feature of FinCEN’s Advance Notice of Rulemaking back in September and a significant element of the BSA/AML reforms that are part of the pending National Defense Authorization Act that was recently passed by both houses of Congress.  On December 10, 2020, we received new guidance related to the voluntary sharing provisions of Section 314(b) of the USA PATRIOT Act, in the form of a Fact Sheet issued by FinCEN.

As you may recall, Section 314(b) allows financial institutions to share information related to potential money laundering or terrorist activities with each other and avoid potential liability for doing so.  The safe harbor under the rule requires participants to register through FinCEN’s Secure Information Sharing System (SISS) and take reasonable steps to verify that the other financial institution they are sharing with is also registered.  Participants must also have reasonable procedures to safeguard the security and confidentiality of shared information and may only use shared information for:

  • Identifying and, where appropriate, reporting on activities that may involve terrorist financing or money laundering;
  • Determining whether to establish or maintain an account, or to engage in a transaction; or,
  • Assisting in compliance with anti-money laundering requirements.

Since information sharing under 314(b) is voluntary and comes with administration burdens as well as the potential for regulatory criticism, many banks have been hesitant to participate.  In addition, there’s a glaring lack of clarity as to how to comply with the rule and risk that a compliance error could open the bank up to liability.  The Fact Sheet replaces and rescinds previous guidance (from 2009, 2012 and 2016) and is a clear attempt to clarify the requirements and encourage financial institutions to participate in the program.

The Fact Sheet opens by describing the rule in general and explaining the benefits of voluntary information sharing.  The guidance confirms that banks have significant flexibility in the types of information that can be shared, and that financial institutions need to only have a reasonable basis to believe the information shared is related to activities that may involve money laundering or terrorist activity to fall under the rule.

There are several other helpful clarifications and confirmations that help alleviate concerns about the safe harbor and make it clear that financial institutions may form and operate associations of financial institutions (governed by a contract) to share information between members. 

Catching and reporting money laundering is an inherently difficult task and the benefits of sharing information between financial institutions is obvious.  The clarity around this rule is a welcome development and may encourage banks who have not been participating in the program to take the step in that direction.

If you want more on this and other timely BSA issues, be sure to join us for our BSA/AML New Year Update webinar on January 7th!

Find out more resources for BSA/AML here – https://www.bankerscompliance.com/regulations-we-cover/the-bank-secrecy-act-bsa/

Published
2020/12/28

BSA/AML Updates

Be sure to JOIN US on January 7, 2021, for our webinar, “BSA/AML New Year Update”. 

In November, we received some BSA guidance in the form of a joint fact sheet related to the due diligence requirements and expectations for charities and nonprofit organizations. This is something that was a long time coming and the response was related to the COVID-19 pandemic.  There were a lot of charities and nonprofit organizations that were having difficulty obtaining banking services because they were higher risk from a BSA perspective.  Why is that?

Click on the video to listen to Kevin explain more.

Find out more about BSA – https://www.bankerscompliance.com/regulations-we-cover/the-bank-secrecy-act-bsa/

Published
2020/12/28

RESPA Section 8

Be sure to JOIN US on December 8, 2020, for our webinar, “RESPA Section 8”. 

If you are a mortgage loan officer you probably cringe a little when you hear the words “RESPA Section 8”.  Historically, this has been an area that has been very murky.  There are tons of questions but not a lot in the way of actual guidance.  Well, there is a little bit of good news!  On October 7, 2020, the CFPB released some Frequently Asked Questions (FAQs) on RESPA Section 8 and they provided some much-needed clarity.

Click on the video to listen to Kevin explain more.

Find more Lending Training here – https://store.bankerscompliance.com/#?keyword=lending&type=.

Published
2020/11/23

Writing A Suspicious Activity Report Narrative

Suspicious activity monitoring and reporting is the cornerstone of your BSA/AML program.  Once you identify the suspicious activity, filling out the Suspicious Activity Report, and more specifically, the narrative, can be a little daunting.  What’s the best way to articulate all the information you might have?

Listen to the video as Kevin explains what he believes to be the six most important items to get into you SAR narrative.

All About Suspicious Activity Monitoring and Reporting

Your suspicious activity monitoring and reporting is the cornerstone of your BSA program. Now, I know. When you sit down and you’ve gathered all of your information and you’ve determined that it’s time to file a SAR, oftentimes when you sit down at that keyboard and start typing in the suspicious activity report narrative, that can be the most daunting task of the entire process. How exactly are you going to articulate all of the information that you have in a format that’s easy to read? Now, I read a lot of suspicious activity reports and sometimes even very experienced BSA officers miss what I think are the six most important items to get into your narrative. It’s the who, what, where, when, why, and how of your narrative.

Who is conducting the suspicious activity? Now, I know that’s already been laid out in the rest of the SAR format, but sometimes in that narrative, you can get really confused as to who did what and who exactly are you focusing on? So who is conducting that suspicious activity? What instruments were used? Again, that is in the body of the SAR as well, but sometimes laying it out in that narrative and being very specific about what were the mechanisms or the instruments or what actually took place and what types of products or services at your banks were being utilized? When did the suspicious activity take place? That’s an easy one to miss simply because there’s a lot of dates already filled into the format.

But if you lay it out in the narrative, it helps investigators really understand what’s going on and piecing it together. Remember, they’re reading these very quickly, so sometimes just having it in that narrative can be really helpful.


    Where did the suspicious activity take place?

    Again, what is their branch information? Did the activity occur outside of the bank?

    Is there activity that occurred in different branches? Make sure you clarify that in the narrative. And then why does the filer think that this is suspicious?

In fact, that’s sometimes the most important part of the narrative that is easily missed. When you fill out all of the information, you have more information than the reader does, and sometimes it’s easy to forget.

You really have to lay out why you think it was suspicious. And then it’s also helpful to say, what crimes do you think might’ve been committed under these circumstances? Just laying that out in the narrative in an easy to understand format can be very helpful. And then finally, how did the suspicious activity occur? The final how. Laying all of that with a very clear and concise narrative can help law enforcement when they’re reading through these to really understand what you’re getting at. So keep in mind, you have the six most important things to make sure you get into your narrative, the who, what, where, why, and how. Thank you.


Find more BSA Resources here

If you want to learn more be sure to check out our webinar, “All About Suspicious Activity Monitoring & Reporting”, which is available now, OnDemand.

Published
2020/09/21