We do not provide services to the cannabis industry. West Coast AML Services was created to manage the unique challenges of banking state-licensed MRBs and minimize the possibility of prosecution under federal money laundering statutes (18 U.S.C. §§ 1956 and 1957) and regulatory enforcement actions. We are committed to protecting the safety, soundness and reputational integrity of financial institutions that are developing compliance programs consistent with federal guidelines and enforcement priorities. Our work has withstood federal and state regulatory examinations.
Most financial institutions that do not bank marijuana-related businesses nevertheless have "ancillary accounts." We have found that ancillary accounts are ripe for money laundering and pose a great risk to the integrity of every compliance program. Our firm crafts risk management programs specific to ancillary accounts, consistent with the institution's risk profile. We help keep our clients from running afoul of the Department of Justice, Criminal Division's Narcotic and Dangerous Drugs Section, Money Laundering and Asset Recovery Section, Organized Crime Drug Enforcement Task Forces Program and HIDTA.
Our training department offers a pilot program stakeholders forum consisting of SME presentations on managing the unique compliance risks of MRB banking, the Federal landscape surrounding MRB banking, and the cannabis industry – license application to banking relationship.
West Coast AML Services provides anti-money laundering subject matter expertise to mitigate and manage compliance risks associated with MRB banking. We prepare risk assessments focused on U.S. Department of Justice enforcement priorities and create the structure, policies, procedures and controls of risk management programs within the context of BSA/AML compliance specific to marijuana-related businesses.
West Coast AML Services examines compliance programs with firsthand insight into the prosecution of financial institutions and bankers by the Department of Justice under federal money laundering statutes (18 U.S.C. §§ 1956 and 1957). We recommend program enhancements, immediate corrective actions, tailor training for BSA officers and senior management, and advise the Board on oversight.
The BSA’s criminal penalties for failing to establish an AML program appropriately designed to guard against money laundering through financial institutions (31 U.S.C. Section 5322 and 31 C.F.R. Section 1010.840) are not altered by the proposed SAFE Banking Act.
“If they have rigorous compliancy all I can really say is they are less likely to get our attention, but I can’t go out and tell banks if you have rigorous compliance, you have immunity.”
United States Attorney for the District of Colorado
It is expected that the Department of Justice will continue to assess the quality and effectiveness of state and local regulatory and law enforcement environments when creating targeting priorities. Keep in mind, FinCEN's guidance clarifying BSA/AML expectations for financial institutions providing services to state-regulated MRBs does not alter any provision of the BSA. Further, the proposed SAFE Banking Act does not mitigate the risk that marijuana-related businesses deposit proceeds into financial institutions from the sale of marijuana accomplished in any manner outside of state licensing and regulatory requirements and Department of Justice marijuana-related conduct enforcement priorities.
In states that have decriminalized marijuana, we have seen an influx of foreign money used to establish grow operations, with much of the marijuana being destined for out-of-state consumers.
The recent HIDTA Insight Report on marijuana production, distribution, and consumption in Oregon confirms what we already know—it is out of control. Overproduction is rampant and the illegal transport of product out of state—a violation of both state and federal law—continues unchecked.
We Anticipate focusing marijuana enforcement efforts on overproduction, targeted sales to minors and organized crime and interstate transportation of drug proceeds. To that end, federal investigators will continue to police the Commonwealth for incoming or outgoing shipments of cash as well as use of the federal banking system.
For states such as California that have enacted laws to authorize the production, distribution and possession of marijuana, the Department of Justice expectation is that these states would establish strict regulatory schemes that protect the federal enforcement priorities. Based on assurances that those states will impose an appropriately strict regulatory system, the Department deferred its right to challenge their legalization laws. But if any of the stated harms do materialize—either despite a strict regulatory scheme or because of the lack of one—federal prosecutors will act aggressively to bring individual prosecutions focused on federal enforcement priorities and the Department may challenge the regulatory scheme themselves in these states.
Terry M. Neeley
Founder / Managing Director