Part Two of a Three-Part Series

In the second part of this series, we explore the practical effects of the FinCEN and DOJ guidance documents on industries attempting to serve marijuana related business (“MRBs”). On June 27, 2017, the Tenth Circuit issued an interesting and divided opinion showing us how difficult it can be to square the prohibitions in the federal Controlled Substances Act (“CSA”) and money laundering statutes with state legislation legalizing certain MRB activity and the seemingly permissive nature of the FinCEN and DOJ guidance documents. Continue Reading Continued and Unexpected Roadblocks to Serving MRBs: Fourth Corner Credit Union v. Federal Reserve Bank

FinCEN assessed two significant AML-related civil money penalties in 2016 against a bank and credit union. First, FinCEN and the Office of the Comptroller of the Currency announced a combined $4 million civil money penalty against Gibraltar Private Bank and Trust Company for allegedly willfully violating the AML requirements of the BSA. According to FinCEN, Gibraltar’s AML program deficiencies ultimately caused the bank to fail to timely file at least 120 SARs involving nearly $558 million in transactions from 2009 to 2013. These deficiencies also unreasonably delayed Gibraltar’s SAR reporting on accounts related to a $1.2 billion Ponzi scheme led by Florida attorney Scott Rothstein.

Second, FinCEN assessed a $500,000 civil money penalty against Bethex Federal Credit Union for alleged AML violations. Bethex was a federally chartered, low-income designated, community development credit union. In December 2015, the National Credit Union Administration liquidated Bethex, determining that it was insolvent with no prospect of returning to viable operations. According to FinCEN, Bethex failed to detect and report suspicious activity in a timely manner to FinCEN and did not file any SARs from 2008 to 2011. In 2013, due to a mandated review of prior transactions, Bethex late-filed 28 SARs. The majority of the suspicious activity involved high-volume, high-dollar transfers outside of Bethex’s expected customer base by Money Services Businesses allegedly capable of exploiting Bethex’s AML weaknesses. Most of those SARs were allegedly inadequate and contained short, vague narratives encompassing a broad summary of multiple and unrelated instances of suspicious activity.