Pub. 14 2019-2020 Issue 1

NEBRASKA BANKERS ASSOCIATION 25 Silvia Garcia Maggio serves as an Associate General Counsel for Compliance Alliance. After graduating from The University of Texas School of Law in 2011, Silvia began her career in real property and foreclosure law. Employed by a national mortgage servicer since 2012, Silvia worked on the OCC independent foreclosure audit and in compliance for Enterprise Risk Management, gaining a multitude of experience dealing with multi- state and federal banking regulations. Over the past year, Silvia has developed and implemented the C/A Minute videos, a series of short, compliance training and refresher videos that leverage the frequently asked questions from the Compliance Alliance hotline. to bank them and how to determine whether their customer actually is an MRB. That distinction should include an intimate understanding of state laws and definitions and also, a conclusive policy statement as to whether the bank does business with MRBs and what the bank’s definition of an MRB is (is it only a dispensary or grower? Is it a customer who rents retail space to a dispensary?). This process should also include a discussion with the bank’s regulator to understand expectations beyond FinCEN’s stated guidance as there is no other federal regulator that has made any official guid- ance and state regulatory guidance is varied. The number one BSA topic thus far in 2019 is how to develop Marijuana Related Business policies andmore importantly, how to even define “Marijuana-Related Busi- nesses.” At the moment, there really isn’t federal guidance so banks are having tomake those interpretations themselves. There are a variety of methods to go about that - from the three-tier approach to the zero-tolerance approach to the “we are choosing not to make an interpretation in our policy” approach. Without a set industry standard, banks are working from scratch via member groups – like C/A huddles – and relying on industry resources like ACAMS to make those interpretations about products that are legal within their own states. A zero-tolerance approach on the interpreting what is a “marijuana-related busi- ness” has generally included not doing any business with companies who have any relation to marijuana business, directly or indirectly. Direct marijuana business under this approach includes businesses that grow, distribute, sell or produce items that do not fall under the definition of “hemp” under a state-licensed or federal pro- gram. Indirect businesses would include businesses that provide services to those businesses – like landlords and business supply companies. While this is the most conservative approach, it is easy to see the downside. This definition interpre- tation includes businesses that perhaps did not provide services in the past but do now – like office supply businesses or gardening supply companies. If in the middle of a long-term business relation- ship – like a closed-end loan – it will be up to the bank to determine how to wrap-up the relationship in order to comply with their own policy. Another approach being taken is the three-tiered risk approach as discussed by ACAMS back in 2016. This approach puts businesses into three dif- ferent tiers based on risk. The bank then makes a risk-based interpretation of what the definition of “marijuana related business” means by deciding whether to bank customers who are Tier 1, Tier 2 and/or Tier 3. It is important to note that regardless of which approach – regardless of how they interpret (or choose not to interpret what an MRB is) – they must do so with an understanding of what the legal and compliance risk is to the bank and within the scope of the bank’s acceptable risk. As with any change that is not explicitly addressed by banking regulators, it is a best practice to work with the bank’s regulators, the bank’s attorneys to de- termine state-specific laws, and the state department of banking prior to beginning new products. Compliance Alliance does have Mari- juana Banking tools on the website under the “Marijuana Banking Toolkit” which includes helpful things like an updated manual to help banks sort out how to build a marijuana banking policy. 