California Cannabis: Department of Business Oversight Issues Somewhat Helpful Guidance to Financial Institutions

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Summary

Earlier this month, on October 3, the California Department of Business Oversight (the “DBO”) issued a Cannabis Banking Guidance memorandum to its state-chartered financial institutions (banks and credit unions) to help them make appropriate risk assessments in serving cannabis-related businesses and comply with federal guidelines. Other sections include recommendations for business file review, account testing/identification of FinCEN red flags, and FinCEN filings. The memorandum is in the form of an extensive questionnaire. This section also focuses on due diligence, as determining where an MRB’s money comes from is critical. These financial institutions will still be required to comply with FinCEN’s BSA expectations, including the FinCEN guidance and priorities set forth above, and they were urged to identify, evaluate, and manage risks appropriately.

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Earlier this month, on October 3, the California Department of Business Oversight (the “DBO”) issued a Cannabis Banking Guidance memorandum to its state-chartered financial institutions (banks and credit unions) to help them make appropriate risk assessments in serving cannabis-related businesses and comply with federal guidelines.  The memorandum is in the form of an extensive questionnaire. The DBO’s Commissioner, Manuel P. Alvarez, commented: “If financial institutions choose to serve the cannabis market, they must understand...

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