Pub. 8 2018 Issue 1

13 ISSUE 1. 2018 in your association’s trade journal is a solid approach to business development. dani@thenewslinkgroup.com | thenewslinkgroup.com | (v)801.676.9722 ADVERTISING in your association’s trade journal is a solid approach to business development. Business publications are rated the first choice for staying in touch with what’s going on in their sector by 61% of decision makers. 83% of managers would recommend to people starting a career in their sector to read the business publications. A recent Nielsen Catalina study shows an average ROI of $7.81 for every $1.00 spent on print ads. Almost half of those surveyed preferred to look at an ad in print, and only 1 in 10 preferred to see that same ad in a digital version. And no one wanted to see it in an app. Print is tangible, it’s engaging, it’s readable, but most of all… it works! Assuming the decision to service (or con - tinue to service) MRBs has been made, the decision to open a MRB deposit account or make a loan should be accomplished on a case-by-case basis with proper enhanced due diligence of each potential customer tailored to the risk profile of the MRB before each relationship is established. The due dil- igence should include verification of the po- tential customer’s licensing, if the customer “touches” cannabis, with a full review of the actual applications and complete documen - tation of the services to be performed, the products to be sold, and the types of custom - ers the MRB will be handling. Procedures for bringing the customer into the bank should be established based on the risk category into which the customer falls, in - cluding completion of questionnaires, and the requisite bank officer’s approval. Model risk management should be in place with regular independent validation of the system. The personnel and monitoring systems must be in place before any accounts are opened. The BSA Officer and a group of trained staff specifically focused on MRB custom- ers who remain familiar with the industry, the BSA/AML monitoring requirements, and the implementation and operation of the systems used to monitor and report on the MSB relationship are essential. The size of the team must be sufficient to meet the tasks involved. The bank should conduct risk assessments and risk grading on an ongoing basis. Annual and special audits should be conducted by qualified independent third parties. The bank must have a system and the manpower in place that allows for the filing of SARs adhering to the current FinCEN guidance unless and until new or amended guidance is issued due to the Attorney Gen- eral’s rescission action. SARs must be filed where the bank has reason to suspect that a transaction (i) involves funds derived from illegal activity, (ii) is designed to evade BSA regulations, or (iii) lacks a business or apparent lawful purpose. Such required filings will be a daily occurrence when banking MRBs. The rescission of the Cole Memo guidance requires reassessment and reevaluation of a bank’s program to service MRBs with the assistance of qualified legal counsel. And while it raises some additional uncertainty, it is not likely to stop the growth of this in - dustry and may, in fact, hasten the day when Congress steps forward to act and clarify the situation once and for all. w Arthur A. Coren, a partner at Duane Morris LLP in its Los Angeles office, has represented large banking institutions, as well as com- munity banks and their holding companies, for more than three decades. Art focuses on regulatory matters, M&A, capital raising and corporate governance.