The director of the Treasury Department division that offered banks guidance on how to deal with marijuana-related businesses denied it was encouraging the practice, saying it merely was a means to ensure the relationship was transparent.
In a letter Thursday to senators who questioned the guidance, Treasury’s Financial Crimes Enforcement Network director Jennifer Shasky Calvery wrote that the guidance was intended to give law enforcement “greater insight into marijuana-related business activity.”
“FinCEN does not purport to enhance the availability of financial services for illegal drug traffickers,” Calvery wrote senators Dianne Feinstein, D-Calif., and Charles Grassley, R-Iowa. “The primary objective … is to enhance financial transparency.”
The senators, who co-chair the Senate Caucus on International Narcotics Control, in April questioned FinCEN’s authority to usurp federal laws that keep the sale and possession of marijuana illegal, despite Colorado and Washington voter approval to legalize it.
FinCEN and the U.S. Department of Justice in February offered guidance to banks interested in doing business with the legal-marijuana trade, which the senators said “turns FinCEN’s mission on its head.”
The agency’s primary function is to safeguard the nation’s financial system from illicit use and to combat money laundering.
Feinstein and Grassley demanded answers to eight specific questions about how FinCEN justifies giving advice to banks about how to deal with marijuana money.
Grassley said Calvery’s response proves “FinCEN’s guidance to financial institutions is absolutely contrary to the mission of the agency.”
“…It’s only logical that FinCEN would now deny the stated purpose of that guidance,” Grassley said in a statement issued Friday. “The agency also concedes the obvious — that its guidance does not change federal criminal law (or) affect its enforcement in any way.”
February’s guidance offered bankers little comfort with working with marijuana businesses, instead requiring additional paperwork that identified who was behind any banking transaction. Bankers said they were not offered reprieve from prosecution should they unknowingly do business with a criminal enterprise.
In her letter, Calvery said FinCEN wasn’t telling banks they were free from prosecution simply because marijuana was legal in Colorado and Washington.
“Only the Department of Justice has discretion to determine whether to prosecute violations of the (Bank Secrecy Act),” she wrote.
The Justice Department said in February that it would be primarily interested in businesses that violated any of eight “red-flag” areas of interest, such as whether trafficking crossed state lines, children were involved, and whether marijuana was used or grown on federal lands.
Federal authorities recently raided a number of Colorado marijuana shops, later indicting a number of its participants.
Grassley again warned banks that working with marijuana businesses was risky.
“There are risks in doing business with the marijuana industry which should give the financial services industry little confidence that it will be protected should an institution be federally prosecuted for getting involved in illegal activities,” he said Friday.
Feinstein’s office had no comment on Calvery’s letter.
Colorado this week passed a bill allowing marijuana businesses to create their own banking cooperative, subject to approval by the Federal Reserve System. It is headed for Gov. John Hickenlooper’s desk.
David Migoya: 303-954-1506, dmigoya@denverpost.com or twitter.com/davidmigoya
