FAQ – IMBs, Marijuana, AML Audits and 4:20
April 19, 2023 BY MQMR Blogger
Hey Mary Jane…just kidding.
Question 1: Did you know that lending on a property, and/or to an individual or company that is affiliated with a marijuana operation is considered a red flag for your Anti-Money Laundering Program, and potentially requires the filing of a Suspicious Activity Report (SAR)? At least that’s the requirement today until the conflicting landscapes of marijuana legalization (federal versus state) get resolved.
Question 2: Did you know that just because Independent Mortgage Banks (IMBs) don’t handle cash transactions like depositories, doesn’t mean that they’re not required to file SARs and have an independent audit of their AML program. Known or suspected criminal activity, such as mortgage fraud, may require a SAR filing. Further, 31 CFR 1029.210 requires, at a minimum, that IMBs maintain a anti-money laundering program that:
(1) Incorporates policies, procedures, and internal controls based upon the loan or finance company's assessment of the money laundering and terrorist financing risks associated with its products and services.
(2) Designates a compliance officer who will be responsible for ensuring that:
(i) The anti-money laundering program is implemented effectively,
(ii) The anti-money laundering program is updated as necessary; and
(iii) Appropriate persons are educated and trained in accordance with paragraph (b)(3) of this section.
(3) Provides for on-going training of appropriate persons concerning their responsibilities under the program.
(4) Provides for independent testing to monitor and maintain an adequate program, including testing to determine compliance of the company's agents and brokers with their obligations under the program.