CRB Monitor Founder & CEO, Steve Kemmerling, was quoted in an American Banker article (by Polo Rocha) Okla. man lied about pot business to open bank account, U.S. attorney says.
Related to last week's posts MRB Exec Pleads Guilty to Lying to Chase to Attain Bank Account and US Attorney Prosecutes MRB for Making False Statements to Open Bank Account, Kemmerling was quoted:
the case is “completely indicative” of the banking industry’s unwitting exposure to marijuana companies...This is happening at most, if not all, banks in states with legalized marijuana.
The article highlights how Oklahoma man who ran a marijuana-related business is facing up to 30 years in prison for making false statements and cash structuring to hide the the true nature of his business when he opened a bank account at JPMorgan Chase. Victor Ngo pled guilty to making a false statement to Chase when he ran the company Cannabless. Prosecutors say he opened an account through a "seemingly unrelated business", which he told the bank was a "wellness and fitness company".
"This fraudulent conduct allowed Ngo and FMG to illegally access the banking system and deposit proceeds generated by Cannabless’s sale of marijuana," the U.S Attorney’s Office for the Western District of Oklahoma said in a press release.
Ngo deposited money almost every day into the account, structuring transactions to avoid the $10,000 threshold at which banks are forced to report suspicious cash transactions. Neither Chase nor Cannabless responded to requests for comment to American Banker.
This is yet another example of law enforcement agencies and/or prosecutors going after discrete examples of marijuana-related bank fraud, payments fraud, loan fraud and/or money laundering. Although this exact same behavior is very likely taking place every day by thousands of marijuana-related businesses in every "legalized" marijuana state, federal (and state) law enforcement and bank regulators/examiners are yet to comprehensively address what may be systemic cannabis-related risk in the US financial system.
Ultimately, in CRB Monitor's opinion, this lack of robust enforcement may / will change as federal tax collectors realize that the activities underlying the money laundering correlate to a lack of tax collection, and as a result may start to pressure bank regulators (and banks) to more proactively and effectively identify, monitor and report on cannabis-related accounts and activity.
Wondering what a Tier 1, Tier 2 or Tier 3 CRB is?
See our seminal ACAMS Today white paper Defining "Marijuana-Related Business"and its update Defining "Cannabis-Related Business"