On March 27, 2019, Cadwalader presented a webinar on recent anti-money laundering ("AML") developments affecting cannabis businesses, broker-dealers, blockchain transactions and draft legislation.
The panel featured Jodi L. Avergun (Chair of Cadwalader's White Collar Group), Todd Blanche (Partner in Cadwalader's White Collar Group), Joseph Moreno (Partner in Cadwalader's White Collar Group) and Christian Larson (Associate in Cadwalader's White Collar Group).
Ms. Avergun explained that the Controlled Substances Act makes the "manufacture, distribution and possession" of cannabis with the intent to distribute a felony under federal law. However, she added, over 30 states now allow the prescribing and dispensing of cannabis for medical use and eight states permit the recreational use of cannabis. According to Ms. Avergun, the SAFE Banking Act, if enacted into law, would give comfort to more financial institutions that they would not face enforcement action solely for engaging in a transaction that involves the proceeds from a cannabis-related legitimate business or service provider.
Mr. Blanche explained that enforcement actions against broker-dealers for AML violations are increasing, and that broker-dealers should evaluate whether their current programs and controls meet regulatory expectations. Mr. Blanche observed that regulators have recently brought enforcement actions against broker-dealers for insufficiently mitigating the specific money laundering risks present in their businesses and neglecting to adequately investigate suspicious activity.
Mr. Moreno explained that regulators increasingly expect corporate sanctions programs to resemble AML programs. Further, he said, the European Commission has grown aggressive in identifying territories it considers to be money laundering concerns. In addition, Mr. Moreno described pending legislation that, if enacted, would create a federal beneficial ownership registry for legal entities and increase penalties for repeated violations of the Bank Secrecy Act.
Mr. Larson explained that regulators in the United States and other jurisdictions are still grappling with whether they can apply existing money laundering and securities regulations to cryptocurrencies and other digital assets, or whether these assets are sufficiently different to require new regulatory regimes. He noted that, outside of the United States, a number of jurisdictions have adopted legislation designed to attract businesses utilizing blockchain and distributed ledger technology.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.