What is “BSA” and why does Salal have a BSA team? BSA stands for Bank Secrecy Act. Salal’s BSA team conducts reviews of Salal’s cannabis business members and alerts your Account Officer to any questions or findings that require further investigation.
The Department of Justice sets BSA Expectations Regarding Marijuana-Related Businesses, through a memo dated February 14, 2014, outlining expectations and guidance for financial institutions, such as Salal, who provide banking services to cannabis businesses. These expectations include a list of “red flags” for Salal to watch for when we’re conducting due diligence on both new account applications and existing business accounts.
Red flags may include potential money laundering, such as an excess of cash that their revenue does not support, a lack of documentation such as bills of sale for product or commingling personal and business funds without sufficient documentation. Other red flags include proximity to schools, non-profits engaged in commercial activity, or negative news such as criminal convictions (other than for cannabis).
Many BSA questions concern your Quarterly Sales figures and your handling of cash deposits. Because cannabis is still federally illegal, dispensaries do not have the same access as other businesses to banking services such as deposit accounts, loans, and credit card processing. This means that many legal dispensaries are forced to operate on a cash-only (or primarily cash) basis, presenting multiple challenges for store owners.
Other BSA questions may relate to your compliance with state law. Compliance, generally, refers to following rules or expectations set by state regulators of cannabis within the federal framework of cannabis as a scheduled substance. Regarding cannabis, regulatory agencies typically care about three main things: public safety, illicit markets, and tax revenue. The rules for each market and license type vary. For retailers, there are regulations around where dispensaries can be located, who can enter, how much cannabis they can purchase, and how their goods are packaged and labeled.
There are also strict rules on inventory management. Typically, Salal reaches out to you when your state business or cannabis registration has expired or has been suspended, to ensure that you are renewing your license or to inquire about new directions for your business. We encourage you to reach out to your Account Officer proactively when you expect to make changes in your business operations.
