Alison Jimenez Interviewed by

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Alison Jimenez, President of Dynamic Securities Analytics (“DSA”), was interviewed for an article titled “Securities Firms Offer Warm(er) Reception to Marijuana Industry, Says Former Examiner” by Larissa Bernardes of The interview centered around securities firms’ interactions with state-legalized marijuana businesses. Below is a excerpt:

Which questions should broker-dealers be asking when they’re approached by a cannabis firm?

That assumes a broker-dealer knows that it is dealing with a cannabis firm. Cannabis firms know that they have a hard time getting accounts open. This is because of the stigma that is still against them. It’s very common for them to hide ownership or hide the nature of what they do, and may find difficulty in setting up their accounts.

But as with any client onboarding, the broker-dealer should be doing good KYC so they know who they’re dealing with. That said, if they know their business and they decide to engage them as a customer, broker-dealers should definitely familiarize themselves with the Cole memo, which outlines priorities for which criminal enforcement actions the Justice Department would take. I would [suggest] to securities firms to just read it before they do any onboarding to see if they have the capacity to manage the compliance challenges, which are quite numerous.

Specifically for broker-dealers, I would want to know why they were seeking access to a broker-dealer and not to a bank. Are they seeking services that only a broker-dealer can offer that a bank couldn’t? Secondly, since most broker-dealers don’t accept cash, how is cash for that MRB entering into the financial system? They must have an account somewhere. Does that entry point know that they’re dealing with a cannabis company? Maybe that’s the weak link. They have a bank account somewhere but that bank doesn’t know what they do….

There were SAR subjects that were located in 34 different countries. If the money is crossing international borders that would be something I would definitely want to know about and be sure the firm is comfortable with that [because] your institution may end serving as a funnel account for MRBs.

Read the full interview here. See DSA’s analysis of Suspicious Activity Reports relating to marijuana business:

New Marijuana Banking SAR Data has International Implications

Securities Brokers have (Relatively) Open Arms to Marijuana Businesses