What triggers the filing of a Marijuana Limited SAR?

The correct answer is that the filing of a Marijuana Limited SAR (Suspicious Activity Report) is triggered when the institution believes the business does not violate state law. This is important because under the Bank Secrecy Act (BSA), financial institutions that provide services to marijuana-related businesses must assess their activities closely. When an institution identifies a business that is compliant with state regulations regarding marijuana, it is still necessary to report certain transactions to the Financial Crimes Enforcement Network (FinCEN) due to potential federal law conflicts and the need for transparency.

This is significant for institutions because it allows them to maintain compliance with both state and federal regulations. The process helps convey that although the business is operating legally at the state level, there still exist risks and compliance obligations for the financial institution. As such, even lawful activities can raise red flags that require monitoring and reporting.

The other options do not correctly describe the trigger for a Marijuana Limited SAR. A violation of state laws does not necessarily warrant a Marijuana Limited SAR if the business is operating legally. Insufficient customer due diligence might lead to other compliance issues but is not a direct trigger for this specific type of SAR. Similarly, identifying a known suspect typically pertains to other suspicious activity categories and does not align with the specific