Officials from the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued guidance Monday to address banks’ questions about servicing hemp-related business customers.
The guidance reminds banks that filing Suspicious Activity Reports (SARs) is not necessary when working with hemp businesses because hemp is federally legal and no longer listed as a controlled substance.
FinCEN said it expects financial institutions to monitor the transactions of hemp-related businesses as they would for other customers, following standard procedures and filing an SAR only if they are aware of suspicious activity.
This could include:
- Growing hemp in a state or jurisdiction where hemp production is currently illegal (South Dakota, Idaho and Mississippi).
- Using a state-licensed hemp business as a cover to launder money derived from criminal activity or federally illegal marijuana-related activity.
- Hemp producers concealing or disguising involvement in a marijuana-related activity.
- Not providing sufficient licensing information or demonstrating their operation is consistent with applicable law; or continued operation after license revocation or non-compliance with the law.
FinCEN advises that if financial transactions of a hemp business are commingled with marijuana-related activities, the institution should apply the FinCEN 2014 Marijuana Guidance, which provides clarity on how to file SARs for marijuana-related activities.
But if the businesses are kept separate, or the customer and bank are able to identify which proceeds are marijuana-related and which are hemp-related, the SAR filing requirements only apply to the marijuana-related part of the business.
FinCEN also advised on the type of information and documentation needed from hemp-related businesses to comply with the Bank Secrecy Act and Anti-Money Laundering regulatory requirements.
The guidance reminds banks they must report currency transactions for hemp-related businesses in the same manner they would for any other customers – anything above an aggregate of $10,000 in a single business day.