In order to make it clear what banks are allowed to do, the U.S. Treasury Department’s Financial Crimes Enforcement Network released guidance regarding the servicing of hemp-related businesses.
The guidance included things like reminding banks that they will not have to file Suspicious Activity Reports now whenever working with hemp businesses. With hemp not being a controlled substance and federal oversight being put in place for these businesses, banks are encouraged to treat them as any other business.
Banks will be expected to monitor transactions for hemp businesses just like they would for any other customers. Only when suspicious activity is detected will they have to file a SAR. This includes reporting transactions totaling over $10,000 a day.
The guidance also gave some examples of potentially suspicious activities.
- Not having proper licensing information or being unable to show that their operation is following all laws
- Continuing to operate without complying with the law or working after a license is revoked.
- Hiding involvement in the illegal cannabis trade.
- Growing hemp in a state that does not currently allow it.
- Using a hemp business as a way to launder money from criminal activity.
If a bank sees a hemp company whose income is mixed with state-legalized marijuana proceeds, then they are encouraged to use the FinCEN 2014 Marijuana guidance, which will show them which reports to file.
If the hemp business is able to keep its finances separate and clearly define the income that comes from hemp from the income associated with marijuana, then the report would only need to include the marijuana side of the business.