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FOS Blog

13 Nov
2020

FinCEN Releases Further Guidance for Banking Hemp-Related Business Customers

FinCEN Releases Further Guidance for Banking Hemp-Related Business Customers

While fielding the daily news and guidance about COVID-related fraud and considerations, it may have been easy to miss FinCEN’s update regarding expectations for performing due diligence for hemp-related business customers.  The guidance (FIN-2020-G001), which was issued on June 29, 2020, is intended as an add-on to earlier December 2019 and 2014 marijuana-related business (MRB) guidance.  As many financial institutions start to open their doors to industrial hemp customers, it is important to remember that, while these customers may seem to pose less risk than MRBs, a certain level of due diligence is still expected and must be performed to ensure hemp-related customers, specifically growers, are compliant with state, tribal government, or USDA licensing requirements.  In addition to your institution’s standard CDD and CIP procedures, FinCEN advises requesting a copy of the customer’s license or, in lieu of the license, the customer’s written attestation of licensure.  Throughout the life of the relationship, the institution may request license renewals, updated attestations, and testing reports.  Refusal to provide the documentation, whether at account opening or throughout the relationship, may be a red flag requiring further investigation and potential SAR filing.

Lastly, although MRB SAR filing requirements do not apply to hemp-related businesses, if the customer has a foot in both worlds – marijuana and hemp – and the funds related to both are flowing through your bank, SAR filing may be warranted related to the marijuana side of the business based on FinCEN’s marijuana guidance.  If MRB SARs are required for the customer, the SARs, to the best of your institution’s ability, should only include information related to the marijuana business.

To find more information related to the latest hemp guidance from FinCEN, go to https://www.fincen.gov/sites/default/files/2020-06/FinCEN_Hemp_Guidance_508_FINAL.pdf.

For additional information contact the author at jmixtacki@fosaudit.com.

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