In our state, it is legal to possess and sell CBD oil as long as the level of THC is below .3%. We just found out a customer of ours is selling the oil. I have done research and found testing done on the oil they sell that the level is below the .3%. Am I required to file a SAR?

What makes it legal at the Federal level?

HEMP was removed from the Controlled substance list. So CBD that is derived from HEMP is no longer considered a controlled substance.

I think you are misinformed. Legally growing hemp and producing CBD are two entirely different things. The Food and Drug Administration (FDA) approved Epidiolex, a form of CBD manufactured by GW Pharmaceuticals, for the treatment of rare forms of pediatric epilepsy. There is no other approved use of CBD with any traces of THC in it.

Everybody wants the answer to be "No SAR", but it's just not a supportable conclusion IMHO.

The 2018 Farm Bill introduced the term "Industrial Hemp" to the Controlled Substances Act (CSA), thereby separating them from marijuana for the purposes of the CSA. Industrial hemp isn't a scheduled substance. The only CBD drug listed as a scheduled substance is Epidiolex, meaning selling Epidiolex without a prescription is illegal. Otherwise CBD isn't scheduled. Bottom line: selling CBD isn't a violation of the CSA.

Does that mean no SAR? No. Why? There is another federal law, the Food, Drug, and Cosmetics Act (FDCA) which is administered by the FDA. The FDA has made recent public comments and has a Q&A that covers their current interpretation of the legality of CBD and hemp. I'd post a link, but you could just as easily Google "FDA CBA FAQ" and find it. My take on the FDA's guidance is that all hemp-only products (e.g. hemp seed oil) are legal, some CBD cosmetics may be legal under strict circumstances (the product can't claim medical benefits), and CBD supplements and food additives are illegal. While a violation of the FDCA is only a predicate crime for money laundering if the violation also involved the receipt of funds from a healthcare program (per the federal healthcare fraud statute), keep in mind that all federal criminal violations facilitated through a financial institution are subject to SAR reporting, providing dollar thresholds are met.

In another post, I tried my best to argue against SAR filing, and the argument is weak. You'd basically reverse what I stated above, noting that an FDCA violation isn't an SUA for ML unless the CBD seller was also committing healthcare fraud. Then you'd have to argue that the CBD-related transactions in their account aren't what's "facilitating" the violation of the FDCA because the FI is immaterial to the violation. Again, that's my best shot at weaseling out of a SAR and I don't think it holds enough weight to pass scrutiny. I'd welcome any additional support because, at the end of the day, I think most FI's would like to stuff pandora back in the box.

So to determine if a SAR is filed, do we ask the customer how much income they are making off it i? Is the amount to determine SAR what they are making monthly? Also, what box do you check on the SAR when filing?

MRS8, I don't have an answer and neither does FinCEN. This is what they told me.


I asked if CBD Oil retail customer would require a SAR filing by the bank and provided the FDA announcement.

FinCEN Answer:
This question goes beyond the specific facts and circumstances in the guidance. We defer you to the Department of Justice regarding any questions related to the substances you have described.

The SAR reporting structure laid out in FinCEN’s February 14, 2014 Guidance “BSA Expectations Regarding Marijuana-Related Business” remains in place, and that SAR reporting guidance with regard to financial institutions seeking to provide services to marijuana-related businesses applies to the specific facts and circumstance set forth in that document. Situations not specifically addressed in that guidance should be treated under standard SAR reporting rules and related guidance. The manufacture, distribution, and dispensing of marijuana is an illegal act in violation of federal law. FinCEN will continue to work closely with law enforcement and the financial sector to combat illicit finance. We will notify the financial sector of any changes to FinCEN’s SAR reporting expectations.

I received that same answer to a different question loosely revolving around marijuana. I'd just like to briefly complain that if FinCEN can't answer whether a specific situation requires a SAR, how do they expect us to? The only conclusion I can draw from an answer like that is that if an examiner were to criticize you for not reporting a series of transactions - the sale of CBD in this case - you can clearly point to this as evidence that there is no right answer and it can only be a judgment call (and document your reasoning for your judgment, obviously).

In my case I did follow up with DoJ, and got an answer that was basically "sounds legal enough," which seems like a good reason not to file. Our state and Federal regulators opted not to weigh in.

I reached out to an ABA attorney and he has stated that since the FDA has reasserted its authority over any derivative product of hemp or marijuana, that their approval is required before any CBD oil can be distributed legally. Therefore, if we are banking someone who sells the CBD oil and their income exceeds the dollar thresholds meets the SAR guidelines, that a SAR is required to be sold. He also stated that we as a bank may have to ask them to prove their income from CBD or choose not to bank such customers.