SAR or not to SAR?

Posted By: Jenny Roberts

SAR or not to SAR? - 01/05/21 10:13 PM

In reviewing hemp growing companies, if they have incoming & outgoing wires that state that the funds are from marijuana legal states, how do you determine whether to file a SAR or not? I have some businesses where the wires going to or coming from I know are hemp processing companies but on some of the businesses, I cannot determine exactly what their business purpose is. My gut says to continue to file a SAR but it gets exhausting filing continuing SAR's all of the time on them.....
Posted By: BrianC

Re: SAR or not to SAR? - 01/05/21 10:31 PM

Have you contacted your customer tto find out the business purpose for the wires that you cannot explain?

Hemp is legal at the federal level. FinCEN guidance this year made it clear that we do not file Marijuana SARs on hemp businesses. Have you concluded that your customer is actually involved in marijuana which is illegal at the federal level?

I'd be doing more investigating before I conclude a SAR is needed.
Posted By: Jenny Roberts

Re: SAR or not to SAR? - 01/06/21 10:19 PM

No, I have not contacted the customer but will. Thanks!
Posted By: Jenny Roberts

Re: SAR or not to SAR? - 01/06/21 10:21 PM

I do have another question about this, what if it is a customer that sells plant nursery equipment and the incoming wires are from states where marijuana is legal and the business sending the wire sells marijuana?
Posted By: RockChucker, CAMS

Re: SAR or not to SAR? - 01/06/21 10:54 PM

Would you file a SAR on HomeDepot if it sold some plant supplies to a marijuana grower?
Posted By: Jenny Roberts

Re: SAR or not to SAR? - 01/07/21 01:50 PM

Good point, I had a previous auditor that wanted me to file on everyone so I think they had me paranoid about everything!! lol
Posted By: StacyLitkeGCV

Re: SAR or not to SAR? - 01/12/21 10:32 PM

While Hemp is legal, it does get some extra scrutiny because the only way to tell the difference between hemp and marijuana is a lab test. This makes it a good front for selling marijuana.

The goal in monitoring your accounts tied to hemp is to make sure that the activity is "normal and expected" for a hemp business. A wire in for the purchase of product would not be unusual, even from a marijuana legal state. You can certainly request an invoice from the customer to substantiate it was a legal sale, or as Brian suggested, have a conversation with them. And it's likely as part of your EDD, you're getting financials, so does the wire seem in line with those numbers?

If you've done a little research and it seems to be part of their normal operating patterns and within the constraints of hemp, then I wouldn't think you'd need to keep filing SARs. Save them for when they get activity that's not typical for them, and isn't easily explained.