Banking Recommended AML, BSA, KYC, and EDD Compliance Protocols

For Hemp & Hemp-Derived CBD “Plant-Touching” Companies

Main Points: KYC, EDD, Federal Compliance, and State & Local Compliance

  • Develop, confirm and monitor business profile, scope of legitimate activity, physical operation(s) and marketing geography
  • Background report on the customer’s beneficial owners and/or authorized signers including:
  • ✔ Address history

    ✔ SSN trace

    ✔ Nationwide Criminal History

    ✔ OFAC/Terrorist search

    ✔ Federal Crimes Search

    ✔ SSN Fraud Verification

    ✔ Personal Credit

    ✔ Beneficial Ownership or Principal in THC-licensed operations anywhere in the US

  • Physical OnSite Compliance Inspection of all facilities excepting home-based operations
  • Cultivators & manufactures required to register and/or obtain appropriate license with state agriculture department where they maintain applicable facilities. (May or may not be temporarily waived pending implementation of federally-mandated individual state regulatory framework.)
  • CBD resellers registered/licensed as required by state law by physical nexus and/or marketing (To be waived pending implementation of individual state regulatory framework.)
  • Depending upon bank regulator requirements: Real-time, daily, weekly, or monthly point-of-sale (POS) monitoring and reporting
  • Compliant source-to-sale (S2S) inventory tracking synchronized with state licensing authority, where applicable
  • Confirm initially and ongoing that state agriculture department registrants/licensees are in current compliance. Identify and require resolution of outstanding violations.
  • Review compliance and violation history and develop relevant policy guidelines.
  • Transaction monitoring, flagging and/or blocking to assure compliance with applicable state law relating to both in-state and interstate commerce
  • Verification of compliance with state law based upon physical nexus, legal registration, labeling and marketing
  • Compliance with FDA and applicable state restrictions on labeling, packaging and health and/or medical claims
  • Compliance with FDA regulations and guidance regarding sale and interstate commerce of unapproved products containing hemp-derived CBD for human or animal consumption
  • Confirmation of registration with local, state and federal tax authorities as applicable and required
  • Confirmation of mercantile registration/licensing with state and local jurisdictions as applicable
  • Submission of monthly reporting on updates and revisions to Schedule ‘A’ (List of CBD products sold) accompanied by applicable COA’s
  • Pre-transaction CID age verification for smokeable and inhalable products

Typical documents required to support application:

  1. Universal Merchant Application Form
  2. W-9
  3. Schedule “A” – List of CBD products sold
  4. Certificates of Analysis (COAs)/Certified Lab Test Report(s) covering all items shown on Schedule “A”
  5. IRS EIN Confirmation letter
  6. Certificate of Entity Formation (with filing stamp)
  7. Entity Articles, Bylaws, LLC Agreement
  8. 3-6 Months Most Recent Business Bank Statements (if available)
  9. 3-6 Months Most Recent Personal Bank Statements (if entity began operations in 2019)
  10. 3-6 Months Most Recent Merchant Processing Statements (if available)
  11. Voided check (with printed company name) and/or Bank letter (verifying account and routing number)
  12. Fulfillment Agreement and/or recent dropship invoices from all vendors (if applicable)
  13. Current business utility bill, copy of business premises lease (or alternative proof of business address)
  14. Photo ID for all owners of 10% or more and authorized signers on account
  15. Proof of URL ownership (if applicable)
  16. DBA filing (if applicable)
  17. Shareholder Register
  18. Website Certification Checklist
  19. Banking Resolution(s)
  20. State Department of Agriculture licensing/registration (if applicable)
  21. CBD registration/license with state regulatory agency (if applicable)
  22. Registration with local, state and federal tax authorities (if applicable)
  23. Mercantile registration/licensing with state and/or local jurisdiction(s) (if applicable)
  24. Other documents as required or individually requested by depository, settlement, underwriting, or acquiring partners

NOTE: Website must be completed and published and include:

  • “No THC” or “0.3% THC or less”
  • Specific statements of compliance with state-specific CBD rules and restrictions covering all states in which the company has a physical presence and/or sells products into
  • Privacy Policy
  • Shipping Policy
  • Refund & Return Policy
  • Terms & Conditions
  • No medical/therapeutic claims unless approved by FDA
  • Customer Service Contact Information:
  • ✔ Customer Service Phone Number

    ✔ Customer Service Email Address

  • Business Address
  • Credit Card Logos
  • Suggested best practices:
  • ✔ COAs listed for each product

    ✔ FDA disclaimers

    ✔ Require age confirmation on site