CBD businesses around the world have been facing challenges with compliance related to know-your-customer (KYC), know-your-business (KYB) and anti-money laundering (AML) regulations.
KYC and KYB regulations require financial institutions and payment processors to verify the identity of their customers and the legitimacy of their business operations in order to prevent illegal activities such as money laundering and terrorist financing. This can be particularly challenging for CBD businesses due to the lack of clear regulatory guidance and the association of CBD with cannabis, which is still illegal in many countries.
Many banks and payment processors have been hesitant to work with CBD businesses due to the lack of clear regulations and guidance on the industry. Without clear guidelines, it can be difficult for banks and payment processors to assess the risks associated with working with CBD businesses and to ensure compliance with KYC and KYB regulations.
AML regulations also pose a challenge for CBD businesses, as they require financial institutions and payment processors to implement systems and controls to detect and prevent money laundering. Many banks and payment processors have been hesitant to work with CBD businesses due to the association of CBD with cannabis and the potential reputational risks of working with an industry that is still perceived as high-risk.
In the United States, the situation is particularly challenging as the legality of CBD can vary from state to state and the Food and Drug Administration (FDA) has not issued formal regulation on the sale and use of CBD products. This lack of clear federal guidance has made it difficult for banks and payment processors to understand the legal landscape and assess the risks associated with working with CBD businesses.
In Europe, despite CBD products being listed in the EU Novel Food Catalogue, the industry is still relatively new, and financial institutions and payment processors might be hesitant to work with the industry due to regulatory uncertainty and the lack of a clear legal framework.
In conclusion, CBD businesses around the world have been facing challenges with compliance related to KYC, KYB and AML regulations due to the lack of clear regulatory guidance and the association of CBD with cannabis, which is still illegal in many countries. This has made it difficult for banks and payment processors to understand the legal landscape and assess the risks associated with working with CBD businesses, resulting in many of them being hesitant to work with the industry. The situation varies in different countries but overall, regulatory clarity and guidance are necessary to help CBD businesses overcome these challenges.
