The Importance of Site Visits & How to Ease the Site Visit Burden
A Real Life Example of Why Site Visits are So Important:
When I built one of the first hemp programs in the United States alongside my Federal Reserve Bank regulators, one of their suggestions was site visits prior to formal approval of a new hemp/CBD relationship. Part of me was like…”Ok I understand, it’s important to validate the business exists”, and the other part of me was like “Are you kidding me? I’m never going to have time to do this, let alone know what I am looking at. This seems ridiculous.” Then the following happened…
Prior to the formal launch of our hemp program, a few hemp business stragglers had made their way into the bank to open accounts. Once those customers were identified, I would retroactively conduct due diligence that all of our new hemp applicants were now subject to prior to approval. Of all the businesses I contacted and explained the situation, there was only one that gave me a hard time. I worked for months on getting a site visit scheduled with this business owner. He finally agreed to a visit, ONLY if I: 1) Brought him a vegan lunch and, 2) Made sure I brought a man with me, *cue eye roll.* “Fine” I replied - after all, this is going on 6+ months of trying to get a site visit scheduled.
You know what happened? We showed up, with his vegan lunch in tow, in the middle of August, to find four tiny hemp plants, still in their original seed tray. Ok, I admit, I am no farmer - but by this point I had been to enough hemp farms and had enough formal education on what to look for on a cannabis farm that I knew - this ain’t right. By the looks of what was going on in his bank accounts, and the hundreds of thousands of dollars this guy had been spending, he should have a pretty established farm with plants that were nearly as tall as my short self. Not the case.
Now I’ve been in BSA for a long time, so I had a hunch something didn’t seem right with his account activity, but I couldn't prove it until this site visit happened. We ended up closing the relationship and shortly after, this guy ended up being busted by his investors for embezzlement. What did I learn that day? That my regulators were right - site visits are a necessary evil.
How to Ease the Site Visit Burden:
Can we just talk a minute about the reality of site visits? We obviously know from the story above that they are a necessary part of due diligence efforts. But let’s be real here - they are traditionally a pain. Not only do you have to complete the site visit but then you have to document the entire thing.
While I loved being able to get out on a hemp farm as a BSA Officer, the reality of it was - I didn’t have time to do it but never felt comfortable with other staff taking on that responsibility. Why? Because: 1) I was the subject matter expert and they likely would have no idea what to look for and, 2) Sales people with sales goals have no business going out and doing site visits. I’m not saying sales folks are dishonest, but when you have a goal - you’re unlikely to scrutinize things the way a BSA Officer who could end up in an orange jumpsuit does. And I don’t know about you, but I have never looked good in orange.
The good news is that now - more than ever - there are ways to ease the burden of site visits.
With the RiskScout platform, you can easily document the site visit from your phone, tablet or computer - while also taking photos throughout the site visit that are all easily documented into the platform. Furthermore, the site visit can be customized to include as many or as little questions as your financial institution sees fit.
But what if you can’t do the site visit yourself?
RiskScout has partnered with a third-party to complete a site visit on behalf of your financial institution. This third-party has been thoroughly trained by RiskScout subject matter experts in the cannabis industry (me!) on everything they need to know to complete a thorough but non-intrusive site visit that cannabis businesses feel comfortable with.
Contact us today to learn more about how we can make your site visits easier!