Federal Financial Regulators Respond to Senator Letters Advocating for Hemp Banking
On April 2, 2019 Senator Majority Leader Mitch McConnell and Senator Ron Wyden submitted four letters to key financial regulatory agencies in the United States.
Three of the four agencies- the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Farm Credit Administration (FCA) – have responded to the Senators.
The Comptroller of the Currency (OCC)
The OCC replied to Senator Wyden that it is the “expectation that OCC-supervised banks will apply their established policies, procedures and practices to legal hemp farmers and producers.”
Here is an excerpt from the OCC’s response letter:
As your letter notes, the 2018 Farm Bill removed hemp and its derivatives from the federal list of controlled substances, affirming hemp as a legal agricultural commodity, and authorizing the production, consumption, and sale of hemp and hemp-derived products in the United States. The OCC supports the institutions it supervises in providing banking services to any category of customers operating in compliance with applicable state and federal law, consistent with an institution’s business plan and risk tolerance. Decisions on the provision of financial services are bank business decisions and matters of banker judgement.
In establishing and maintaining any customer relationship, OCC-supervised banks are required to identify and assess the risks associated with each individual customer relationship and design and implement appropriate controls to manage those risks effectively. We expect these general requirements to apply to relationships established and maintained with legal hemp farmers and producers. The OCC does not currently plan to issue guidance specific to this area, because it is our expectation that OCC-supervised banks will apply their established policies, procedures and practices to legal hemp farmers and producers. Nevertheless, we will continue to monitor this issue. OCC Response Letter to Senator Wyden April 25, 2019
You can read OCC’s response letter here.
Federal Deposit Insurance Corporation (FDIC)
In thier response, the FDIC advised that they are providing training to FDIC examiners and encouraging financial institutions to assess on a case-by-case basis the risk posed by individual customer relationships.
Following are excerpts from the FDIC response:
Nevertheless, we have taken a number of steps to inform financial institutions and our examiners about the changes made by the legislation in removing certain types of hemp from Schedule I. For example, we discussed the changes provided by the 2018 Farm Bill with community bankers during the March 28, 2019 meeting of our Advisory Committee for Community Banking, and I have personally discussed the changes during banker outreach meetings both in Washington, D.C., and across the country. We are in the process of providing training to our examiners on the changes to the legal status of hemp and instructing them that the suspicious activity filing requirements prescribed by the Financial Crimes Enforcement Network for cannabis do not apply to hemp.
Further, the FDIC’s Statement on Providing Banking Services encourages financial institutions to assess the risk posed by individual customer relationships on a case-by-case basis, rather than declining to provide banking services to entire categories of customers FDIC Response Letter to Senator Wyden 2019
You can read the FDIC’s response letter in its entirety here.
Farm Credit Administration (FCA)
The FCA responded by sharing a guidance document issued to all Farm Credit System institutions to help them determine “when and under what conditions to finance producers or processors of hemp.”
The FCA response letter and guidance document can be read in their entirety here: