On October 29, 2019 the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation (FDIC), Financial Crimes Enforcement Network (FinCEN), Office of the Comptroller of the Currency (OCC), and the Conference of State Bank Supervisors published a Joint Guidance on Providing Financial Services to Customers Engaged in Hemp-Related Businesses clarifying the legal status of hemp production under the 2018 Farm Bill, the USDA Interim Final Rule (IFR), and the Bank Secrecy Act (BSA) considerations when providing banking services to hemp-related businesses.
The guidance provides that banks providing services to hemp-related businesses are no longer required to file suspicious activity reports (SAR) solely because the customer is engaged in the growth or cultivation of hemp since hemp was removed from the Controlled Substances Act. To maintain compliance with the BSA, banks are expected to follow standard SAR procedures and file a SAR if suspicious activity warrants.
The guidance does state that it is a bank’s business decision as to the types of permissible services and accounts to offer. For banks serving hemp related businesses they are required to “comply with applicable regulatory requirements for customer identification, suspicious activity reporting, currency transaction reporting, and risk-based customer due diligence, including the collection of beneficial ownership information for legal entity customers.”
FinCEN will issue additional guidance after evaluating the IFR.
How does this affect your business?
How will the new banking guidance affect your business? In fact, these new guidelines will impact far more than just hemp producers and processors. These new guidelines are far reaching, and should also provide benefits to businesses that are not directly producing or processing hemp – such as brokers, insurance companies providing hemp policies, retailers and more.
To learn more and to discuss how these new financial guidelines will affect your business, or how to make the most of the new changes as they come, feel free to request a consultation with our hemp policy expert and founding principal, Courtney N. Moran, LL.M.