December 9, 2019 – On Tuesday, December 3rd, the four federal bank regulatory agencies (the Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and Treasury’s Financial Crimes Enforcement Network (FinCEN)) together with state bank regulators (the Conference of the State Bank Supervisors) issued a joint statement clarifying the legal status of hemp growth and production and the relevant requirements under the Bank Secrecy Act (BSA) for banks providing services to hemp-related businesses. The statement indicates that FinCEN is expected to issue additional bank guidance after a further review and evaluation of the USDA interim final rule, which was announced on October 29, 2019.
In 2014, FinCEN issued guidance for the banking of cannabis-related businesses that established a requirement that banks must submit a Suspicious Activity Report (SAR) for their clients involved in a “marijuana-related business.” There has been much confusion as to whether this guidance should still apply to industrial hemp and its derivatives since it was declassified as a Schedule I drug under the 2018 Farm Bill. This is a huge victory for the growth of the hemp industry, particularly for banks because they are no longer required to file a SAR on customers “solely because they are engaged in the growth or cultivation of hemp in accordance with applicable laws and regulations,” as stated in the press release. The press release states clearly that “[f]or hemp-related customers, banks are expected to follow standard SAR procedures, and file a SAR if indicia of suspicious activity warrants.”
Banks still have complete discretion with respect to whether to provide services to hemp-related businesses, but this should go a long way toward easing some of the compliance and operational hurdles that have existed for financial institutions wishing to serve the cannabis industry.
If you have questions regarding this announcement or these guidelines, Clark Partington provides independent advice to a wide range of clients on banking, corporate, real property, and regulatory matters. Contact Anastasia D. Stull by calling 850-269-8858, or emailing firstname.lastname@example.org.
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