Four federal agencies, in partnership with the state bank regulators, issued a 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, according to a release from the Federal Reserve.
According to the new statement, banks are no longer required to file suspicious activity reports (SAR) for customers solely because they’re engaged in growing or cultivating hemp in accordance with applicable laws and regulations. For hemp-related customers, banks are expected to follow standard SAR procedures and file a SAR if suspicious activity warrants.
The statement also provides banks with background information on the legal status of hemp, the USDA’s interim final rule on the production of hemp and the BSA considerations when providing banking services to hemp-related businesses, the release states.
The Federal Reserve Board, the Federal Deposit Insurance Corporation, FinCEN, the Office of the Comptroller of the Currency and the Conference of State Bank Supervisors issued the statement. Banks with further questions about the 2018 Farm Bill and its implementing regulations can contact the USDA, state departments of agriculture and tribal governments.
Michael Weiner, a partner at Dorsey & Whitney law firm and chair of its Cannabis Practice Group, as well as an expert in cannabis and hemp regulation, provided more clarity to what the guidance means for financial institutions.
"This statement is limited to hemp growers and not to other businesses related to hemp or CBD from hemp. For banks that are already providing banking services to hemp growers, the word ‘solely’ may cause banks to hesitate to cease filing suspicious activity reports for these customers. For banks that are reluctant to provide banking services to hemp growers, this statement is unlikely to provide sufficient comfort to enter the market," Weiner says.
"Further, FinCEN stated that it would issue additional guidance following further review of the USDA interim final rule, perhaps following issuance of final rules from the USDA following the current public comment letter. Banks may delay making any changes to their banking services until issuance of such additional guidance," Weiner says.
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