Hemp businesses won’t have to jump through so many hoops to secure banking services.
Four federal agencies and state bank regulators released a statement Tuesday that “emphasizes” that “banks are no longer required to file suspicious activity reports (SAR) for customers solely because they are engaged in the growth or cultivation of hemp,” as long as all parties are following the law.
The statement, which follows the passage of the 2018 Farm Bill, which legalized hemp, was issued to “provide clarity regarding the legal status of commercial growth and production of hemp and relevant requirements for banks under the Bank Secrecy Act (BSA) and its implementing regulations.”
(Read Cannabis Wire’s coverage of the 2018 Farm Bill and hemp-related developments at the USDA.)
The statement was issued by the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Financial Crimes Enforcement Network, the Office of the Comptroller of the Currency, and the Conference of State Bank Supervisors.
The American Bankers Association said this guidance has been “long sought” by the ABA.
“We welcome the guidance issued today by federal banking regulators, FinCEN and the Conference of State Bank Supervisors, which provides greater clarity on banks’ obligations related to hemp producers,” Rob Nichols, ABA president and CEO, said in a statement.
“We are pleased that the guidance also notes that bank customers are responsible for complying with regulatory requirements surrounding hemp, not the banks who serve those customers,” Nichols added.
The U.S. Hemp Roundtable told Cannabis Wire that the organization was “excited” by the joint statement, adding that the they view it “as a promising step towards wide acceptance of something that is truly already legal.”
“Despite the 2018 US Farm Bill clearly permitting financial transactions in the hemp industry, many banks and other financial institutions have been slow to participate, blaming their fear of the risk of federal regulatory crackdowns. Today’s guidance removes much of that concern,” Jonathan Miller, general counsel to the U.S. Hemp Roundtable, told Cannabis Wire.
The American Trade Association of Cannabis and Hemp (ATACH) applauded the announcement, saying that it gave “much needed reassurance to banks” to offer services to hemp businesses.
“To businesses getting off the ground in this promising emerging industry, many have waited patiently for banks to be given the direction that they need. We are hopeful that this is a step in the right direction to create more access to banking for the industry and provide a pathway for industry develop and thrive,” Michael Bronstein, president of ATACH told Cannabis Wire.
Hemp business owners should also expect the Financial Crimes Enforcement Network (FinCEN) to announce more guidance after “further reviewing and evaluating” the USDA interim final rule on hemp cultivation, which was released in October.
It’s on people working in the hemp industry to follow rules set forth by the Farm Bill, and while members of the cannabis industry have faced high hurdles to secure banking services thanks to federal prohibition, there will remain some level of risk for banks to work with any type of cannabis business.
In short, it’s up to banks to decide what level of risk they’re comfortable with when deciding which businesses to work with.
“When deciding to serve hemp-related businesses, banks must 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,” the statement read.
This story was updated at 1:45 p.m. on December 3 with comment from the American Bankers Association, the U.S. Hemp Roundtable, and the American Trade Association of Cannabis and Hemp.
