The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the US Department of the Treasury’s Financial Crimes Enforcement Network, in conjunction with the Conference of State Bank Supervisors, issued a joint statement on December 3 to provide more clarity regarding Bank Secrecy Act (BSA) compliance for banks that service customers with hemp-related businesses.
In 2018, the US Department of Agriculture (USDA) was directed by the Agriculture Improvement Act of 2018 (FARM Bill) to provide a regulatory program to facilitate the legal production of hemp. In response, the USDA issued an interim final rule on October 31, 2019, that establishes a federal licensing regime for hemp producers, among other requirements. The US Food and Drug Administration is also expected to release its own set of rules in the near future.
Since the FARM Bill excludes hemp as a controlled substance under the Controlled Substances Act, the guidance emphasizes that banks are no longer required to file a Suspicious Activity Report (SAR) on customers solely because they are engaged in the growth or cultivation of hemp in accordance with applicable laws and regulations. The statement proceeds to list the BSA considerations of which banks should be aware for customers with hemp-related businesses and notes that FinCen will issue additional guidance after the participating federal agencies have reviewed the interim final rule.
While the statement is purportedly meant to ease concerns of marijuana-related businesses, in actuality the guidance only provides comfort to hemp businesses allowed under the FARM Bill and is no help at all to the rest of the broader—and growing—cannabis industry. The guidance explicitly states that in the context of marijuana-related businesses, banks should continue following FinCEN guidance FIN-2014-G001 – BSA Expectations Regarding Marijuana-Related Businesses.