The Financial Crimes Enforcement Network (FinCEN) published guidance (Guidance) on customer due diligence requirements under the Bank Secrecy Act (BSA) for hemp-related customers on June 29. The Guidance, which recognizes hemp as defined under the Agriculture Improvement Act of 2018 (the 2018 Farm Bill), advises financial institutions on their BSA customer due diligence requirements for hemp customers. This Guidance supplements—but does not replace—the December 3, 2019 interagency statement on providing financial services to customers engaged in hemp-related businesses.

Notably, the Guidance allows financial institutions to confirm a hemp grower’s compliance with applicable legal requirements by obtaining an attestation from the grower that it is validly licensed, or by obtaining a copy of that license. Further due diligence above and beyond these core requirements may be needed, however, depending on the financial institution’s assessment of the level of risk posed by a particular hemp customer. Thus, financial institutions are expected to apply their risk-based customer due diligence policies and procedures to determine whether additional information about a particular hemp customer is required, and to obtain additional information as may be necessary, consistent with the risk profile of the customer.

Two years ago, we wondered in our blog post whether the staff of the US Securities and Exchange Commission (SEC) would have to further extend no-action relief to permit a broker-dealer to rely on an SEC registered investment adviser (RIA) to perform the broker-dealer’s customer identification program (CIP) requirements. And . . . here we are.

On December 12, the SEC staff issued the latest in a series of letters to the Securities Industry and Financial Markets Association (SIFMA). The letters conditionally extend no-action relief to allow a broker-dealer to rely on RIAs to perform some or all of the broker-dealer’s CIP requirements as well as the broker-dealer’s obligations under beneficial ownership requirements that went into full effect in May 2018.