The federal banking agencies and the Financial Crimes Enforcement Network, in consultation with the Conference of State Bank Supervisors, today issued guidance long sought by the American Bankers Association on banks’ Bank Secrecy Act obligations related to hemp producers. The guidance makes clear that banks are not required to file Suspicious Activity Reports on hemp producers operating under an approved federal, state or tribal license or plan. The guidance also notes that bank customers are responsible for complying with regulatory requirements, not the banks.
“Because hemp is no longer a Schedule I controlled substance under the Controlled Substances Act, banks are not 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,” the agencies said. “For hemp-related customers, banks are expected to follow standard SAR procedures, and file a SAR if indicia of suspicious activity warrants.”
ABA President and CEO Rob Nichols welcomed the guidance. “We appreciate the steps regulators have taken today to clarify regulatory expectations for banks, and we look forward to working with them as they develop additional guidance.”
The guidance came following an interim final rule in October from the U.S. Department of Agriculture, which provided a framework for how USDA will approve regulatory plans from states and Indian tribes that wish to oversee hemp production, as well as a federal plan to license producers in areas without approved local plans. FinCEN said it will issue further guidance after reviewing the USDA rule.
While the 2018 Farm Bill reclassified hemp as a legal agricultural commodity, significant questions remained, and ABA encouraged regulators to provide additional clarity on banks’ ability to serve hemp producers and hemp-related businesses.
