Four federal agencies, in conjunction with state bank regulators, clarified the legal status of hemp-related businesses and the applicable edicts under the Bank Secrecy Act (BSA) for financial institutions (FI) offering services to those businesses, the Office of the Comptroller of the Currency (OCC) said in a joint agency press release on Tuesday (Dec. 3).
Banks no longer have to submit a suspicious activity report (SAR) just because a business is growing or cultivating hemp. Financial institutions should follow standard SAR procedures and submit a report only if there is questionable behavior.
The statement provides FIs with federal data that defines the legal status of hemp, as well as the U.S. Department of Agriculture’s (USDA) interim final rule on hemp production. It also clarifies the BSA guidelines when offering financial services to hemp-related businesses.
After further evaluation of the USDA interim final rule, the Financial Crimes Enforcement Network (FinCEN) will issue additional guidance.
The Federal Reserve Board, the Federal Deposit Insurance Corporation (FDIC), FinCEN, the OCC and the Conference of State Bank Supervisors participated in issuing the definitions and guidelines.
If banks have additional questions regarding the Agriculture Improvement Act of 2018 (2018 Farm Bill) and its regulations, they can contact the USDA, state departments of agriculture and tribal governments.
The BSA establishes recordkeeping and reporting requirements for national banks, federal savings associations, federal branches and agencies of foreign banks. It was amended to include the Patriot Act, which requires every bank to adopt a customer identification program.
Under the BSA and related anti-money laundering laws, FIs must have compliance and monitoring programs, establish a process for SAR and screen against Office of Foreign Assets Control (OFAC) and other government lists.
Businesses offering CBD, which is derived from hemp, continue to have trouble processing payments and maintaining bank accounts. While the CBD industry is under increasing regulatory and political scrutiny, it keeps on growing, providing opportunities for digital payments firms and commerce.