December 5, 2019

Doobie-us Compliance – SAR Relief to Banks Engaged with Hemp Producers – WST

The Agricultural Improvement Act of 2018 removed hemp as a Schedule I controlled substance under the Controlled Substance Act.

On Tuesday, December 3, 2019, the Federal Reserve, along with the FDIC, FinCEN, OCC and Conference of State Bank Supervisors issued a statement (FIL-78-2019: Providing Financial Services to Customers Engaged in Hemp-Related Businesses) 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).

In general, what this statement means for your institution is:

  1. Because hemp is no longer a Schedule I controlled substance, banks are no longer required to file a Suspicious Activity Report (SAR) on customers solely because they are growing and producing hemp in accordance with applicable laws and regulations.
  2. For hemp-related customers, banks are expected to follow standard SAR procedures, and file a SAR if suspicious activity is observed.
  3. Regarding marijuana-related businesses, banks should continue following FinCEN guidance FIN-2014-G001 – BSA Expectations Regarding Marijuana-Related Businesses.

FinCEN will issue additional guidance after reviewing the interim final rule issued by the U.S. Department of Agriculture.

Past Weekly Security Tips – WST