On December 3, 2019, four federal agencies and state bank regulators issued a joint statement clarifying the requirements of the Bank Secrecy Act for covered financial institutions providing services to hemp-related businesses. According to the joint release by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Financial Crimes Enforcement Network, the Office of the Comptroller of the Currency, and the Conference of State Bank Supervisors, banks will no longer be required to file suspicious activity reports for customers solely on the grounds that they are engaged in hemp cultivation. Instead, standard SAR procedures will now apply.
The joint guidance issued by the regulators follows the December 2018 removal of hemp from Schedule I of the Controlled Substances Act, and its placement under the regulatory authority of the US Department of Agriculture, the states, or tribal governments as applicable. Although hemp production is legal under federal law, marijuana is still defined as a controlled substance.
Banks are required to have BSA and anti-money laundering compliance programs that are commensurate with the level of complexity and risk involved. Banks that elect to serve hemp-related business must comply with the applicable regulatory requirements for suspicious activity reporting, customer identification, risk-based due diligence, and currency transaction reporting; and they should continue to follow the 2014 FinCEN guidance on marijuana-related businesses.