finCEN Publishes Guidance on Hemp Banking
Tuesday, January 21, 2020
FinCEN recently published guidance to help banks and title companies serve the needs of hemp producers.
Four federal banking agencies and state bank regulators issued requirements under the Bank Secrecy Act (BSA) for providing services to hemp-related businesses. Hemp production was removed from the Controlled Substances Act as part of the Agriculture Improvement Act of 2018 (2018 Farm Bill).
The main component is that banks will no longer be mandated to file a suspicious activity report (SAR) of transactions involving companies that grow, produce or sell hemp products. Hemp producers will have an easier time obtaining banking services. Title and settlement companies may therefore be able to provide services to hemp producers and retailers that seek to buy real estate.
Despite the change, banks still are expected to file a SAR if there are indications of suspicious activity. The guidance also makes a distinction between hemp businesses and state legal marijuana businesses. While from the same species of plant, hemp and marijuana are genetically distinct. Under federal law, the key difference is that hemp production is legal if the plant, seeds and derivatives result in a THC (the psychoactive component) concentration of less than 0.3% by dry weight.
Earlier this year, the U.S. House of Representatives passed the SAFE Banking Act (HR 1595), which would assist banks, insurers and other financial services providers in their efforts to serve businesses in the cannabis industry. Over the last year, ALTA has worked closely with bill sponsors Ed Perlmutter (D-CO) and Denny Heck (D-WA) to broaden the bill to protect insurance companies and settlement providers. The SAFE Banking Act is currently awaiting hearing in the U.S. Senate.