Federal Financial Regulators Recognize Legal Status of Hemp Businesses

The Board of Governors of the Federal Reserve System, FDIC, FinCEN, OCC and Conference of State Bank Supervisors recently issued a statement regarding the legal status of commercial hemp growth and production as it relates to Bank Secrecy Act (BSA) and other regulatory requirements.

The Agriculture Improvement Act of 2018 (2018 Farm Bill) together with a recent USDA interim final rule implementing the law have established that hemp grown with a valid USDA-issued license or USDA-approved state or tribal plan is no longer considered a Schedule I controlled substance under the Controlled Substances Act.  Therefore, banks are not required to file a SAR on a customer engaged in the lawful growth or production of hemp.  The agencies note that banks should follow standard SAR procedures as warranted.

Banks serving hemp businesses must continue to comply with regulatory requirements for customer identification, SARs, currency transaction reporting, and risk-based customer due diligence.