Federal regulations on hemp banking protocols loosened

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The 2018 Farm Bill is forcing changes across the landscape

Before the 2018 Farm Bill was approved and hemp and its derivatives legalized in the US, all the financial institutions had the obligation to file suspicious activity report (SARs) for accounts associated with the crop. Before this bill, hemp was also categorized as a Schedule I controlled substance at the same level as marijuana, so it had all the same restrictions. Now the regulatory agencies at the federal financial level are sending making clarifications to the banks. There is no need from the banks to take further steps to track any account from a company involved in a hemp-related business.

This past Tuesday, several entities issued a statement to clear the waters regarding the legal status of hemp to the banks. The issuers of that statement were the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Financial Crimes Enforcement Network (FinCEN), the Office of the Comptroller of the Currency and lastly, the Conference of State Bank Supervisors.

“Because hemp is no longer a Schedule I controlled substance under the Controlled Substances Act, banks are not required to file a Suspicious Activity Report (SAR) on customers solely because they are engaged in the growth or cultivation of hemp in accordance with applicable laws and regulations,” according to the memo. “For hemp-related customers, banks are expected to follow standard SAR procedures and file a SAR if indicia of suspicious activity warrants.” The final message basically says that there is no reason for accounts coming from hemp businesses to receive different treatment than an account from any other industry. The entities also emphasized that no banks are forced to accept these accounts if they don’t want to.