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Financial Services Law Insights and Observations


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  • FinCEN outlines BSA due diligence requirements for hemp-related businesses

    Agency Rule-Making & Guidance

    On June 29, the Financial Crimes Enforcement Network (FinCEN) issued guidance for hemp-related business customers to explain due diligence requirements and identify the types of information financial institutions can collect to comply with Bank Secrecy Act (BSA) regulatory requirements. The guidance supplements a December 2019 interagency statement (covered by a Buckley Special Alert), which confirmed that financial institutions are no longer required to file a suspicious activity report (SARs) on customers solely because they are “engaged in the growth or cultivation of hemp in accordance with applicable laws and regulations.” Among other things, the guidance reiterates FinCEN’s expectation that financial institutions conduct customer due diligence (CDD) for hemp-related businesses, as they would for other customers, and establish appropriate on-going risk-based CDD procedures. This may include confirming that the hemp business is complying with applicable state, tribal government, or United States Department of Agriculture licensing requirements. Financial institutions should also tailor BSA/Anti-Money Laundering programs to appropriately reflect the risks associated with a customer’s particular risk profile and file the required reports. The guidance further provides that while financial institutions are not required to file SARs on customers solely because they are engaged in a hemp business, “financial institutions are expected to follow standard SAR procedures.” Examples of suspicious activity that may warrant the filing of a SAR are provided. Finally, the guidance states that financial institutions must report currency transactions connected to hemp-related businesses as they would for any other customer for transactions above $10,000 in aggregate on a single business day.

    Agency Rule-Making & Guidance FinCEN Bank Secrecy Act Anti-Money Laundering Hemp Businesses CDD Rule

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  • NCUA releases additional guidance to credit unions serving hemp businesses

    Agency Rule-Making & Guidance

    Recently, the NCUA released updated guidance to federally insured credit unions on serving hemp businesses. As previously covered by InfoBytes, in August 2019, NCUA released interim guidance allowing federally insured credit unions to service hemp businesses. The guidance explained that the Agriculture Improvement Act of 2018 (2018 Farm Bill) removed hemp from Schedule I of the Controlled Substances Act, but noted that hemp could not be produced lawfully under federal law, beyond a 2014 pilot program, until the USDA promulgated regulations and guidelines to implement the hemp production provisions of the 2018 Farm Bill. In October 2019, the USDA issued an interim final rule, which outlined provisions to approve plans submitted by state or Native American tribes that want to retain primary regulatory authority over the production of hemp and a federal licensing plan for producers in states and tribal territories that do not have their own USDA-approved plans.

    The newly released guidance reminds credit unions to stay current with the federal, state, and Native American tribal laws and regulations that apply to any hemp-related businesses, as the interim final rule does not preempt or limit any law state or tribal law that that is more stringent than the 2018 Farm Bill. Among other things, the guidance notes that NCUA examiners will collect data concerning the types of services credit unions are providing to hemp-related businesses and states that the NCUA expects credit unions to employ sufficient customer due diligence procedures as part of their BSA/AML compliance program to ensure hemp growers possess a valid state or USDA license.

    Agency Rule-Making & Guidance NCUA Credit Union Bank Secrecy Act Anti-Money Laundering Hemp Businesses

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  • Special Alert: Banks no longer required to file SARs for hemp-related businesses

    Agency Rule-Making & Guidance

    Federal and state banking regulators confirmed in a December 3 joint statement that banks are no longer required to file a suspicious activity report on customers solely because they are “engaged in the growth or cultivation of hemp in accordance with applicable laws and regulations.”

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    Click here to read the full special alert.

    For questions about the alert and related issues, please visit our Bank Secrecy Act/Anti-Money Laundering practice page, or contact a Buckley attorney with whom you have worked in the past.

    Agency Rule-Making & Guidance Federal Reserve FDIC FinCEN OCC CSBS Department of Agriculture Bank Secrecy Act SARs Hemp Businesses Special Alerts

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