A number of regulatory agencies associated with the United States federal bank have issued joint guidance on providing finance based services to customers who are involved in a business related to hemp. The guidance was developed in consultation with the Conference of State Bank Supervisors.
The agencies involved in the development include the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Financial Crimes Enforcement Network, and the Federal Reserve Board.
The new interagency guidance has now given confirmation that banks in the United States will be free to provide banking services to the hemp industry, in the same way that they do for any other agricultural commodity in the country. According to the guidance, banks will not need to file a Suspicious Activity Report on customers, just because of the activity of growing or cultivating hemp, if it is complying with relevant laws and regulations.
Industrial Hemp Removed from Controlled Substances Act
The guidance has also stated that in cases where a bank must decide whether or not to provide services to hemp related businesses, banks have to be in compliance with the regulatory needs of reporting suspicious activity, customer identification, reporting currency transactions, and risk based due diligence for customers. This can also include the collection of advantageous information on ownership for legal entity customers.
The new joint guidance also includes a reminder about the legal status of hemp crops on the basis of the Agricultural Improvement Act of 2018, and has reiterated the key requirements of compliance for banks operating in the U.S. hemp industry.
The 2018 Farm Bill has removed industrial hemp (with up to 0.3 per cent THC content) from the coverage of the federal Controlled Substances Act. This has pushed the plant into regulations that are associated with other agricultural commodities.
Further according to the United States Department of Agriculture, all hemp producers will have to comply with requirements of licensing, land data, and procedures needed for testing THC levels, and the processes involved in the disposal of non-compliant plants, among others.
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