Banking hemp no longer requires filing SARs: Regulators
WASHINGTON — The federal banking regulators along with the Financial Crimes Enforcement Network and state banking regulators issued a statement Tuesday affirming that banks will no longer be required to file suspicious activity reports for customers involved in hemp cultivation.
The statement comes about a month after the Department of Agriculture issued an interim rule Oct. 31 that established a domestic hemp regulatory program in order to oversee legal production of the substance. Tuesday’s statement said Fincen is still evaluating that rule and plans to issue additional guidance at a later date.
The 2018 farm bill enacted by Congress legalized hemp, removing restrictions on farmers growing the substance. Hemp is used in industrial goods and contains less than 0.3% THC, the compound that causes the psychoactive effects of marijuana. That law spurred hopes that banks would feel more emboldened to serve the hemp industry, but financial institutions are said to still have concerns about the regulatory implications.
Meanwhile, a bill recently passed by the House to enable legal cannabis banking also included additional protections for industrial hemp businesses. The Secure and Fair Enforcement Banking Act, or SAFE Banking Act, would bar federal regulators from penalizing financial institutions serving marijuana businesses that are compliant with state laws. Senate Banking Committee Chairman Mike Crapo, R-Idaho, has said he has been working on a pot banking bill to bring before the panel.
The regulators' statement said that since hemp is no longer considered a banned narcotic, a SAR is no longer required "solely because [a business is] engaged in the growth or cultivation of hemp."
"For hemp-related customers, banks are expected to follow standard SAR procedures, and file a SAR if ... suspicious activity warrants," they said.