Four federal financial regulatory agencies, including the Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), the Federal Reserve, and Financial Crimes Enforcement Network (FinCEN), joined by the Conference of State Bank Supervisors issued a guidance clarifying the legal status of hemp and the relevant requirements for banks providing financial services to hemp-related businesses.
The joint guidance emphasizes that banks are no longer required to file suspicious activity reports (SAR) for customers solely because they are engaged in the growth or cultivation of hemp in accordance with applicable laws and regulations. For hemp-related customers, banks are expected to follow standard SAR procedures and file a SAR if indicia of suspicious activity warrants. It also indicates that the Financial Crimes Enforcement Network (FinCEN) will issue additional guidance after further reviewing and evaluating the USDA interim final rule.
This guidance came at the request of Senate Majority Leader Mitch McConnell (R-KY) and Senator Ron Wyden (D-OR), who contacted several federal banking and financial regulatory institutions earlier in the year in an effort to reiterate hemp’s legality, and to request timely guidance and clarification to help ease concerns from lawful hemp farmers and producers about the lack of access to financial services.
Despite the passage of Senator McConnell’s hemp-legalization initiative in the 2018 Farm Bill, many hemp farmers and producers in Kentucky have continued to face challenges accessing capital and other important financial products while exploring the crop’s economic opportunities.
After the National Credit Union Administration fulfilled Senator McConnell’s request to issue guidance and the U.S. Department of Agriculture released its regulatory framework, Senator McConnell followed up with the federal banking regulatory agencies in October to reiterate his request for them to issue guidance to help ease this barrier for the legal hemp industry.
“Once again, Senator McConnell showed why he is an indispensable voice for Kentucky in Washington,” said Kentucky Bankers Association President and CEO Ballard W. Cassady, Jr.
“By affirming hemp’s status as a legal commodity, this federal guidance can provide much-needed clarity and reassurance to Kentucky banks exploring opportunities in our state’s growing hemp industry."
For years, Senator McConnell has championed the cause of hemp, helping overcome numerous challenges at the federal level so Kentuckians are able to take full advantage of this exciting crop. Without the Senate Majority Leader throwing his weight behind this Kentucky priority, we might never have gotten it done,” said Cassady, Jr.
Kentucky has been at the forefront of hemp production since the authorization of hemp pilot programs established by McConnell’s provision in the 2014 Farm Bill. Leaders from around the globe are looking to the state’s hemp industry as the crop is now grown in 101 of 120 counties.