Home » Banks Cleared For SARS Reports With Hemp Farmers

Banks Cleared For SARS Reports With Hemp Farmers

On Tuesday, The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), the Financial Crimes Enforcement Network (FinCEN), and the Office of the Comptroller of the Currency issued a statement clarifying banking rules around hemp customers.
Key Takeaway
The key takeaway from the statement is that banks no longer need to file the onerous Suspicious Activity Report, known as SARS for hemp farmers.
The statement said, “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. For hemp-related customers, banks are expected to follow standard SAR procedures, and file a SAR if indicia of suspicious activity warrants.”
Michael Weiner is a partner at the international law firm Dorsey & Whitney and the chair of its Cannabis Practice Group said, “This statement is limited to hemp growers and not to other businesses related to hemp or CBD from hemp.  For banks that are already providing banking services to hemp growers, the word “solely” may cause banks to hesitate to cease filing suspicious activity reports for these customers.  For banks that are reluctant to provide banking services to hemp growers, this statement is unlikely to provide sufficient comfort to enter the market.”
“Further, FinCEN stated that it would issue additional guidance following further review of the USDA interim final rule, perhaps following issuance of final rules from the USDA following the current public comment letter.  Banks may delay making any changes to their banking services until issuance of such additional guidance,” Weiner added.
The statement went on to add “When deciding to serve hemp-related businesses, banks must comply with
applicable regulatory requirements for customer identification, suspicious activity reporting, currency transaction reporting, and risk-based customer due diligence, including the collection of beneficial ownership information for legal entity customers.”
Many in the industry are not interpreting the language as starkly as Weiner. Most believe the statement gets all hemp customers off the hook with banks. However, banks tend to be very conservative and may opt to only apply the SARS guidelines to the growers and not the extended hemp family of CBD producers.

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