Regulators Want to Help Hemp Companies Get Better Support from Banks
Officials hope clarifying the protocol around hemp will make it easier for banks to do business with hemp companies.
Hemp companies should hopefully have an easier time dealing with banks thanks to some clarity from regulators.
Five financial regulatory agencies in the U.S. emphasized in a statement on Tuesday that banks no longer have to take extra steps when working with hemp-related businesses, such as filing Suspicious Activity Reports (SARs).
Banking regulations for state-legal, medical, and recreational cannabis will remain, according to the statement. Banks had previously been required to file SARs for accounts associated with hemp businesses, due to the federal Schedule 1 controlled substance status of cannabis.
“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,” the guidance statement read.
Marijuana, as defined by federal law, is still considered a controlled substance.
The financial regulators aren’t requiring banks to work with hemp-related businesses, but banks that choose to work with hemp-related businesses must treat them like any other client or legal business.
“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,” officials said in their statement.
Sen. Mitch McConnell (R-KY) and Sen. Ron Wyden (D-OR) had pushed for clearer guidance on hemp. In April, the senators sent letters to federal financial regulators asking for clarification on banks servicing hemp businesses.
“I’m proud federal banking regulators agreed to my request to issue new guidance that affirms hemp’s legality,” said McConnell in a press release. “I look forward to more Kentucky producers having the ability to grow their hemp businesses with the help of the Commonwealth’s financial institutions.”