Supervision and Regulation Letters

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SR 19-14:

Statement on Providing Financial Services to Customers Engaged in Hemp-Related Businesses

BOARD OF GOVERNORS
OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D.C. 20551

DIVISION OF
SUPERVISION AND REGULATION

SR 19-14
December 3, 2019

TO THE OFFICER IN CHARGE OF SUPERVISION AT EACH FEDERAL RESERVE BANK

SUBJECT:

Statement on Providing Financial Services to Customers Engaged in Hemp-Related Businesses

Applicability:  This guidance applies to banking organizations supervised by the Federal Reserve that are subject to the Bank Secrecy Act.

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Financial Crimes Enforcement Network (FinCEN), and the Office of the Comptroller of the Currency, in consultation with the Conference of State Bank Supervisors, are issuing a statement to provide clarity regarding the legal status of commercial growth and production of hemp and relevant requirements for banking organizations subject to the Bank Secrecy Act (BSA) and its implementing regulations.

The Agriculture Improvement Act of 2018 (2018 Farm Bill),1 which removed hemp as a Schedule I controlled substance under the Controlled Substances Act,2 was signed into law on December 20, 2018. The 2018 Farm Bill directs the U.S. Department of Agriculture (USDA), in consultation with the U.S. Attorney General, to regulate hemp production.3 On October 31, 2019, the USDA issued an interim final rule establishing the domestic hemp production regulatory program to facilitate the legal production of hemp, as set forth in the 2018 Farm Bill.4

The attached statement provides banking organizations with background information regarding the legal status of hemp, the USDA's interim final rule on the production of hemp, and the BSA considerations when providing banking services to hemp-related businesses. The statement indicates that banking organizations are no longer required to file suspicious activity reports on customers solely because they are engaged in the growth or cultivation of hemp in accordance with applicable laws and regulations. Finally, the statement highlights that FinCEN will issue additional guidance after further reviewing and evaluating the USDA interim final rule on the commercial growth and production of hemp.

Federal Reserve Banks are asked to distribute this letter to the supervised banking organizations in their districts and to appropriate supervisory staff. Questions regarding this letter should be directed to the following individuals:

  • Division of Supervision and Regulation:  Koko Ives, Manager, Bank Secrecy Act/Anti-Money Laundering Compliance Section, at (202) 973-6163 or Lee Davis, Lead Financial Institution Policy Analyst, at (202) 912-4350.
  • Legal Division:  Jason Gonzalez, Senior Special Counsel, at (202) 452-3275.

In addition, questions may be sent via the Board's public website.5

signed by
Michael S. Gibson
Director
Division of
Supervision and Regulation

Attachments:
Notes:
  1. Pub. L. No. 115-334.  Return to text.
  2. 7 U.S.C. 1639o(1).  Return to text.
  3. 7 U.S.C. 1639r(a)(1).  Return to text.
  4. See Establishment of a Domestic Hemp Production Program, 84 Fed. Reg. 58522 (Oct. 31, 2019) (to be codified at 7 CFR 990).  Return to text.
  5. See http://www.federalreserve.gov/apps/contactus/feedback.aspx.  Return to text.
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Last Update: December 03, 2019