On the eve of National Compliance Officer Day (and ironically when TCA published a discussion on banking industrial hemp), the United States House of Representatives passes H.R.1595 Safe Banking Act of 2019 which, if signed into law, would protect financial institutions from examiner criticism for providing banking services to cannabis-related businesses. The bill provides for five specific clauses:
- The institution’s FDIC insurance may not be terminated.
- Examiners may not “prohibit, penalize or discourage” institutions from providing services to cannabis-related businesses or their service providers.
- Examiners may not recommend or incentivize an institution to not offer services to the industry, including its employees.
- Examiners may not take supervisory action against loans made to the industry solely on the basis of the customer’s nature of business.
- Extends prohibition on prohibitions, penalties and discouragement to entities providing services to the industry.
Although this law provides some added protections to the banking industry, it goes on to state that if the institution files a suspicious activity report (SAR) relating to a cannabis-related business, it must comply with applicable guidance from FinCEN. As of this date, the only guidance that exists was published in 2014 (FIN-2014-G001) Finally, the bill calls on the FFIEC to publish updated guidance and BSA examination procedures within 180 days of the bill becoming law.
To summarize: This bill, if passed, does not legalize marijuana at the federal level. It is directed at federal examiners not to penalize financial institutions solely on the basis of their decision to provide services to the cannabis industry. Each institution is still responsible for performing appropriate due diligence on all of its high-risk customers and to comply with applicable regulations and rules according to FinCEN. The friction between state and federal law will remain.
If your institution needs assistance navigating the uncertain waters of the marijuana, hemp and CBD Oil terrain, contact a member of the TCA® BSA Action Team (800) 934-7347. We’re ready to partner with you!
