NCUA Issues New Guidance to Credit Unions Which Permits Hemp Banking
On August 19, 2019, the chairman of the National Credit Union Association issued a letter with guidance to all credit unions. Prior to August 19, hemp businesses had difficulty locating banks or other entities that would permit them to conduct normal merchant banking activities. That issue has, in part, been addressed by this letter of guidance. Questions remain, however, regarding many merchant services and whether FinCEN will issue a similar guidance. In either event, banks or credit unions that bank with hemp businesses have numerous compliance obligations under the Bank Secrecy Act (BSA) and Anti-Money Laundering Act (AML). It is important to make your banking institution aware of your business purpose to avoid the Suspicious Activity Reports (SAR) that could negatively impact your business operations.
According to Chairman Hood, “Credit unions need to be aware of the Federal, State and Indian Tribe laws and regulations that apply to any hemp-related businesses they serve. Credit unions that choose to serve hemp-related businesses in their field of membership need to understand the complexities and risks involved.
While it is generally a credit union’s business decision as to the types of permissible services and accounts to offer, credit unions must have a Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) compliance program commensurate with the level of complexity and risks involved. In particular, credit unions need to incorporate the following into their BSA/AML policies, procedures, and systems:
As the regulatory entities work through the changes in federal law, new rules and regulations are inevitable. FinCEN, the FDA and TTB are expected to issue new regulations, although they do not appear to be on the horizon any time soon. The SAFE Banking Act, STATE’s Act and other new federal legislation remain held up in committee. For questions on the legislative and regulatory landscape, please contact your Dinsmore attorney.
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