The Financial Crimes Enforcement Network (FinCEN) just issued guidance to financial institutions doing business with hemp-related businesses. “Hemp” is a part of the Cannabis Sativa L. family that contains no more than .3 percent potency level of Delta-9 tetrahydrocannabinol (THC). Hemp was removed from the controlled substances list and reclassified as an agricultural commodity as part of the 2018 Farm Bill. The plant now falls under the purview of the U.S. Department of Agriculture (USDA). As more and more states allow for hemp cultivation as an industrial crop, financial institutions have been seeking guidance on how to respond to the business needs while still complying with the provisions found in the “Bank Secrecy Act / Anti-Money Laundering” (BSA / AML) regulations. Despite the reclassification of hemp and its removal from the Controlled Substances Act, FinCEN is very clear that banks will have to exercise ongoing due diligence when dealing with hemp-related clients and establish “risk-based” procedures to safeguard against suspicious or illegal activity.
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