NCUA Issues Interim Guidance Governing Hemp Banking
Chairman Hood says CUs won't be required to file Suspicious Activity Reports for hemp activities as long as the activity is not unusual.
Federally insured credit unions now may provide certain financial services to legally operating hemp businesses, under interim guidance published by the NCUA on Monday.
“Many credit unions have a long and successful history of providing services to the agriculture sector,” NCUA Chairman Rodney Hood said, in a letter to boards of directors and CEOs of federally insured credit unions. “Hemp provides new opportunities for communities with an economic base involving agriculture.”
The 2018 farm bill included a provision that removed hemp as a scheduled substance. The Department of Agriculture has not yet updated regulations governing hemp, so the NCUA issued its guidance on an interim basis.
“Lawful hemp businesses provide exciting new opportunities for rural communities,” said Hood. “I believe today’s interim guidance keeps with the mission of the nation’s cooperative credit system to serve people who have been overlooked and underserved.”
Hood cautioned that the production or possession of hemp may remain illegal under some state and tribal laws. And he said that states and tribes may issue regulations that are stricter than the federal rules.
But Hood said that states and tribes may not prohibit the interstate shipment of hemp products.
Hood said that credit unions must have a Bank Secrecy Act and Anti-money Laundering compliance program that are commensurate with risks involved. However, he said that credit unions will not be required to file Suspicious Activity Reports for hemp activities as long as the activity is not unusual for that business.
Credit unions also must obtain information about whether a hemp program is operating under a pilot program created in the 2014 farm bill and adjust their compliance programs accordingly.
The NCUA said that lending to a lawfully operating hemp-related business is allowed, but any such lending must be done in compliance with NCUA rules.
Senators from both parties have been pressing financial regulators to provide guidance to institutions now that hemp no longer is a controlled substance under federal law.
“In my home state of Colorado, farmers cultivated hemp on over 21,000 acres of land last year,” Democratic Sen. Michael Bennet wrote in a June letter to the regulatory agencies. “Nonetheless, farmers generally continue to lack access to the banking system even though hemp is no longer a Schedule 1 drug.”
He added, “Access to the banking system will provide certainty and much needed clarity for our nation’s hemp farmers and related businesses.”
Hemp is a major crop in Kentucky, the home state of Senate Majority Leader Republican Mitch McConnell, who pushed the provision of the farm bill that declassified hemp as a controlled substance.
McConnell also has promised to try to help cure the banking debacle that some hemp businesses face.
“Whatever obstacles Kentucky hemp farmers, processors and manufacturers might encounter as they try to take full advantage of this hemp revolution, I’ll be there to help in any way I can,” he said.