July 14, 2020
To: Chief Executive Officers or Equivalents of New York State Regulated Institutions
Re: FinCEN Guidance to Financial Institutions with Respect to Hemp-Related Business Customers
The New York State Department of Financial Services (the Department) is issuing this letter to advise New York State regulated institutions of the FinCEN guidance dated June 29, 2020 (the Guidance), regarding the Bank Secrecy Act (BSA), and Anti-Money Laundering (AML) regulatory requirements for financial services to hemp-related businesses.
This Guidance supplements a December 3, 2019 interagency statement regarding provision of financial services to customers engaged in hemp-related businesses. The purpose of the Guidance is to enhance the availability of financial services for, and the financial transparency of, hemp-related businesses in compliance with federal law.
The Guidance prescribes customer due diligence (CDD) for hemp-related businesses, such as basic identifying information, risk-based CDD processes, including beneficial ownership collection and verification, and on-going risk-based CDD procedures. In the case of hemp growers, the Guidance provides that financial institutions may confirm the hemp growers’ compliance with state, tribal government, and the USDA licensing requirements, as applicable, either through a written attestation or a copy of any such license. Depending on the level of risk, financial institutions may need to obtain additional information beyond this minimum requirement, such as crop inspection or testing reports, license renewals, and updated attestations from the business.
Financial institutions are not required to file a Suspicious Activity Report (SAR) on hemp-related businesses solely because they are engaged in the growth or cultivation of hemp in accordance with applicable laws and regulations. For such customers, financial institutions are expected to follow the standard SAR procedures and file a SAR if the financial institution becomes aware, in the normal course of business, of a suspicious activity. The Guidance contains a list of suspicious activities that financial institutions should consider.
To the extent the financial transactions of a hemp-related business are commingled with marijuana-related activities, a financial institution should apply FinCEN’s 2014 Marijuana Guidance, which provides clarity on how to file SARs on marijuana-related activities. However, if the proceeds of the businesses are kept separate, or the customer and its financial institution are able to identify which proceeds are marijuana-related and which are hemp-related, then the 2014 Marijuana Guidance, including specific SAR filing, applies only to the marijuana-related part of the business.
Financial institutions also must report currency transactions in connection with hemp-related businesses in the same manner they would for any other customers (i.e., report all currency transactions above $10,000 in aggregate on a single business day).
The Department continues to support responsible and legitimate businesses, including those relating to hemp, and encourages New York State-regulated financial institutions to provide access to financial services and products to hemp-related businesses that operate in New York in full compliance with federal and New York State laws and regulations.
Link to: FinCEN Guidance, FIN-2020-G001 (PDF)
Executive Deputy Superintendent
New York State Department of Financial Services