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BOARD OF GOVERNORS

OF THE

FEDERAL RESERVE SYSTEM

WASHINGTON, D.C. 20551 

DIVISION OF SUPERVISION

AND REGULATION

SR 19-14 

December 3, 2019

TO THE OFFICER IN CHARGE OF SUPERVISION

 AT EACH FEDERAL RESERVE BANK

SUBJECT: Statement on Providing Financial Services to Customers Engaged in HempRelated Businesses

Applicability: This guidance applies to banking organizations supervised by the Federal Reserve

that are subject to the Bank Secrecy Act.

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance 

Corporation, the Financial Crimes Enforcement Network (FinCEN), and the Office of the 

Comptroller of the Currency, in consultation with the Conference of State Bank Supervisors, are 

issuing a statement to provide clarity regarding the legal status of commercial growth and 

production of hemp and relevant requirements for banking organizations subject to the Bank 

Secrecy Act (BSA) and its implementing regulations. 

The Agriculture Improvement Act of 2018 (2018 Farm Bill),1 which removed hemp as a 

Schedule I controlled substance under the Controlled Substances Act,2 was signed into law on 

December 20, 2018. The 2018 Farm Bill directs the U.S. Department of Agriculture (USDA), in 

consultation with the U.S. Attorney General, to regulate hemp production.3 On October 31, 

2019, the USDA issued an interim final rule establishing the domestic hemp production 

regulatory program to facilitate the legal production of hemp, as set forth in the 2018 Farm Bill.4

The attached statement provides banking organizations with background information 

regarding the legal status of hemp, the USDA’s interim final rule on the production of hemp, and 

the BSA considerations when providing banking services to hemp-related businesses. The 

statement indicates that banking organizations are no longer required to file suspicious activity 

reports on customers solely because they are engaged in the growth or cultivation of hemp in 

accordance with applicable laws and regulations. Finally, the statement highlights that FinCEN 

 

1 Pub. L. No. 115-334.

2 7 U.S.C. 1639o(1). 

3 7 U.S.C. 1639r(a)(1). 

4 See Establishment of a Domestic Hemp Production Program, 84 Fed. Reg. 58522 (Oct. 31, 2019) (to be codified at 

7 CFR 990).
 

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will issue additional guidance after further reviewing and evaluating the USDA interim final rule 

on the commercial growth and production of hemp. 

Federal Reserve Banks are asked to distribute this letter to the supervised banking 

organizations in their districts and to appropriate supervisory staff. Questions regarding this 

letter should be directed to the following individuals: 

• Division of Supervision and Regulation: Koko Ives, Manager, Bank Secrecy 

Act/Anti-Money Laundering Compliance Section, at (202) 973-6163 or Lee Davis, 

Lead Financial Institution Policy Analyst, at (202) 912-4350. 

• Legal Division: Jason Gonzalez, Senior Special Counsel, at (202) 452-3275. 

In addition, questions may be sent via the Board’s public website.5

Michael S. Gibson

Director

Attachment:

• Statement on Providing Financial Services to Customers Engaged in Hemp-Related 

Businesses

 

5 See http://www.federalreserve.gov/apps/contactus/feedback.aspx
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Board of Governors of the Federal Reserve System

Federal Deposit Insurance Corporation

Financial Crimes Enforcement Network

Office of the Comptroller of the Currency

Conference of State Bank Supervisors

Providing Financial Services to Customers Engaged in Hemp-Related Businesses

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance 

Corporation, the Financial Crimes Enforcement Network (FinCEN), and the Office of the 

Comptroller of the Currency in consultation with the Conference of State Bank Supervisors, are 

issuing this statement to provide clarity regarding the legal status of commercial growth and 

production of hemp and relevant requirements for banks1 under the Bank Secrecy Act (BSA) and 

its implementing regulations. FinCEN will issue additional guidance after further reviewing and 

evaluating the U.S. Department of Agriculture (USDA) interim final rule.

Background

The Agriculture Improvement Act of 2018 (2018 Farm Bill),

2 which removed hemp as a 

Schedule I controlled substance under the Controlled Substances Act3 was signed into law on 

December 20, 2018. The 2018 Farm Bill directs the USDA, in consultation with the U.S. 

Attorney General, to regulate hemp production.4 The 2018 Farm Bill states that hemp 

production shall be subject to a hemp production regulatory plan established by the USDA, the 

states, 5 or tribal governments. 

On October 31, 2019, the USDA issued an interim final rule establishing the domestic hemp 

production regulatory program to facilitate the legal production of hemp, as set forth in the 2018 

Farm Bill.6 Under the interim final rule, state departments of agriculture and tribal governments 

may submit plans for monitoring and regulating the domestic production of hemp to the USDA 

for approval. The interim final rule establishes a federal licensing plan for regulating hemp 

producers in states and tribal territories that do not have their own USDA-approved plans. In the 

 

1 For the purposes of this statement, the term “bank” means each agent, agency, branch or office within the United 

States of commercial banks, savings banks, savings and loan associations, thrift institutions, and foreign banks. 2 Pub. L. 115-334, 132 Stat. 4490.

3 The term “hemp” is defined in the 2018 Farm Bill as “the plant Cannabis sativa L. and any part of that plant, 

including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, 

whether growing or not, with a delta-9 tetrahydrocannabinol [THC] concentration of not more than 0.3 percent on a 

dry weight basis.” 7 U.S.C. 1639o(1). 

4 7 U.S.C. 1639r(a)(1).

5 The 2018 Farm Bill defines states to include a state, the District of Columbia, the Commonwealth of Puerto Rico, 

and any other territory or possession of the United States. 7 U.S.C. 1639o(4).

6 See Establishment of a Domestic Hemp Production Program, 84 Fed. Reg. 58522 (Oct. 31, 2019) (to be codified at 

7 CFR 990). 
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absence of a state or tribal regulatory plan, hemp producers will be subject to regulation directly 

by the USDA unless the state or tribal government prohibits hemp production. 

The interim final rule includes requirements for maintaining information on the land where hemp 

is produced, testing hemp for tetrahydrocannabinol (THC) levels, disposing of plants with more 

than 0.3 percent THC, and licensing for hemp producers. The USDA regulations are in effect to 

accommodate the 2020 planting season. 

Key Points

• Consistent with the USDA interim final rule, hemp may be grown only with a valid USDAissued license or under a USDA-approved state or tribal plan. Research and development 

initiatives authorized under the Agricultural Act of 2014 (2014 Farm Bill) remain in effect

until one year after the effective date of the USDA interim final rule.

• A state or tribal government may prohibit the production of hemp, even though it is legal 

under federal law. The 2018 Farm Bill provisions related to USDA-approved state or tribal 

plans did not preempt state or tribal laws regarding the production of hemp that are more 

stringent than federal law. 

• Separately, marijuana7 is still a controlled substance under federal law. The 2018 Farm Bill 

amended the definition of marijuana only to exclude hemp from the Controlled Substances 

Act. 

BSA Considerations

Because hemp is no longer a Schedule I controlled substance under the Controlled Substances 

Act, banks are not required to file a Suspicious Activity Report (SAR) on customers solely 

because they are engaged in the growth or cultivation of hemp in accordance with applicable 

laws and regulations. For hemp-related customers, banks are expected to follow standard SAR 

procedures, and file a SAR if indicia of suspicious activity warrants.

Bank customers engaged in hemp-related business activities are responsible for complying with 

the requirements set forth in the 2018 Farm Bill8 and applicable regulations. It is generally a 

bank’s business decision as to the types of permissible services and accounts to offer, and banks 

 

7 The term “marijuana” is defined in the Controlled Substance Act at 21 U.S.C. 802.16, as amended by section 

12619 of the 2018 Farm Bill. 

8 The interim final rule governs the production of hemp under the 2018 Farm Bill. The interim final rule does not 

affect hemp that was or is being cultivated under the 2014 Farm Bill programs. That hemp remains subject to the 

requirements of the 2014 Farm Bill.
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must have a BSA/AML compliance program9 commensurate with the level of complexity and 

risks involved. When deciding to serve hemp-related businesses, banks must comply with

applicable regulatory requirements for customer identification,

10 suspicious activity reporting,11

currency transaction reporting,12 and risk-based customer due diligence,

13 including the 

collection of beneficial ownership information for legal entity customers.

14

In the context of marijuana-related businesses, banks should continue following FinCEN 

guidance FIN-2014-G001 – BSA Expectations Regarding Marijuana-Related Businesses.

15

Additional Information

For questions regarding the 2018 Farm Bill and its implementing regulations, banks may 

consider contacting the USDA, state departments of agriculture, or tribal governments. 

Additionally, the 2018 Farm Bill explicitly preserved the authority of the U.S. Food and Drug 

Administration (FDA) to regulate hemp products under the Federal Food, Drug, and Cosmetic 

Act and section 351 of the Public Health Service Act. Banks may consider contacting the FDA 

with hemp-related food, drug, and cosmetic questions.

 

9 See 12 CFR 208.63, 12 CFR 211.5(m), and 12 CFR 211.24(j) (Board of Governors of the Federal Reserve 

System); 12 CFR 326.8 (Federal Deposit Insurance Corporation); 12 CFR 21.21 (Office of the Comptroller of the 

Currency); and 31 CFR 1020.210 (Financial Crimes Enforcement Network). 10 See 12 CFR 208.63(b), 211.5(m), 211.24(j) (Board of Governors of the Federal Reserve System); 12 CFR 326.8 

(b) (Federal Deposit Insurance Corporation); 12 CFR 21.21 (Office of the Comptroller of the Currency); and 31 

CFR 1020.220 (FinCEN). 11 See 12 CFR 208.62, 211.5(k), 211.24(f), and 225.4(f) (Board of Governors of the Federal Reserve System); 12 

CFR 353 (Federal Deposit Insurance Corporation); 12 CFR 21.11 and 163.180 (Office of the Comptroller of the 

Currency); and 31 CFR 1020.320 (FinCEN). 12 See 31 CFR 1010.311. 13 See 31 CFR 1020.210(b)(5). 14 See 31 CFR 1010.230. 15 Available at: https://www.fincen.gov/resources/statutes-regulations/guidance/bsa-expectations-regardingmarijuana-related-businesses.