By: Matthew Hovis, CFE, CAMS, CPP, Director of BSA/AML Services
On Wednesday, September 25th, The U.S. House of Representatives passed the Secure And Fair Enforcement (SAFE) Banking Act. First introduced in March of this year, the bill aims to make it easier for financial institutions to provide services to legitimate cannabis-related businesses. Key provisions of the bill are as follows:
- Prohibits federal banking regulators from taking any adverse action – including the termination of deposit or share insurance – against an Institution for the sole reason that they have provided services to a legitimate cannabis-related business.
- Excludes service providers accepting payments from legitimate cannabis-related businesses from the scope of federal money laundering statutes and other relevant federal laws.
- Amends the Bank Secrecy Act to require FinCEN guidance be consistent with the purposes of the SAFE Banking Act. Additionally, the GAO is directed to conduct a study upon the effectiveness of marijuana SARs within two years of enactment.
- Directs banking regulators to issue guidance concerning industrial hemp, hemp-derived CBD, and other hemp-derived cannabinoid products within 90 days of enactment and uniform guidance and examination procedures for all cannabis-related legitimate businesses within 180 days of enactment.
Should the bill be enacted in its current state, it will be considered a major victory for both financial institutions and the cannabis industry. The SAFE Banking Act would relieve burdens on banks and credit unions looking to offer services to direct marijuana businesses and benefit all financial institutions by eliminating the confusion regarding the need to file SARs upon ancillary businesses, hemp-related businesses, and companies selling hemp-derived CBD. However, with a predicted “2% chance of becoming enacted,” it’s clear the SAFE Banking Act faces significant challenges in becoming law.1
Contact Matthew Hovis, Director of BSA/AML Services for more information (firstname.lastname@example.org).
1 “Secure And Fair Enforcement Banking Act of 2019 (H.R. 1595).” GovTrack.us. Accessed October 4, 2019. https://www.govtrack.us/congress/bills/116/hr1595.