Federal credit union regulator provides guidance confirming that credit unions can loan to hemp businesses

Category: hemp, credit unions

Federal credit union regulator provides guidance confirming that credit unions can loan to hemp businesses


The National Credit Union Administration (NCUA), which regulates and insures federal credit unions, has issued interim guidance for credit unions interested in banking businesses “dealing with hemp and hemp-derived products."

Bottom line, the NCUA’s guidance states that “[c]redit unions may provide the customary range of financial services for business accounts, including loans, to lawfully operating hemp-related businesses within their fields of membership.”

The NCUA  will issue additional guidance once the Department of Agriculture’s forthcoming regulations and guidelines for legal hemp are finalized. The guidance also acknowledges the authority of the Secretary of Health and Human Services or the Commissioner of the Food and Drugs Administration to promulgate federal regulations and guidelines that relate to hemp under the Federal Food, Drug, and Cosmetic Act or the Public Health Service Act.

According to the guidance, in order to service hemp and hemp-related businesses, the NCUA’s guidance states that “credit unions must have a Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) compliance program commensurate with the level of complexity and risks involved. In particular, credit unions need to incorporate the following into their BSA/AML policies, procedures and systems:

  • Credit unions need to maintain appropriate due diligence procedures for hemp-related accounts and comply with BSA and AML requirements to file Suspicious Activity Reports (SARs) for any activity that appears to involve potential money laundering or illegal or suspicious activity. It is the NCUA’s understanding that SARs are not required to be filed for the activity of hemp-related businesses operating lawfully, provided the activity is not unusual for that business. Credit unions need to remain alert to any indication an account owner is involved in illicit activity or engaging in activity that is unusual for the business.
  • If a credit union serves hemp-related businesses lawfully operating under the 2014 Farm Bill pilot provisions, it is essential the credit union knows the state’s laws, regulations, and agreements under which each member that is a hemp-related business operates. For example, a credit union needs to know how to verify the member is part of the pilot program. Credit unions also need to know how to adapt their ongoing due diligence and reporting approaches to any risks specific to participants in the pilot program.
  • When deciding whether to serve hemp-related businesses that may already be able to operate lawfully – those not dependent on the forthcoming USDA regulations and guidelines for hemp production – the credit union needs to first be familiar with any other federal and state laws and regulations that prohibit, restrict, or otherwise govern these businesses and their activity. For example, a credit union needs to know if the business and the product(s) is lawful under federal and state law, and any relevant restrictions or requirements under which the business must operate.”

The guidance goes on to emphasize that lending to a lawfully operating hemp-related business is permissible, and must be conducted pursuant to customary commercial loan underwriting procedures. Hopefully, this guidance will allow credit unions both inside and outside of agricultural communities to have the comfort to provide loans and other banking services to hemp businesses, one of America’s fastest-growing sectors.

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