Compliance Update with Amy K
by Amy Kleinschmit
Chief Compliance Officer
7/1/2020

 

FinCEN – Hemp Guidance

On Monday the Financial Crimes Enforcement Network (FinCEN) issued Guidance FIN-2020-G001 regarding due diligence requirements under the Bank Secrecy Act for hemp-related business customers, which can be found here. This guidance does not change any previously provided statements/guidance related to marijuana – only hemp.

Conducting customer due diligence applies to all customers/members, including natural person accounts – thus it will obviously apply to hemp-related businesses.

This guidance discusses that for customers who are hemp growers, credit unions may confirm the hemp grower’s compliance with state, tribal government, or the USDA licensing requirements, as applicable, by either obtaining (1) a written attestation by the hemp grower that they are validly licensed, or (2) a copy of such license.

Based on the credit union’s assessment of the level of risk posed by each customer/member, additional information might include crop inspection or testing reports, license renewals, updated attestations from the business, or correspondence with the state, tribal government, or USDA. In order to identify the risks posed, credit unions must understand the nature and purpose of customer relationships for the purpose of developing a customer risk profile, and conduct ongoing monitoring to identify and report suspicious transactions, including, on a risk basis, to maintain and update customer information.

The recently issued guidance follows the December 2019 guidance on the same topic and confirms that a SAR is not required solely because they are engaged in the growth or cultivation of hemp in accordance with applicable laws and regulations. A SAR would be required if the credit union becomes aware, in the normal course of business, of suspicious activity. FinCEN expects credit unions to monitor the transactions of hemp-related businesses for signs of suspicious or unlawful activity, just as with other customers. This guidance lists a number of potential red flags, such as a customer appears to be using a state-licensed hemp business as a front or pretext to launder money derived from other criminal activity, or derived from marijuana-related activity that may not be permitted under applicable law.

Also, there is an upcoming webinar from NASCUS: Cannabis and Hemp, A Changing Landscape. Topics covered will include recent regulatory updates you might have missed, the impact of Covid-19 on these industries, and how these businesses are evolving and what financial institutions should start thinking about for their cannabis banking programs. The session will be held on July 15 at 2:00 p.m (CT) and you can register here.

DOL – FFCRA & Closed Summer Camps/Programs

The Department of Labor (DOL) recently issued a bulletin that addresses paid sick or expanded family and medical leave eligibility under the Families First Coronavirus Response Act (FFCRA) as it relates to the closure of summer camps, summer enrichment programs, or other summer programs. Field Assistance Bulletin 2020-4 provides guidance on when an employee qualifies to take paid leave under the FFCRA to care for his or her child based on the closure of a summer camp, summer enrichment program, or other summer program for coronavirus-related reasons. This Bulletin can be found here.

As you will recall, the FFCRA requires covered employers to provide eligible employees with up to two weeks of paid sick leave and up to twelve weeks of expanded family and medical leave, of which up to 10 weeks may be paid. FFCRA leave may be taken if the employee is unable to work or telework due to a need to care for his or her child whose place of care is closed due to COVID-19 related reasons.

The DOL’s regulations specifically recognize that summer camps and programs may qualify as places of care of employees’ children for the purposes of FFCRA leave, even though they would have not been operating at the time those regulations were issued in April 2020.

Proposed Flood Insurance Q&A

Five regulatory agencies, which includes the NCUA, recently issued a proposal to make certain revisions to the Interagency Q&A regarding flood insurance. These revisions would address escrow of flood insurance premiums requirements; the detached structure exemption; and force-placement procedures. Comments are due in 60 days and the proposed revisions can be found here.

NCUA RFI on Digital Technology.

At its recent board meeting, the NCUA issued a Request for Information (RFI) as it conducts a “comprehensive study of alternative procedures to modernize the agency’s examination program.” These comments in response to this RFI must be submitted within 60 days and can be found here.

As explained in the RFI, “the objective of modernizing is to improve efficiency and effectiveness in achieving the NCUA’s mandates under the Federal Credit Union Act.  The agency seeks to support a predominately offsite examination and supervision model by taking advantage of new and emerging approaches and techniques to utilizing data and technology.”

The RFI includes questions to prompt suggestions to inform the NCUA’s development of an examination program that benefits all parties.  The questions are not intended to limit discussion; responders may explore any issue relevant to this examination initiative.  Commenters are also invited to report any concerns, issues, or comments they have regarding the program.

It is NCUA’s intention to:

• Reduce burden on credit unions and increase agency efficiency by reducing onsite examination time;

• Improve offsite supervision capabilities;

• Provide more consistency and standardization for the examination and supervision process; 

• Improve communication between examiners, credit unions, and state supervisory authorities; and 

• Explore and evaluate technology utilization and appetite for adoption.

 

AND NOW… on the lighter side.

What do you call a duck who likes watching fireworks? A firequacker.

I know compliance is a blast and it is the spark that lights up everyone’s day, but wishing you a safe weekend celebrating the 4th of July. As always contact me, Amy Kleinschmit, with any questions.

Okay, one last quip – since it is international joke day.

Why can’t you tell the Liberty Bell any jokes? We don’t want it to crack up anymore.

 

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