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H.R. 1595 — what changed

Secure And Fair Enforcement Banking Act of 2019

From Reported in House to Engrossed in House. 5 sections amended and 5 added between Reported in House and Engrossed in House.

Sec. 3 Protections for ancillary businesses

changed For the purposes of sections 1956 and 1957 of title 18, United States Code, and all other provisions of Federal law, the proceeds from a transaction conducted by involving activities of a cannabis-related legitimate business or service provider shall not be considered as proceeds from an unlawful activity solely because the transaction was conducted by a cannabis-related legitimate business or service provider, as applicable.because—

(1)
added the transaction involves proceeds from a cannabis-related legitimate business or service provider; or
(2)
added the transaction involves proceeds from—
(A)
added cannabis-related activities described in section 14(4)(B) conducted by a cannabis-related legitimate business; or
(B)
added activities described in section 14(13)(A) conducted by a service provider.

Sec. 4 Protections under Federal law

(a)
In general— With respect to providing a financial service to a cannabis-related legitimate business or service provider within a State, political subdivision of a State, or Indian country that allows the cultivation, production, manufacture, sale, transportation, display, dispensing, distribution, or purchase of cannabis pursuant to a law or regulation of such State, political subdivision, or Indian Tribe that has jurisdiction over the Indian country, as applicable, a depository institution, entity performing a financial service for or in association with a depository institution, or insurer that provides a financial service to a cannabis-related legitimate business or service provider, and the officers, directors, and employees of that depository institution, entity, or insurer may not be held liable pursuant to any Federal law or regulation—
(1)
solely for providing such a financial service; or
(2)
for further investing any income derived from such a financial service.
(b)
changed Protections for Federal reserve banks—banks and Federal Home Loan Banks— With respect to providing a service to a depository institution that provides a financial service to a cannabis-related legitimate business or service provider (where such financial service is provided within a State, political subdivision of a State, or Indian country that allows the cultivation, production, manufacture, sale, transportation, display, dispensing, distribution, or purchase of cannabis pursuant to a law or regulation of such State, political subdivision, or Indian Tribe that has jurisdiction over the Indian country, as applicable), a Federal reserve bank, bank or Federal Home Loan Bank, and the officers, directors, and employees of the Federal reserve bank, bank or Federal Home Loan Bank, may not be held liable pursuant to any Federal law or regulation—
(1)
solely for providing such a service; or
(2)
for further investing any income derived from such a service.
(c)
added Protections for insurers— With respect to engaging in the business of insurance within a State, political subdivision of a State, or Indian country that allows the cultivation, production, manufacture, sale, transportation, display, dispensing, distribution, or purchase of cannabis pursuant to a law or regulation of such State, political subdivision, or Indian Tribe that has jurisdiction over the Indian country, as applicable, an insurer that engages in the business of insurance with a cannabis-related legitimate business or service provider or who otherwise engages with a person in a transaction permissible under State law related to cannabis, and the officers, directors, and employees of that insurer may not be held liable pursuant to any Federal law or regulation—
(1)
added solely for engaging in the business of insurance; or
(2)
added for further investing any income derived from the business of insurance.
(d)
added Forfeiture—
(c)
removed Forfeiture—
(1)
renumbered was (4)(2) Depository institutions— A depository institution that has a legal interest in the collateral for a loan or another financial service provided to an owner, employee, or operator of a cannabis-related legitimate business or service provider, or to an owner or operator of real estate or equipment that is leased or sold to a cannabis-related legitimate business or service provider, shall not be subject to criminal, civil, or administrative forfeiture of that legal interest pursuant to any Federal law for providing such loan or other financial service.
(2)
added Federal reserve banks and Federal Home Loan Banks— A Federal reserve bank or Federal Home Loan Bank that has a legal interest in the collateral for a loan or another financial service provided to a depository institution that provides a financial service to a cannabis-related legitimate business or service provider, or to an owner or operator of real estate or equipment that is leased or sold to a cannabis-related legitimate business or service provider, shall not be subject to criminal, civil, or administrative forfeiture of that legal interest pursuant to any Federal law for providing such loan or other financial service.
(2)
removed Federal reserve banks— A Federal reserve bank that has a legal interest in the collateral for a loan or another financial service provided to an owner, employee, or operator of a depository institution that provides a financial services to a cannabis-related legitimate business or service provider, or to an owner or operator of real estate or equipment that is leased or sold to such a depository institution, shall not be subject to criminal, civil, or administrative forfeiture of that legal interest pursuant to any Federal law for providing such loan or other financial service.

Sec. 5 Rules of construction

(a)
added No requirement To provide financial services— Nothing in this Act shall require a depository institution, entity performing a financial service for or in association with a depository institution, or insurer to provide financial services to a cannabis-related legitimate business, service provider, or any other business.
(b)
added General examination, supervisory, and enforcement authority— Nothing in this Act may be construed in any way as limiting or otherwise restricting the general examination, supervisory, and enforcement authority of the Federal banking regulators, provided that the basis for any supervisory or enforcement action is not the provision of financial services to a cannabis-related legitimate business or service provider.

removed Nothing in this Act shall require a depository institution, entity performing a financial service for or in association with a depository institution, or insurer to provide financial services to a cannabis-related legitimate business or service provider.

Sec. 6 Requirements for filing suspicious activity reports

Section 5318(g) of title 31, United States Code, is amended by adding at the end the following:

“(5) Requirements for cannabis-related legitimate businesses

“(A) In general—With respect to a financial institution or any director, officer, employee, or agent of a financial institution that reports a suspicious transaction pursuant to this subsection, if the reason for the report relates to a cannabis-related legitimate business or service provider, the report shall comply with appropriate guidance issued by the Financial Crimes Enforcement Network. The Secretary shall ensure that the guidance is consistent with the purpose and intent of the SAFE Banking Act of 2019 and does not significantly inhibit the provision of financial services to a cannabis-related legitimate business or service provider in a State, political subdivision of a State, or Indian country that has allowed the cultivation, production, manufacture, transportation, display, dispensing, distribution, sale, or purchase of cannabis pursuant to law or regulation of such State, political subdivision, or Indian Tribe that has jurisdiction over the Indian country.

“(B) Definitions—For purposes of this paragraph:

“(i) Cannabis—The term cannabis has the meaning given the term marihuana in section 102 of the Controlled Substances Act (21 U.S.C. 802).

changed “(ii) Cannabis-related legitimate business—The term “cannabis-related legitimate business” has the meaning given that term in section 11 14 of the SAFE Banking Act of 2019.

“(iii) Indian country—The term “Indian country” has the meaning given that term in section 1151 of title 18.

“(iv) Indian Tribe—The term “Indian Tribe” has the meaning given that term in section 102 of the Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. 479a).

changed “(v) Financial service—The term financial service has the meaning given that term in section 11 14 of the SAFE Banking Act of 2019.

changed “(vi) Service provider—The term “service provider” has the meaning given that term in section 11 14 of the SAFE Banking Act of 2019.

“(vii) State—The term State means each of the several States, the District of Columbia, Puerto Rico, and any territory or possession of the United States.”

Sec. 11 Banking services for hemp businesses

(a)
added Findings— The Congress finds that—
(1)
added the Agriculture Improvement Act of 2018 (Public Law 115–334) legalized hemp by removing it from the definition of “marihuana” under the Controlled Substances Act;
(2)
added despite the legalization of hemp, some hemp businesses (including producers, manufacturers, and retailers) continue to have difficulty gaining access to banking products and services; and
(3)
added businesses involved in the sale of hemp-derived cannabidiol (“CBD”) products are particularly affected, due to confusion about their legal status.

removed In this Act:

(b)
changed Business of insurance—Federal banking regulator hemp banking guidance— The term “business Not later than the end of insurance” has the meaning given such term in section 1002 90-day period beginning on the date of enactment of this Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5481).Federal banking regulators shall jointly issue guidance to financial institutions—
(1)
added confirming the legality of hemp, hemp-derived CBD products, and other hemp-derived cannabinoid products, and the legality of engaging in financial services with businesses selling hemp, hemp-derived CBD products, and other hemp-derived cannabinoid products, after the enactment of the Agriculture Improvement Act of 2018; and
(2)
added to provide recommended best practices for financial institutions to follow when providing financial services and merchant processing services to businesses involved in the sale of hemp, hemp-derived CBD products, and other hemp-derived cannabinoid products.
(c)
changed Cannabis—Financial institution defined— The term cannabis has the meaning given In this section, the term marihuana in section 102 of the Controlled Substances Act (21 U.S.C. 802).“financial institution” means any person providing financial services.
(3)
removed Cannabis product— The term cannabis product means any article which contains cannabis, including an article which is a concentrate, an edible, a tincture, a cannabis-infused product, or a topical.
(4)
removed Cannabis-related legitimate business— The term “cannabis-related legitimate business” means a manufacturer, producer, or any person or company that—
(A)
removed engages in any activity described in subparagraph (B) pursuant to a law established by a State or a political subdivision of a State, as determined by such State or political subdivision; and
(B)
removed participates in any business or organized activity that involves handling cannabis or cannabis products, including cultivating, producing, manufacturing, selling, transporting, displaying, dispensing, distributing, or purchasing cannabis or cannabis products.
(5)
removed Depository institution— The term depository institution means—
(A)
removed a depository institution as defined in section 3(c) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c));
(B)
removed a Federal credit union as defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752); or
(C)
removed a State credit union as defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752).
(6)
removed Federal banking regulator— The term Federal banking regulator means each of the Board of Governors of the Federal Reserve System, the Bureau of Consumer Financial Protection, the Federal Deposit Insurance Corporation, the Financial Crimes Enforcement Network, the Office of Foreign Asset Control, the Office of the Comptroller of the Currency, the National Credit Union Administration, the Department of the Treasury, or any Federal agency or department that regulates banking or financial services, as determined by the Secretary of the Treasury.
(7)
removed Financial service— The term financial service—
(A)
removed means a financial product or service, as defined in section 1002 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5481);
(B)
removed includes the business of insurance;
(C)
removed includes, whether performed directly or indirectly, the authorizing, processing, clearing, settling, billing, transferring for deposit, transmitting, delivering, instructing to be delivered, reconciling, collecting, or otherwise effectuating or facilitating of payments or funds, where such payments or funds are made or transferred by any means, including by the use of credit cards, debit cards, other payment cards, or other access devices, accounts, original or substitute checks, or electronic funds transfers;
(D)
removed includes acting as a money transmitting business which directly or indirectly makes use of a depository institution in connection with effectuating or facilitating a payment for a cannabis-related legitimate business or service provider in compliance with section 5330 of title 31, United States Code, and any applicable State law; and
(E)
removed includes acting as an armored car service for processing and depositing with a depository institution or the Board of Governors of the Federal Reserve System with respect to any monetary instruments (as defined under section 1956(c)(5) of title 18, United States Code.
(8)
removed Indian country— The term “Indian country” has the meaning given that term in section 1151 of title 18.
(9)
removed Indian Tribe— The term “Indian Tribe” has the meaning given that term in section 102 of the Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. 479a).
(10)
removed Insurer— The term “insurer” has the meaning given that term under section 313(r) of title 31, United States Code.
(11)
removed Manufacturer— The term manufacturer means a person who manufactures, compounds, converts, processes, prepares, or packages cannabis or cannabis products.
(12)
removed Producer— The term producer means a person who plants, cultivates, harvests, or in any way facilitates the natural growth of cannabis.
(13)
removed Service provider— The term “service provider”—
(A)
removed means a business, organization, or other person that—
(i)
removed sells goods or services to a cannabis-related legitimate business; or
(ii)
removed provides any business services, including the sale or lease of real or any other property, legal or other licensed services, or any other ancillary service, relating to cannabis; and
(B)
removed does not include a business, organization, or other person that participates in any business or organized activity that involves handling cannabis or cannabis products, including cultivating, producing, manufacturing, selling, transporting, displaying, dispensing, distributing, or purchasing cannabis or cannabis products.
(14)
removed State— The term State means each of the several States, the District of Columbia, Puerto Rico, and any territory or possession of the United States.

Sec. 12 Application of safe harbors to hemp and CBD products

added
(a)
added In general— Except as provided under subsection (b), the provisions of this Act (other than sections 6 and 10) shall apply to hemp (including hemp-derived cannabidiol and other hemp-derived cannabinoid products) in the same manner as such provisions apply to cannabis.
(b)
added Rule of application— In applying the provisions of this Act described under subsection (a) to hemp, the definition of “cannabis-related legitimate business” shall be treated as excluding any requirement to engage in activity pursuant to the law of a State or political subdivision thereof.
(c)
added Hemp defined— In this section, the term “hemp” has the meaning given that term under section 297A of the Agricultural Marketing Act of 1946 (7 U.S.C. 1639o).

Sec. 13 Requirements for deposit account termination requests and orders

added
(a)
added Termination requests or orders must be valid—
(1)
added In general— An appropriate Federal banking agency may not formally or informally request or order a depository institution to terminate a specific customer account or group of customer accounts or to otherwise restrict or discourage a depository institution from entering into or maintaining a banking relationship with a specific customer or group of customers unless—
(A)
added the agency has a valid reason for such request or order; and
(B)
added such reason is not based solely on reputation risk.
(2)
added Treatment of national security threats— If an appropriate Federal banking agency believes a specific customer or group of customers is, or is acting as a conduit for, an entity which—
(A)
added poses a threat to national security;
(B)
added is involved in terrorist financing;
(C)
added is an agency of the Government of Iran, North Korea, Syria, or any country listed from time to time on the State Sponsors of Terrorism list;
(D)
added is located in, or is subject to the jurisdiction of, any country specified in subparagraph (C); or
(E)
added does business with any entity described in subparagraph (C) or (D), unless the appropriate Federal banking agency determines that the customer or group of customers has used due diligence to avoid doing business with any entity described in subparagraph (C) or (D),
(b)
added Notice requirement—
(1)
added In general— If an appropriate Federal banking agency formally or informally requests or orders a depository institution to terminate a specific customer account or a group of customer accounts, the agency shall—
(A)
added provide such request or order to the institution in writing; and
(B)
added accompany such request or order with a written justification for why such termination is needed, including any specific laws or regulations the agency believes are being violated by the customer or group of customers, if any.
(2)
added Justification requirement— A justification described under paragraph (1)(B) may not be based solely on the reputation risk to the depository institution.
(c)
added Customer notice—
(1)
added Notice required— Except as provided under paragraph (2) or as otherwise prohibited from being disclosed by law, if an appropriate Federal banking agency orders a depository institution to terminate a specific customer account or a group of customer accounts, the depository institution shall inform the specific customer or group of customers of the justification for the customer’s account termination described under subsection (b).
(2)
added Notice prohibited—
(A)
added Notice prohibited in cases of national security— If an appropriate Federal banking agency requests or orders a depository institution to terminate a specific customer account or a group of customer accounts based on a belief that the customer or customers pose a threat to national security, or are otherwise described under subsection (a)(2), neither the depository institution nor the appropriate Federal banking agency may inform the customer or customers of the justification for the customer’s account termination.
(B)
added Notice prohibited in other cases— If an appropriate Federal banking agency determines that the notice required under paragraph (1) may interfere with an authorized criminal investigation, neither the depository institution nor the appropriate Federal banking agency may inform the specific customer or group of customers of the justification for the customer’s account termination.
(d)
added Reporting requirement— Each appropriate Federal banking agency shall issue an annual report to the Congress stating—
(1)
added the aggregate number of specific customer accounts that the agency requested or ordered a depository institution to terminate during the previous year; and
(2)
added the legal authority on which the agency relied in making such requests and orders and the frequency on which the agency relied on each such authority.
(e)
added Definitions— For purposes of this section:
(1)
added Appropriate Federal banking agency— The term “appropriate Federal banking agency” means—
(A)
added the appropriate Federal banking agency, as defined under section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813); and
(B)
added the National Credit Union Administration, in the case of an insured credit union.
(2)
added Depository institution— The term “depository institution” means—
(A)
added a depository institution, as defined under section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813); and
(B)
added an insured credit union.

Sec. 14 Definitions

added

added In this Act:

(1)
added Business of insurance— The term “business of insurance” has the meaning given such term in section 1002 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5481).
(2)
added Cannabis— The term cannabis has the meaning given the term marihuana in section 102 of the Controlled Substances Act (21 U.S.C. 802).
(3)
added Cannabis product— The term cannabis product means any article which contains cannabis, including an article which is a concentrate, an edible, a tincture, a cannabis-infused product, or a topical.
(4)
added Cannabis-related legitimate business— The term “cannabis-related legitimate business” means a manufacturer, producer, or any person or company that—
(A)
added engages in any activity described in subparagraph (B) pursuant to a law established by a State or a political subdivision of a State, as determined by such State or political subdivision; and
(B)
added participates in any business or organized activity that involves handling cannabis or cannabis products, including cultivating, producing, manufacturing, selling, transporting, displaying, dispensing, distributing, or purchasing cannabis or cannabis products.
(5)
added Depository institution— The term depository institution means—
(A)
added a depository institution as defined in section 3(c) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c));
(B)
added a Federal credit union as defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752); or
(C)
added a State credit union as defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752).
(6)
added Federal banking regulator— The term Federal banking regulator means each of the Board of Governors of the Federal Reserve System, the Bureau of Consumer Financial Protection, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the Financial Crimes Enforcement Network, the Office of Foreign Asset Control, the Office of the Comptroller of the Currency, the National Credit Union Administration, the Department of the Treasury, or any Federal agency or department that regulates banking or financial services, as determined by the Secretary of the Treasury.
(7)
added Financial service— The term financial service—
(A)
added means a financial product or service, as defined in section 1002 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5481);
(B)
added includes the business of insurance;
(C)
added includes, whether performed directly or indirectly, the authorizing, processing, clearing, settling, billing, transferring for deposit, transmitting, delivering, instructing to be delivered, reconciling, collecting, or otherwise effectuating or facilitating of payments or funds, where such payments or funds are made or transferred by any means, including by the use of credit cards, debit cards, other payment cards, or other access devices, accounts, original or substitute checks, or electronic funds transfers;
(D)
added includes acting as a money transmitting business which directly or indirectly makes use of a depository institution in connection with effectuating or facilitating a payment for a cannabis-related legitimate business or service provider in compliance with section 5330 of title 31, United States Code, and any applicable State law; and
(E)
added includes acting as an armored car service for processing and depositing with a depository institution or a Federal reserve bank with respect to any monetary instruments (as defined under section 1956(c)(5) of title 18, United States Code.
(8)
added Indian country— The term “Indian country” has the meaning given that term in section 1151 of title 18.
(9)
added Indian Tribe— The term “Indian Tribe” has the meaning given that term in section 102 of the Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. 479a).
(10)
added Insurer— The term “insurer” has the meaning given that term under section 313(r) of title 31, United States Code.
(11)
added Manufacturer— The term manufacturer means a person who manufactures, compounds, converts, processes, prepares, or packages cannabis or cannabis products.
(12)
added Producer— The term producer means a person who plants, cultivates, harvests, or in any way facilitates the natural growth of cannabis.
(13)
added Service provider— The term “service provider”—
(A)
added means a business, organization, or other person that—
(i)
added sells goods or services to a cannabis-related legitimate business; or
(ii)
added provides any business services, including the sale or lease of real or any other property, legal or other licensed services, or any other ancillary service, relating to cannabis; and
(B)
added does not include a business, organization, or other person that participates in any business or organized activity that involves handling cannabis or cannabis products, including cultivating, producing, manufacturing, selling, transporting, displaying, dispensing, distributing, or purchasing cannabis or cannabis products.
(14)
added State— The term State means each of the several States, the District of Columbia, Puerto Rico, and any territory or possession of the United States.

Sec. 15 Discretionary surplus funds

added

added Section 7(a)(3)(A) of the Federal Reserve Act (12 U.S.C. 289(a)(3)(A)) is amended by striking “$6,825,000,000” and inserting “$6,821,000,000”.

Sec. 16 Determination of Budgetary Effects

added

added The budgetary effects of this Act, for the purpose of complying with the Statutory Pay-As-You-Go Act of 2010, shall be determined by reference to the latest statement titled “Budgetary Effects of PAYGO Legislation” for this Act, submitted for printing in the Congressional Record by the Chairman of the House Budget Committee, provided that such statement has been submitted prior to the vote on passage.