Secure And Fair Enforcement Banking Act of 2021

IIB 117TH CONGRESS 1ST SESSION H. R. 1996 IN THE SENATE OF THE UNITED STATES APRIL 20, 2021 Received; read twice and referred to the Committee on Banking, Housing, and Urban Affairs AN ACT To create protections for financial institutions that provide financial services to cannabis-related legitimate busi- nesses and service providers for such businesses, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 23:16 Apr 20, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1996.RFS H1996 pamtmann on DSKBC07HB2PROD with BILLS 2 HR 1996 RFS SECTION 1. SHORT TITLE; TABLE OF CONTENTS; PURPOSE. 1 (a) SHORT TITLE.—This Act may be cited as the 2 ‘‘Secure And Fair Enforcement Banking Act of 2021’’ or 3 the ‘‘SAFE Banking Act of 2021’’. 4 (b) TABLE OF CONTENTS.—The table of contents for 5 this Act is as follows: 6 Sec. 1. Short title; table of contents; purpose. Sec. 2. Safe harbor for depository institutions. Sec. 3. Protections for ancillary businesses. Sec. 4. Protections under Federal law. Sec. 5. Rules of construction. Sec. 6. Requirements for filing suspicious activity reports. Sec. 7. Guidance and examination procedures. Sec. 8. Annual diversity and inclusion report. Sec. 9. GAO study on diversity and inclusion. Sec. 10. GAO study on effectiveness of certain reports on finding certain per- sons. Sec. 11. Application of this Act with respect to hemp-related legitimate busi- nesses and hemp-related service providers. Sec. 12. Banking services for hemp-related legitimate businesses and hemp-re- lated service providers. Sec. 13. Requirements for deposit account termination requests and orders. Sec. 14. Definitions. Sec. 15. Discretionary surplus funds. (c) PURPOSE.—The purpose of this Act is to increase 7 public safety by ensuring access to financial services to 8 cannabis-related legitimate businesses and service pro- 9 viders and reducing the amount of cash at such busi- 10 nesses. 11 SEC. 2. SAFE HARBOR FOR DEPOSITORY INSTITUTIONS. 12 (a) IN GENERAL.—A Federal banking regulator may 13 not— 14 (1) terminate or limit the deposit insur- 15 ance or share insurance of a depository institu- 16 tion under the Federal Deposit Insurance Act 17 VerDate Sep 11 2014 23:16 Apr 20, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1996.RFS H1996 pamtmann on DSKBC07HB2PROD with BILLS 3 HR 1996 RFS (12 U.S.C. 1811 et seq.), the Federal Credit 1 Union Act (12 U.S.C. 1751 et seq.), or take 2 any other adverse action against a depository 3 institution under section 8 of the Federal De- 4 posit Insurance Act (12 U.S.C. 1818) solely be- 5 cause the depository institution provides or has 6 provided financial services to a cannabis-related 7 legitimate business or service provider; 8 (2) prohibit, penalize, or otherwise discour- 9 age a depository institution from providing fi- 10 nancial services to a cannabis-related legitimate 11 business or service provider or to a State, polit- 12 ical subdivision of a State, or Indian Tribe that 13 exercises jurisdiction over cannabis-related le- 14 gitimate businesses; 15 (3) recommend, incentivize, or encourage a 16 depository institution not to offer financial serv- 17 ices to an account holder, or to downgrade or 18 cancel the financial services offered to an ac- 19 count holder solely because— 20 (A) the account holder is a cannabis- 21 related legitimate business or service pro- 22 vider, or is an employee, owner, or oper- 23 ator of a cannabis-related legitimate busi- 24 ness or service provider; 25 VerDate Sep 11 2014 23:16 Apr 20, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1996.RFS H1996 pamtmann on DSKBC07HB2PROD with BILLS 4 HR 1996 RFS (B) the account holder later becomes 1 an employee, owner, or operator of a can- 2 nabis-related legitimate business or service 3 provider; or 4 (C) the depository institution was not 5 aware that the account holder is an em- 6 ployee, owner, or operator of a cannabis-re- 7 lated legitimate business or service pro- 8 vider; 9 (4) take any adverse or corrective super- 10 visory action on a loan made to— 11 (A) a cannabis-related legitimate busi- 12 ness or service provider, solely because the 13 business is a cannabis-related legitimate 14 business or service provider; 15 (B) an employee, owner, or operator 16 of a cannabis-related legitimate business or 17 service provider, solely because the em- 18 ployee, owner, or operator is employed by, 19 owns, or operates a cannabis-related legiti- 20 mate business or service provider, as appli- 21 cable; or 22 (C) an owner or operator of real es- 23 tate or equipment that is leased to a can- 24 nabis-related legitimate business or service 25 VerDate Sep 11 2014 23:16 Apr 20, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1996.RFS H1996 pamtmann on DSKBC07HB2PROD with BILLS 5 HR 1996 RFS provider, solely because the owner or oper- 1 ator of the real estate or equipment leased 2 the equipment or real estate to a cannabis- 3 related legitimate business or service pro- 4 vider, as applicable; or 5 (5) prohibit or penalize a depository insti- 6 tution (or entity performing a financial service 7 for or in association with a depository institu- 8 tion) for, or otherwise discourage a depository 9 institution (or entity performing a financial 10 service for or in association with a depository 11 institution) from, engaging in a financial service 12 for a cannabis-related legitimate business or 13 service provider. 14 (b) SAFE HARBOR APPLICABLE TO DE NOVO INSTI- 15 TUTIONS.—Subsection (a) shall apply to an institution ap- 16 plying for a depository institution charter to the same ex- 17 tent as such subsection applies to a depository institution. 18 SEC. 3. PROTECTIONS FOR ANCILLARY BUSINESSES. 19 For the purposes of sections 1956 and 1957 of title 20 18, United States Code, and all other provisions of Fed- 21 eral law, the proceeds from a transaction involving activi- 22 ties of a cannabis-related legitimate business or service 23 provider shall not be considered proceeds from an unlawful 24 activity solely because— 25 VerDate Sep 11 2014 23:16 Apr 20, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1996.RFS H1996 pamtmann on DSKBC07HB2PROD with BILLS 6 HR 1996 RFS (1) the transaction involves proceeds from a 1 cannabis-related legitimate business or service pro- 2 vider; or 3 (2) the transaction involves proceeds from— 4 (A) cannabis-related activities described in 5 section 14(4)(B) conducted by a cannabis-re- 6 lated legitimate business; or 7 (B) activities described in section 8 14(13)(A) conducted by a service provider. 9 SEC. 4. PROTECTIONS UNDER FEDERAL LAW. 10 (a) IN GENERAL.—With respect to providing a finan- 11 cial service to a cannabis-related legitimate business 12 (where such cannabis-related legitimate business operates 13 within a State, political subdivision of a State, or Indian 14 country that allows the cultivation, production, manufac- 15 ture, sale, transportation, display, dispensing, distribution, 16 or purchase of cannabis pursuant to a law or regulation 17 of such State, political subdivision, or Indian Tribe that 18 has jurisdiction over the Indian country, as applicable) or 19 a service provider (wherever located), a depository institu- 20 tion, entity performing a financial service for or in associa- 21 tion with a depository institution, or insurer that provides 22 a financial service to a cannabis-related legitimate busi- 23 ness or service provider, and the officers, directors, and 24 employees of that depository institution, entity, or insurer 25 VerDate Sep 11 2014 23:16 Apr 20, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1996.RFS H1996 pamtmann on DSKBC07HB2PROD with BILLS 7 HR 1996 RFS may not be held liable pursuant to any Federal law or 1 regulation— 2 (1) solely for providing such a financial service; 3 or 4 (2) for further investing any income derived 5 from such a financial service. 6 (b) PROTECTIONS FOR FEDERAL RESERVE BANKS 7 AND FEDERAL HOME LOAN BANKS.—With respect to 8 providing a service to a depository institution that pro- 9 vides a financial service to a cannabis-related legitimate 10 business (where such cannabis-related legitimate business 11 operates within a State, political subdivision of a State, 12 or Indian country that allows the cultivation, production, 13 manufacture, sale, transportation, display, dispensing, dis- 14 tribution, or purchase of cannabis pursuant to a law or 15 regulation of such State, political subdivision, or Indian 16 Tribe that has jurisdiction over the Indian country, as ap- 17 plicable) or service provider (wherever located), a Federal 18 reserve bank or Federal Home Loan Bank, and the offi- 19 cers, directors, and employees of the Federal reserve bank 20 or Federal Home Loan Bank, may not be held liable pur- 21 suant to any Federal law or regulation— 22 (1) solely for providing such a service; or 23 (2) for further investing any income derived 24 from such a service. 25 VerDate Sep 11 2014 23:16 Apr 20, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H1996.RFS H1996 pamtmann on DSKBC07HB2PROD with BILLS 8 HR 1996 RFS (c) PROTECTIONS FOR INSURERS.—With respect to 1 engaging in the business of insurance within a State, polit- 2 ical subdivision of a State, or Indian country that allows 3 the cultivation, production, manufacture, sale, transpor- 4 tation, display, dispensing, distribution, or purchase of 5 cannabis pursuant to a law or regulation of such State, 6 political subdivision, or Indian Tribe that has jurisdiction 7 over the Indian country, as applicable, an insurer that en- 8 gages in the business of insurance with a cannabis-related 9 legitimate business or service provider or who otherwise 10 engages with a person in a transaction permissible under 11 State law related to cannabis, and the officers, directors, 12 and employees of that insurer may not be held liable pur- 13 suant to any Federal law or regulation— 14 (1) solely for engaging in the business of insur- 15 ance; or 16 (2) for further investing any income derived 17 from the business of insurance. 18 (d) FORFEITURE.— 19 (1) DEPOSITORY INSTITUTIONS.—A depository 20 institution that has a legal interest in the collateral 21 for a loan or another financial service provided to an 22 owner, employee, or operator of a cannabis-related 23 legitimate business or service provider, or to an 24 owner or operator of real estate or equipment that 25 VerDate Sep 11 2014 23:16 Apr 20, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H1996.RFS H1996 pamtmann on DSKBC07HB2PROD with BILLS 9 HR 1996 RFS is leased or sold to a cannabis-related legitimate 1 business or service provider, shall not be subject to 2 criminal, civil, or administrative forfeiture of that 3 legal interest pursuant to any Federal law for pro- 4 viding such loan or other financial service. 5 (2) FEDERAL RESERVE BANKS AND FEDERAL 6 HOME LOAN BANKS.—A Federal reserve bank or 7 Federal Home Loan Bank that has a legal interest 8 in the collateral for a loan or another financial serv- 9 ice provided to a depository institution that provides 10 a financial service to a cannabis-related legitimate 11 business or service provider, or to an owner or oper- 12 ator of real estate or equipment that is leased or 13 sold to a cannabis-related legitimate business or 14 service provider, shall not be subject to criminal, 15 civil, or administrative forfeiture of that legal inter- 16 est pursuant to any Federal law for providing such 17 loan or other financial service. 18 SEC. 5. RULES OF CONSTRUCTION. 19 (a) NO REQUIREMENT TO PROVIDE FINANCIAL 20 SERVICES.—Nothing in this Act shall require a depository 21 institution, entity performing a financial service for or in 22 association with a depository institution, or insurer to pro- 23 vide financial services to a cannabis-related legitimate 24 business, service provider, or any other business. 25 VerDate Sep 11 2014 23:16 Apr 20, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H1996.RFS H1996 pamtmann on DSKBC07HB2PROD with BILLS 10 HR 1996 RFS (b) GENERAL EXAMINATION, SUPERVISORY, AND 1 ENFORCEMENT AUTHORITY.—Nothing in this Act may be 2 construed in any way as limiting or otherwise restricting 3 the general examination, supervisory, and enforcement au- 4 thority of the Federal banking regulators, provided that 5 the basis for any supervisory or enforcement action is not 6 the provision of financial services to a cannabis-related le- 7 gitimate business or service provider. 8 (c) BUSINESS OF INSURANCE.—Nothing in this Act 9 shall interfere with the regulation of the business of insur- 10 ance in accordance with the Act of March 9, 1945 (59 11 Stat. 33, chapter 20; 15 U.S.C. 1011 et seq.) (commonly 12 known as the ‘‘McCarran-Ferguson Act’’) and the Dodd- 13 Frank Wall Street Reform and Consumer Protection Act 14 (12 U.S.C. 5301 et seq.). 15 SEC. 6. REQUIREMENTS FOR FILING SUSPICIOUS ACTIVITY 16 REPORTS. 17 Section 5318(g) of title 31, United States Code, is 18 amended by adding at the end the following: 19 ‘‘(5) REQUIREMENTS FOR CANNABIS-RELATED 20 LEGITIMATE BUSINESSES.— 21 ‘‘(A) IN GENERAL.—With respect to a fi- 22 nancial institution or any director, officer, em- 23 ployee, or agent of a financial institution that 24 reports a suspicious transaction pursuant to 25 VerDate Sep 11 2014 23:16 Apr 20, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H1996.RFS H1996 pamtmann on DSKBC07HB2PROD with BILLS 11 HR 1996 RFS this subsection, if the reason for the report re- 1 lates to a cannabis-related legitimate business 2 or service provider, the report shall comply with 3 appropriate guidance issued by the Financial 4 Crimes Enforcement Network. Not later than 5 the end of the 180-day period beginning on the 6 date of enactment of this paragraph, the Sec- 7 retary shall update the February 14, 2014, 8 guidance titled ‘BSA Expectations Regarding 9 Marijuana-Related Businesses’ (FIN–2014– 10 G001) to ensure that the guidance is consistent 11 with the purpose and intent of the SAFE 12 Banking Act of 2021 and does not significantly 13 inhibit the provision of financial services to a 14 cannabis-related legitimate business or service 15 provider in a State, political subdivision of a 16 State, or Indian country that has allowed the 17 cultivation, production, manufacture, transpor- 18 tation, display, dispensing, distribution, sale, or 19 purchase of cannabis pursuant to law or regula- 20 tion of such State, political subdivision, or In- 21 dian Tribe that has jurisdiction over the Indian 22 country. 23 ‘‘(B) DEFI [Text truncated for display. Full text available on Congress.gov.]