South Dakota Division of Banking Issues Industrial Hemp Guidance

The South Dakota Division of Banking on Tuesday issued guidance to South Dakota state-chartered banks and licensed money lenders that have customers engaged in industrial hemp growth, production and transportation in South Dakota.

Prior to offering financial services to these customers, the guide states that an institution must have appropriate risk management practices in place, including: 

  • A strong understanding of applicable state and federal laws and regulations.
  • A risk assessment that considers potential impacts to all areas of your institution.
  • An effective audit program.
  • Policies and procedures to effectively guide staff.
  • A training program for staff and management.
  • Management information systems to monitor trends and activities.
  • A robust BSA/AML program that ensures: appropriate methods exist for identifying customers engaged in these activities, customers have obtained proper state and federal licensure, customers possess and maintain necessary records, and customers have appropriate plans for testing and inspections.

"While the demand for industrial hemp production in South Dakota remains unknown, I encourage you to review this information with your board of directors and senior management team to ensure  your institution understands the unique risks involved with industrial hemp and that you have appropriate risk management plans in place," said South Dakota Division of Banking Director Bret Afdahl. 

Institutions considering providing financial services to customers engaged in the industrial hemp industry or with questions are encouraged to  contact the Division of Banking at 605.773.3421. Read the guidance. 

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