On September 27, 2023, Senate Banking Committee members advanced the Secure and Fair Enforcement Regulation (SAFER) Banking Act (S. 2860) out of committee for a full Senate vote.  Prior versions of the bill have passed the House of Representatives repeatedly; however, the bill had never before been considered in the Senate.

According to a joint statement by the sponsors of the bill, the SAFER Banking Act is intended to make “communities and small businesses safer by giving legal cannabis businesses access to traditional financial institutions, including bank accounts and small business loans,” and to prevent “federal bank regulators from ordering a bank or credit union to close an account based on reputational risk.”  The legislation, including amendments made as a part of the Senate Banking Committee mark-up hearing, has now been placed on the Senate calendar for floor consideration.

Below, we outline certain background information and provide a summary of key elements and implications of the bill.


– State of play. Because the possession, distribution and sale of cannabis are illegal at the federal level, banks are largely reluctant to provide financial services to marijuana-related businesses (“MRBs”) due to the potential for liability and other financial crime and reputational risk concerns.  As such, many MRBs today lack access to bank accounts, credit card processing and other financial services, even if such MRBs are acting in accordance with applicable state laws.  This results in many MRBs conducting business in cash, which can present public safety risks to companies and their customers, staff and communities.

– Rescheduling efforts. The Senate Banking Committee’s passage of the SAFER Banking Act comes on the heels of the recommendation of the U.S. Department of Health and Human Services that marijuana be reclassified under the Controlled Substances Act (“CSA”) from a Schedule I to a Schedule III substance.

– Schedule III substances, such as testosterone and anabolic steroids, are defined by the Drug Enforcement Administration “as drugs with a moderate to low potential for physical and psychological dependence.”

– Rescheduling cannabis to Schedule III is expected to expand research in and testing of cannabis and would likely result in lighter criminal penalties for cannabis-related crimes.

– Marijuana would remain illegal under federal law, however, and it is unclear whether or the extent to which rescheduling would impact banks’ willingness to serve MRBs.

– Prior legislative efforts. Prior versions of the legislation, referred to as the Secure and Fair Enforcement (SAFE) Banking Act, have passed the House of Representatives seven times.  However, the Senate had not considered the bill before the September 27, 2023 mark-up.

Purpose of the SAFER Banking Act.

As noted in the initial section-by-section summary of the bill, the SAFER Banking Act would provide a safe harbor for banks, credit unions, payment processors and other institutions serving MRBs that act in compliance with state law, allowing such businesses “to operate in the financial mainstream.”  The bill is intended to build on existing guidance of the Financial Crimes Enforcement Network (“FinCEN”) and federal banking agency practices “to ensure that banks and credit unions are operating in a safe and sound manner, including having processes and procedures to identify fraudulent or illegal activity,” while “expand[ing] access to deposit accounts in the communities in which banks and credit unions serve, and to consumers and business owners from all backgrounds.”

Key takeaways of the SAFER Banking Act.

Generally speaking, the bill’s substance is similar to the SAFE Banking Act passed by the House of Representatives.  We highlight below some key differences and other noteworthy elements of the SAFER Banking Act:

– New requirements for termination of deposit accounts. Most notably, the SAFER Banking Act includes a new Section 10, not provided in prior iterations of the bill, addressing requests by federal banking agencies that banks terminate certain deposit accounts.

– Section 10 sets forth the sense of Congress that the appropriate banking agencies have a (i) duty to ensure that depository institutions are operating in a safe and sound manner and (ii) have processes and procedures in place to identify fraudulent or illegal activities. The bill goes on to note, among other things, that the duties set forth in (i) and (ii) must “rest on laws and regulations, not on personal beliefs or political motivations,” and that “undue pressure and coercion designed to restrict access to financial services for lawful business have no place” at any federal banking agency.

– Section 10 thus (i) prohibits a federal banking agency from requesting or requiring a bank to terminate a deposit account without a valid reason, which valid reason must be provided in writing; and (ii) requires that federal banking regulators report annually to Congress on deposit accounts closed at their request or requirement.

– Response to Operation Choke Point. This provision is intended in part to satisfy Republicans’ desire to prevent agencies from requiring that banks terminate customer relationships based on political or reputational risk considerations (whether for MRBs or other businesses, such as firearms sellers), as occurred under “Operation Choke Point” during the Obama administration.  While Operation Choke Point was officially ended in August 2017, Republicans remain concerned that federal banking agencies continue to direct banks to terminate customer accounts for political reasons.  While Sen. Steve Daines (R-MT), who supports the SAFER Banking Act, characterized Section 10 as effectively “tackl[ing] much needed reforms with respect to financial account closures” under Operation Choke Point, not all Republican Committee members believe Section 10 adequately  protects businesses from unfairly having their accounts closed (or services denied).

– Implications for SARs. Under Section 4 of the SAFER Banking Act, for purposes of federal criminal money laundering law (18 U.S.C. §§ 1956-1957) and all other provisions of federal law, proceeds from transactions conducted by state-sanctioned marijuana businesses or service providers would not be considered “unlawful activit[ies]” solely for involving proceeds of marijuana businesses or service providers or proceeds from transactions involving certain marijuana-related activities conducted by MRBs pursuant to applicable state law.  As such, transactions covered by this provision would likely not require the filing of suspicious activity reports (“SARs”).  Section 6 of the proposed bill would amend existing law to provide  that any SAR submitted in connection with a state-sanctioned marijuana business or service provider must comply with guidance issued by FinCEN and requires FinCEN to amend exist marijuana SAR guidance to ensure consistency with the “purpose and intent” of the SAFER Banking Act.

– Safe harbors. Section 5 of the bill would provide certain protections to financial service providers, such as:

– Protections for banks. Depository institutions, insurers and certain other entities (such as those performing financial services for or in association with depository institutions) providing services to state-sanctioned marijuana businesses or service providers and such organizations’ respective officers, directors, employees or agents would not be held liable pursuant to any federal law or regulation solely for providing such a financial service or further investing income derived from such a service.  (Federal reserve banks and federal home loan banks would be afforded similar protections from liability for providing services to depository institutions that are in turn servicing marijuana businesses or service providers.)

– Insurance protections. The bill also would protect insurers engaged in the business of insurance within a jurisdiction that permits certain marijuana activities and services (e.g., cultivation, sale, dispensing, purchase) from being held liable solely for engaging in the business of insurance or further investing income derived from such business.

– Anti-forfeiture protections. Firms including, but not limited to, depository institutions, federal reserve banks, federal home loan banks, federal home loan mortgage associations and other mortgage providers would not be subject to criminal, civil or administrative forfeiture pursuant to any federal law “solely” in connection with particular state-sanctioned activities undertaken and services provided as relates to marijuana businesses or service providers.  As such, depository institutions would be able to provide lending and other services to state-sanctioned MRBs.

– Annual testimony by FinCEN director. Section 15 would require FinCEN’s director to testify before Congress about anti-money laundering efforts within one year of the final bill’s enactment and on an annual basis thereafter.

– Additional guidance. The bill also requires federal banking agencies to develop guidance and examination procedures for banks providing financial services to state-sanctioned marijuana businesses within one year of enactment (Section 7) and to update guidance on providing financial services to hemp-related businesses within 180 days (Section 8).

What’s next for the SAFER Banking Act?

– Senate vote. On September 28, 2023, the SAFER Banking Act was placed on the Senate legislative calendar, under General Orders, Calendar No. 215.  Senate Majority Leader Chuck Schumer (D-NY) has committed to bringing the bill to a vote as quickly as possible, where it must receive at least 60 votes to be passed.

– Whether the bill will enjoy enough bipartisan support to pass the Senate remains to be seen, however, as several Republican Senators have already voiced their opposition.

– In addition, progressive Democrats have expressed concerns about the lack of criminal justice provisions in the legislation.

– House vote. Based on the House of Representatives’ bipartisan approval of the prior versions of the bill, it is expected that the SAFER Banking Act, if passed by the Senate and sent to the House, would enjoy similar support.


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Satish Kini is a corporate partner. He is Co-Chair of Debevoise’s National Security practice, the Chair of the Banking Group and a member of the Financial Institutions Group. He can be reached at smkini@debevoise.com.


Aseel Rabie is a corporate counsel and a member of Debevoise’s Banking Group. She can be reached at arabie@debevoise.com.


Nariné A. Atamian is a corporate associate and a member of Debevoise's Financial Institutions Group. She can be reached at naatamian@debevoise.com.