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FIU Director Weighs in on the Cannabis and Industrial Hemp Industry

Belizeans have come to know it as the Marijuana Bill; it is a very crucial piece of legislation that has been getting a lot of attention accompanied with many questions and concerns. Just last week, the Senate passed the Cannabis and Industrial Hemp Control and Licensing Bill. Among the concerns raised on the issue in last week’s Senate meeting was the effect it would and could have on correspondent banking. Expanding on the subject of banking and marijuana, the Director of the Financial Intelligence Unit (FIU), Kent Clare, explained on The Morning Show today, why banks would be hesitant to do business with someone involved in the weed and hemp industry.

Kent Clare, Director, FIU: Alright so, we have Belize and you have the U.S. and other jurisdictions as well, it’s not only the U.S. but we can speak to what would have happened to other jurisdictions who would have had the same challenge. It’s not only Belize that is going along this route. There are many Caribbean countries as well who feel that there is, some are going to strictly hemp and then others to marijuana, outright production of marijuana. So banks are independent business entities and so, while the law might say it’s illegal to grow and traffic in this type of product, banks are going to be driven by risk and they’re going to be driven by the mandates being set on them by their correspondent banks. Now if you’re a bank and you don’t have to do wire transfers and you don’t have to interact with the wider global financial system then you might very well want to take the money because, obviously, there’s going to be a need for security of the funds. That’s not the reality. The world is so integrated.”

Troy Gabb, Host, The Morning Show:  Otherwise there would be chaos.

Kent Clare, Director, FIU: So in the U.S. for example, under BSA, Banks Secrecy Act, there are federal banks or banks that are supervised by the federal authorities are prohibited from dealing with this type of product and so while different states might legalise it, the fact is, there’s a bunch of persons producing the product but they can’t bank. They have to deal in cash and that’s likely what will happen in the first instance, until, what you described earlier, maybe the day comes when the whole world says well we’re going to treat it as any other commodity. But right now, what’s going to happen, it’s not the FIU that’s going to put any constraints on banks because we don’t. Banks are supervised by the Central Bank and what all of us is going to be doing is to advise them, use prudence and recognise the dictates of your correspondent bank. Some correspondents will say, not only marijuana, other different types of activities like casinos, for example, yeah anything like that, we don’t want that filtering into the funds that you might eventually ask us to transfer. So, I think it’s not a difficult situation for the FIU. It’s going to be a challenge really for the banks.”