* Vital financial links endangered if banks accept monies
* Banker warns nation against 'throwing caution to wind'
* Could result in parallel financial system like web shops
By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Bahamas faces being "cut off from the US" economy and financial system if its banks accept monies generated by a marijuana/hemp industry, top financial executives warned yesterday.
Gowon Bowe, Fidelity Bank (Bahamas) chief executive, and Kenrick Brathwaite, the Clearing Banks Association's (CBA) head, told Tribune Business that Bahamian institutions were informed last year their cherished correspondent relationships with US banks would be endangered if they took deposits from this sector even if it was legalised here.
This, they explained, is because US federal law still treats the cultivation of marijuana and its recreational use as a crime. US-based banks, especially multinationals and those subject to federal oversight, will thus automatically refuse to deal with foreign banks that accept marijuana-related funds for fear they will become tainted and accused of committing a criminal offence.
Reader poll
Do you agree with the Economic Recovery Committee that up to two ounces of marijuana should be made legal for personal use?
- Yes
- No
233 total votes.
The Bahamian banker duo yesterday voiced surprise that this issue had seemingly not figured more prominently in both the National Commission on Marijuana, and the Economic Recovery Committee's (ERC), reports and discussions even though Mr Bowe said he had raised the potential obstacles with both the former body and the Government.
Pointing out that Canadian banks catering to that nation's multi-billion dollar medical marijuana/hemp industry are already experiencing problems conducting cross-border transactions with the US as a result, Mr Bowe warned that The Bahamas and its COVID-battered economy "will die without" the correspondent ties its banks presently enjoy with their American counterparts.
As a nation that imports virtually all it consumes, with most goods originating from or transiting the US, access to US dollars is vital for Bahamian companies and individuals to execute and clear these transactions. Access to US currency, and such clearing and settlement facilities, is exactly what is provided by these correspondent relationships.
In effect, correspondent banking is the element in the Bahamian financial system that lubricates the economy and its international business centre model. Mr Bowe said the key question for The Bahamas is whether it should "throw caution to the wind", and endanger these banking ties, by pursuing a medical marijuana and/or hemp industry as part of its COVID-19 recovery plan.
Suggesting The Bahamas must be sure the benefits from doing so outweigh the likely economic loss caused by the severing of correspondent links, Mr Bowe revealed there had been banking industry discussions on the feasibility of this nation purchasing or setting up its own US-based correspondent to ensure it retains US dollar clearing and settlement access.
Mr Brathwaite, meanwhile, warned that The Bahamas could see a repeat of what happened with the web shop gaming industry if it proceeded to legalise a medical marijuana/hemp industry but the commercial banks refused to conduct business with it.
Just like the web shops pre-legalisation, he warned this could result in the creation of an "underground" or parallel financial system where the marijuana industry's potentially vast proceeds remained outside the formal banking system - a development that would likely bring increased scrutiny upon The Bahamas from the world's anti-money laundering overseers.
"There is one concern that no one is commenting on," Mr Brathwaite said yesterday. "Marijuana is still a US federal crime, and as such any industry will become an 'underground' industry just like the numbers industry prior to it being legalised.
"Any bank in the Caribbean that decides to bank the proceeds will risk losing their losing their correspondent bank relationships. This was conveyed to the Caribbean Banks Association meeting which was held in Florida in summer 2019." The Clearing Banks chief said this "unequivocal" and "unambiguous" message was delivered by a US State Department official.
While not necessarily sending proposals for a Bahamian medical marijuana and/or hemp industry completely up in smoke, the threat to The Bahamas' US correspondent banking relationships represents a major obstacle.
Mr Bowe, who said he had warned potential funders and financiers of medical marijuana about this problem, added that Canadian banks were having to "ring fence" accounts and monies linked to that nation's legalised marijuana industry from participation in US cross-border transactions.
Branding this as "very difficult and a tall order", as well as a sign of what The Bahamas may be faced with, Mr Bowe said the signal from the same Florida conference was that Bahamian and Caribbean banks should "only take on clients acceptable to correspondent banks.
"As it stands," he added, "US banks are not prepared to take on any respondent banks that have the [marijuana] industry as a client," he added. "Whilst it is a wonderful conversation to have in terms of what we believe this industry can produce, there are a lot of underlying factors that have to be recognised and set out if it's to be a a meaningful sector.
"It's a golden rule. As long as the US is opposed to it at a federal level, because we are reliant and heavily dependent on them for correspondent banking, imports and trade, we'd have to consider how we find an alternative to this if we go down this path because we will not have the same easy access to the US as we currently enjoy. It's not as simple as people think...
"Is it a multi-billion industry for The Bahamas that is so worthwhile throwing caution to the wind, and taking it on, because it compensates for everything we lose on the other side? That is to be the debate before we take it on."
Mr Bowe recalled a seminar he attended in Jamaica, which legalised medical marijuana some five years ago, and the challenges it was having in developing the sector. He said the major dispensaries and "players" in Canada talked about how technology was allowing them to "produce far more potent strains than they produce naturally" which raised questions about The Bahamas' potential competitiveness.
Asked what would happen should The Bahamas lose its US correspondent banking ties, Mr Bowe replied: "Without them you die. We would literally be back to personal savings institutions where only Bahamian dollar transactions take place.
"Any banking institution that is not a co-operative whose intended purpose is to conduct transactions wholly in Bahamian dollars will not exist without a correspondent relationship. And if we import 90 percent of what we consume, and if we pursue this, think about not having US currency and access."
The Fidelity Bank (Bahamas) warned that the loss of US correspondent banking links would leave Bahamians unable to obtain US dollars from local commercial banks, or use credit/debit cards and wire transfers to pay for purchases from Amazon and other online sites.
Warning against "cutting off our nose to spite our face" over the medical marijuana/hemp proposal, Mr Bowe said community and state banks that typically did not conduct transactions across state lines were being used to accept the industry's funds in the US and avoid coming under the remit of US federal law.
He added that there had been talks among Bahamas-based commercial and private banks over the creation of a US-based correspondent to serve the industry here, but this would still come under the oversight of federal regulators.
Mr Brathwaite, meanwhile, said even medical marijuana was still treated as a federal crime based on the US State Department official's explanation at last year's conference. "People think this is an excellent way to make money," he added, "and build our economy, but there some challenges to that. We all need to be careful with this if we're going to be involved in this kind of industry.
"Just think of a bank where you cannot transfer funds, transact business in the US and all your expenses. How do you deal with that? You cannot send wires throughout the US without a correspondent connection. You are cut off from the US. I don't think anyone wants that."
Mr Brathwaite pointed out that Bahamian banks' US correspondent relationships had already been under pressure for some years, as their counterparts moved to 'de-risk' and drop links to institutions where the perceived risk of being exposed to regulatory breaches - and multi-million dollar fines - outweighs the potential earnings reward.
Warning that medical marijuana/hemp could worsen this trend, he added that any refusal by Bahamian commercial banks to accept deposits and transactions with the sector could create "an underground economy" similar to that of the web shops pre-legalisation where "the proceeds and profits did not go through the banking system".
None of this was addressed in the Economic Recovery Committee (ERC) report, which simply recommended that all Bahamas-based companies involved in the production, manufacturing, sale and export of cannabis must have a "minimum" of 50 percent Bahamian ownership.
It also called for the Government to "make Crown Land available to Bahamians to cultivate cannabis (with special provisions for small-scale farmers and the Rastafarian community), and manufacture cannabis-based products".
"The Government should avoid over-regulation of the market, which will have the effect of sustaining a black market for smaller producers or retailers who do not have the means to navigate complex bureaucracies," the ERC added.
It also urged an exemption of CBD products - hemp and hemp derivative products with minimal or no THC levels - "from the regulatory ambit, and permit their trade with minimal restriction".
Mr Brathwaite admitted he was "kind of surprised" that the correspondent banking fears were not addressed given that these have been known since last year.
Comments
Porcupine 3 years, 5 months ago
Isn't it funny how "we threw caution to the wind" for the web shops. The banking system, to any who have studies it's roots to today's operations is evil to the core. There is little doubt that banking alone has helped create the overwhelming majority of today's problems. What, pray tell, do bankers produce? Nothing! Modern banking is a Ponzi scheme. The world's wealth is being concentrated into fewer and fewer hands due specifically to the banks and their financing schemes perpetrated on the world. A close study of banks and a good understanding of mathematics leaves any reasonable person agreeing that banks have enslaved humanity. While their are decent people and geniuses in every profession, that cannot be an endorsement of a particular industry. Banking should never be in private hands. History has proven the usefulness of the adage, "Power corrupts. Absolute power corrupts, absolutely." There are few places this is more evident than in banking. Greed and political power have allowed banks to fund the Nazi regime, support genocide, ecocide and countless crimes against humanity. This is before considering the effects banks have had in fueling the greatest disparity of wealth humankind has ever witnessed. Of course our economy would suffer because we are trying to better ourselves by exploring alternatives which the industrialized countries have embarked on capturing the greatest market share. To our ultimate detriment. Our politicians and bankers are puppets of the US banking system. We are not an independent nation. We along with the rest of humanity are enslaved by the global banking system. This is not conspiracy theory. This is a well documented fact.
tribanon 3 years, 5 months ago
Surely you're not arguing for the ownership and control of banks around the world to be taken out of the hands of the private sector and placed in the hands of governments. That certainly has not worked out too well in our case of Bank of The Bahamas (BOB).
benniesun 3 years, 5 months ago
@tribanon - read up on the BIS and its history in the book 'Tower of Basel'.
http://gen.lib.rus.ec/search.php?req=...">http://gen.lib.rus.ec/search.php?req=...
Bank for International Settlements
The Bank for International Settlements (or BIS), based in Basel, Switzerland, is an international organization of central banks established in 1930 under the Hague agreement. It was later joined by the International Monetary Fund and World Bank set up at the Bretton Woods conference of July 1944.
Porcupine 3 years, 5 months ago
"It is well enough that people do not understand banking and our monetary sydtem, for if they did, I believe there would be a revolution before tomorrow morning." Henry Ford. The banking and monrtary system were designed by the bankers. For their benefit. I try and remove intellectual exploration out of the limited realm of The Bahamas. BOB failed because of politics and corruption. The baby and the bath water stink to high heaven.
tribanon 3 years, 5 months ago
Gowon Bowe and Kenrick Brathwaite are absolutely spot on with their concerns about the legalization of marijuana.
ForeverDreamer 3 years, 5 months ago
Wrong. He's correct in concerns with banks taking marijuana related money activities. Legalization does not need involve those banks. Thus, webshops and local financial corps such as Sun transfer, Omni, may be positioned to be the bankers for this sector.
newcitizen 3 years, 5 months ago
Canadian banks are not having any issues dealing with the US since weed legalization. That is a bunch of nonsense.
themessenger 3 years, 5 months ago
Nor are the American banks in those states where it's legal in the US having any issues.
What a load of BS, Bowe & Braithwaite mussy on the Christian Counsel payroll now.
wolfwolfwolfwolf 3 years, 5 months ago
Solution: Crypto currency
You’re welcome :)
stislez 3 years, 5 months ago
Yall stop freakin out here! I live in the US, cant yall see they don't want no other country to enjoy the benefits of marijuana? They be having all type marijuana parties down here and it aint even legal recreationally! Regular people created opportunities for themselves in that industry, from edibles to medicine to clothes etc. Orlando have the first ever marijuana school called learn sativa! America been enjoying the fruits of the industry! If you get catch with less than 28grams its only a misdemeanor....like if it so FEDERALLY ILLEGAL, why does america have the industry? What this man talking bout is a scare tactic to try keep us out of the industry. 90-95% of alllll food in america is processed food, so imagine their weed. America know if we in the Caribbean start our marijuana industry, it will have a big affect on their stuff they been enjoying because ours will be better! More natural, more potent, more health benefits etc! Look at Jamaica! The marijuana grown in the mountains is wayyyyy better than american hybrid marijuana. I think thats the main reason, our environment is more conducive to grow a better quality crop and that put america's at risk because we so close. So you know the americans ga want that natural island grown weed and the possiblity of illegal import into the US is gonna be a problem. WAKE UP PEOPLE! Den you have the Christian council out here talkin da most shit too smh. Bout coming to the table with them smt. Yall people still have the same old mentality about marijuana but ine ga get into dem set. Basically if we start growing weed it will be a problem for America because of proximity and the possiblity of us having a better crop. As long as our leaders put relationships and befits we have with other countries over the people of our country we always ga be "beggin" and "can't do". I mean what sensible country relies soley on other people money to survive without building up their own industries and infrastructure. Now these man talking bout puming money into the agricultural and finishing industries to provide stability for some Bahamians! Our f*n s*t was fishing and agriculture jackasses! Yall switch da st to tourism.....
Porcupine 3 years, 5 months ago
We would have a tough time beating the top grade Jamaican. Otherwise? I agree.
proudloudandfnm 3 years, 5 months ago
Jamaican herb aint been top grade since the 80s... Lol... Its swag. Cheap and weak. Top grade is crippy, hydro, but definitely not Jamaican swag...
DWW 3 years, 5 months ago
nonsense. absolute gibberish. The USA cannot dictate to any other country what their laws should be. They have their laws, we have ours. If it is legal then whats the problem. Is this numnuts saying that Jamaica cannot send and receive US$? I need proof that canadian banks cannot transact with US banks. Show me the actual federal legislation enacting sanctions by the USA federal government against Canada? poppycock. lets try another BS argument. Bowe needs to go have a vacation he's obviously under way too much stress. or he's being paid off by the liquor merchants in this country to say such silly things.
tribanon 3 years, 5 months ago
@DWW says: "The USA cannot dictate to any other country what their laws should be." I guess @DWW believes we adopted all of those anti-money laws, etc. that have destroyed our banking industry because we thought it was in our interest to do so. LMAO
ThisIsOurs 3 years, 5 months ago
I agree with the LMAO comment. To pretend the US can't tell us what to do is to have been born today.. maybe an hour ago.
DWW 3 years, 5 months ago
HEres a google search of "USA sanctions against Canada". how come there is no mention anywhere of this sillyness. https://www.google.com/search?q=USA+s...">https://www.google.com/search?q=USA+s...
John 3 years, 5 months ago
The US doesn’t want marijuana legalized because it doesn’t want to free the hundreds of thousands of young black (and Hispanic ) men it has serving long sentences for small amounts of marijuana. Notice how the ‘war on drugs’ in that country is ‘shoot to kill’, while being in fear of your life as police are loading up young male targets with dozens of bullets, not giving them any chance of survival, but sending clear messages of fear and ‘no tolerance’ to the Black communities and to other race hate groups that ‘we gat this.’ And our ‘ignorant’ police leaders here in this country are anxiously following suit, not having a single iota of race relations in America or the war that had been declared on Black people since the times of the Richard Nixon presidency. In the main time, some 80 billion tons of cocaine enters the United States ‘illegally’, annually and hardly any is getting busted and hardly anyone is going to jail. And opoids, mostly fentanyl, is also wreaking havoc in that country, killing thousands of people. And the government blamed the problem on China. But only now have the US started to crack down on the multi-billion dollar, American owned and operated drug companies that produce these drugs and the mega rich doctors who have been prescribing these drugs like candy. And strangely enough, marijuana is used as a treatment to wean patients , who have become addicted, off opoids. There are legal and licensed marijuana dispensary in the US that still cannot put their legally earned money in American banks. And the legalization or decriminalization of marijuana will mean less US presence in the Bahamas, where some of that country’s agencies have billion dollar budgets, but their missions are unstated or unclear. The great unraveling is taking place and a major shift in economic power will take plac, regardless of the resistance to those who hold filthy lucre.
Porcupine 3 years, 5 months ago
That was good, John.
ThisIsOurs 3 years, 5 months ago
hmmm... maybe. I suspect it will be about the dollars. Just like the banking industry. Someone will realize dem people taking our revenue, shut them down.
John 3 years, 5 months ago
And don’t forget when the US sprayed weed killer over Jamaica and Mexico and other countries, claiming to kill marijuana fields, but making thousands of innocent people sick and with respiratory problems and probably even causing deaths, especially among and elderly populations. ‘ Paraquat Pot: The True Story Of How The US Government Tried To Kill Weed Smokers With A Toxic Chemical In The 1980s’. Google it! A Jamaican who lives up in the mountains said ‘everything died and everyone got sick. Even the water from the river turn poison and kill out the animals dem. But the trees grew back and we survived and we got more animals.’
Porcupine 3 years, 5 months ago
This is true. I remember that well.
FrustratedBusinessman 3 years, 5 months ago
I am personally in favour of decriminalization, I think that it is absolutely outrageous that so many of our young people's lives are ruined for the mere possession of a plant, however, I think we need to examine 1.) the effects on our relationship with the US 2.) the long-term health effects before I can support full legalization.
I do not believe that the US will levy any form of economic sanctions on us in response to the legalization of weed, however, they can easily pull their pre-clearance facilities/other travel benefits and make our lives a living hell trying to obtain visas. We are one of a handful of nations in the world that have pre-clearance facilities within our national borders, and we have enjoyed visa-free travel (something only a few countries such as Canada, United Kingdom, etc.) for quite a while now. The possibility of losing those privileges needs to be discussed before we make a move on legalization. We also need to remember that we are not Canada. Canada is one of the largest trading partners for the United States; for as much huff and puff that Trump likes to make regarding their relationship, both nation's economic wellbeings are co-dependent on one another. The Bahamas could drop off the face of the earth, and the US would not care any less. Let us not overestimate our value here.
That being said, I think that we need to look into the health effects of marijuana before we consider legalization. Cannabis psychosis is a very real thing, and I think there should be very strict rules and regulations surrounding the cultivation and distribution of marijuana if we are to legalize it. We also should keep up to date on any new scientific information what may suggest long-term health implications as well; let's remember that people thought tobacco was harmless at one point in time as well.
Walla 3 years, 5 months ago
We need to be our own country and not fear America, they are a country in decline. America is making billions from marijuana and we are afraid they are gonna blacklist us again? Our country could profit so much from this plant, but no we gonna play little bitches to America. Grow a spine. You really think they gonna stop tourist if we make weed legal? I guarantee you that tourism will increase, both from America and everywhere else. Billions of dollars to be made, and with this plague lord knows we need it to get back up on our feet, and a banker is scaring us cause they scared they gonna lose money from they pocket. They don't care about the Bahamain on the street, they laughing at him/her as they roll by in they big time car. Apart from the money it will make us , imagine how much money it will save us if the police could deal with real crimes, if the court system was not clogged up with people being prosecuted for a joint? Rise up people and stop being slaves to bankers and rich people who just wanna keep things they way they are so they the big shots.
DDK 3 years, 5 months ago
Here we go!!! Nice photo Tribune!
tribanon 3 years, 5 months ago
Haven't you heard the latest?! Minnis now claims smoking marijuana for at least one hour once a day prevents you from being infected by the deadly Communist China Virus. LOL
John 3 years, 5 months ago
They labeled the last pandemic similar to Covid-19 the Spanish Flu. But it was discovered that that glue originated in the United States. And of recent times, at least within a decade, it was American scientists that went in search of graves of victims who died from the Spanish flu in hopes of finding active samples of the virus. And it is now coming to light that Covid-19 has been active in at least some islands of the The Bahamas since the fall of 2019, around the time of the Dorian hurricane. And that was months before it was discovered in China.
KapunkleUp 3 years, 5 months ago
So the Bahamas can't make weed legal according to the US but Alaska, California, Colorado, Illinois, Maine, Massachusetts, Michigan, Neveda, Oregon, Vermont and Washington can.
ThisIsOurs 3 years, 5 months ago
exactly. No powerful nation wants a competitor. They didnt want it for the banking industry and Im going to bet we'll start to see the same kind of roadblocks pop up for this. Not that I care, I think we need to diversify our economy by using our brains ratger than actively turning it to mush. We gat addictive gaming, now we want addictive marijuana, watch the next mind destroying get rich quick proposal will be to make the islands a giant tropical brothel. I mean think of the billions the sex industry makes!
bogart 3 years, 5 months ago
Dealing with rampant inefficiencies, corruption in country in a lucrative ganga field opens pandora box. The limited local markets likely extend to the illegal transporting from small limited Bahamas to US markets controlled by gangs, Kingpins etc. Likely big business in go fast boats, home made subs, remote, air trafficking, yachts.....even all along to old grammy sitting on some dope in her wheelchair trying to go through US local Customs Border. Opens to many other parts is the illegal guns and weapons, more Crowns lands corrupted original use for local vegetables for lucrative ganga growing. If existing Legislation and laws not abided by and enforced then its unlikely to have any new laws regulating new ganga industry enforced.
Millennial242 3 years, 5 months ago
Sure, that's a concern. However, it's not something that should derail the entire prospect of developing this industry in The Bahamas. On the scale of SWOT (strengths, weaknesses, opportunities, and threats), it is a possible threat. However, this is where we do things to mitigate the threat or find other avenues to ensure the way forward can still proceed. Sooooooo respectfully Mr. Bowe, let's not lead with fearmongering. Let's lead with action.
proudloudandfnm 3 years, 5 months ago
Legal marijuana shops in the US can bank in the US but we'd be cut off?
Doubtful. And if we were sounds like an easy win in court.
Nothing to see here.
Legalize it already!
SP 3 years, 5 months ago
What a crock of shyt. Absolute asinine stupidity in the Bahamas as usual!
TalRussell 3 years, 5 months ago
Who was it back on May 10, 2017, had ordained the 35 House-elected redcoat MPs, is ones get to mandate that the selling of weed be restricted medicinal purposes?
Shakehead once for Yeah a proven does offer benefits pot tea, and must ingredient variety home-baked brownies, Twice for Not have acting financial secretary investigate?
Revolutionary 3 years, 5 months ago
Why is this entire article assuming that domestic Bahamian-owned banking services that do not do business with the USA cannot exist or handle marijuana money? So what if we have a domestic banking system? And why does the author repeatedly refer to domestic banking as a "parallel financial system" like it's some evil underworld? It's just a bank that doesn't do business with the USA. This whole article seems like propaganda made to scare Bahamians from legalizing simply because the big banks can't take all the marijuana money and do business with the USA. They want to have their cake and eat it too. CYC.
tribanon 3 years, 5 months ago
I think you and many of the other commenters above have conveniently forgotten that the Bahamas imports just about everything by way of transactions in hard currencies through the international banking system. LOL
rodentos 3 years, 5 months ago
weed will be only the one thing left here after covid passed over. weedheads full of shit
Sign in to comment
Or login with:
OpenID