The Medicinal Cannabis (R)evolution

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There is genuine concern that the perceived risk associated with the medicinal cannabis industry, given the historical association of marijuana with illicit drugs, could lead to further severing of correspondent banking relationships in the ECCU. The concept of de-risking does not only present an issue at the international level, but may also present challenges at the domestic level. In an attempt to maintain correspondent banking relationships and lower the risk profile of its institution, some commercial banks may refrain from offering banking services to businesses engaged in medicinal cannabis. FATF defines money laundering as the processing of criminal proceeds to disguise their illegal origin. It is noteworthy that the Caribbean region has been viewed as a drug trafficking transhipment point and, as a result, the risk of money laundering has been considered high. 12 Given this perception, there may be a concern that the legalisation of medicinal cannabis may heighten the money laundering risk profile of ECCU member countries. However, where medicinal cannabis has been legalised, proceeds from the sale by licensed companies should not be associated with money laundering within the domestic market. The issue of money laundering should only arise where attempts are made to transfer funds across borders to jurisdictions where medicinal cannabis is still considered illegal. What remains critical to the process are the risk management processes which commercial banks have instituted to ensure that funds derived from medicinal cannabis are not channeled through correspondent banks where medicinal cannabis has not been legalised. Despite the efforts identified above, it is noted that the region may not be able to predict the response of correspondent banks related to medicinal cannabis. Appendix I captures the legal framework for correspondent banking relationships in the United States of America and possible constraints regarding the cannabis industry.

12 The 2018 United States Department of State Bureau of International Narcotics and Law Enforcement Affairs- International Narcotics Controls Strategy Report March 2018