Banksters Not About To Surrender Their Drug Money Laundering Profits...,

wolfstreet |  Under the US Patriot Act, handling money from marijuana is illegal and violates measures to control money laundering and terrorist acts. However, US regulators have made it clear that banks will not be prosecuted for providing services to businesses that are lawfully selling cannabis in states where pot has been legalized for recreational use. Some cannabis businesses have been able to set up accounts at credit unions, but major banks have shied away from the expanding industry, deciding that the burdens and risks of doing business with marijuana sellers are not worth the bother.

But that may not be their only motive. There are also the huge profits that can be reaped from laundering the proceeds of the global narcotics trade. According to Antonio María Costa, the former Under-Secretary of the United Nations Office on Drugs and Crime, over $350 billion of funds from organized crime were processed by European and US banks in the wake of the global financial crisis.

“Inter-bank loans were funded by money that originated from the drugs trade and other illegal activities… There were signs that some banks were rescued that way,” Costa said. To date, no European government or bank has publicly denied Costa’s charges. Meanwhile, numerous big banks on both sides of the Atlantic have been caught and fined, some repeatedly, for laundering billions of dollars of illicit drugs money — in direct contravention of the US anti-drugs legislation.

Whatever the banks’ real motives in denying funds to the Uruguayan pharmacies, the perverse irony, as the NY Times points out, is that applying US regulations intended to crack down on banks laundering the proceeds from the illegal sale of drugs to the current context in Uruguay is likely to encourage, not prevent, illicit drug sales:

Fighting drug trafficking was one of the main reasons the Uruguayan government gave for legalizing recreational marijuana. Officials spent years developing a complex regulatory framework that permits people to grow a limited supply of cannabis themselves or buy it at pharmacies for less than the black market rate. Lawmakers hoped that these legal structures would undercut illicit marijuana cultivation and sales.
“There probably isn’t a trade in Uruguay today that is more controlled than cannabis sale,” said Pablo Durán (a legal expert at the Center of Pharmacies in Uruguay, a trade group).

Despite that fact, the pressure continues to be brought to bear on Uruguay’s legal cannabis businesses. Banco República has already announced that it will close the accounts of the pharmacies that sell cannabis in order to safeguard its much more valuable dollar operations.

In other words, a state-owned bank of a sovereign nation just decided to put draconian US legislation before a law adopted by the Uruguayan parliament authorizing the sale and production of marijuana. The law’s prime sponsor, Uruguay’s former president, José Mujica, is furious. During a session of the country’s Senate, he accused the banks of directly attacking democracy.