Tuesday 17 September, 2019

NCB steers clear of ‘hot potato’ marijuana business

NCB Financial Group CEO, Patrick Hylton, said as much as there have been some legislative provisions for  the commercialization of marijuana through its medicinal use, the bank cannot do anything with existing or prospective customers to put the financial institution’s at risk and in problems with correspondent banks.

NCB Financial Group CEO, Patrick Hylton, said as much as there have been some legislative provisions for the commercialization of marijuana through its medicinal use, the bank cannot do anything with existing or prospective customers to put the financial institution’s at risk and in problems with correspondent banks.

The NCB Financial Group has said it is treading carefully in relation to facilitating businesses in the formal local marijuana industry.

Lawmakers in recent times have called on the Cannabis Licencing Authority (CLA) to move quickly to forge a relationship with banks to assist stakeholders in the industry who are have difficulty conducting transactions with the banks.

But NCB Financial Group CEO, Patrick Hylton, said as much as there have been some legislative provisions for commercialization of marijuana through its medicinal use, the bank cannot do anything with existing or prospective customers to put the financial institution’s at risk and in problems with correspondent banks.

Hylton was speaking at the company’s investors briefing an announcement of the financial year results, which saw NCB making a record $19.1 billion in net profit.

“Until there is clarity, and until we find ourselves on the same page, we can find ourselves locked out of the international financial system,” Hylton said of any business with the marijuana industry.

Group General Counsel and Corporate Secretary, Dave Garcia, said that facilitating marijuana businesses isn’t a simple matter.

‘This is a fairly complicated issue. One of the things that we have to appreciate is that where federal laws in the US prohibit certain activities, it means that the correspondents with whom we deal are not going to be able to facilitate it at all,” Garcia said.

He made it clear that it is not a stance being taken by NCB to not work with local marijuana businesses, but really that the bank must consider the relationship it has with other similar institutions in the US.

“So that rules out a certain segment of transactions, it means that foreign currency transaction varying from wires to drafts to just holding a foreign currency account with us, or exchanging currency, are going to be things that we will not be able to facilitate even if it fell within our own risk appetite,” said Garcia.

The NCB attorney also said the bank has had dialogue with the CLA on the issue, and appreciates the importance of moving to clarify the issue.

“From a risk assessment standpoint, we did note that the CLA has outlined very detailed procedures that they employ, and the legislation and regulatory framework required in relation to the assessment and monitoring of marijuana-related business. That’s something which augurs well for the future, and something that we have under continuous assessment,” Garcia said.

The CLA assured the institutions that the agency has measures in place to guard against certain risks.

But Garcia said NCB still actively looking at the issue, and particularly in relation to Jamaican dollar services, and the position within the organisation at this time.

“If we are to do business with a marijuana-related company, its requires a pretty high level of approval and review for us to proceed, and we will proceed very cautiously, bearing in mind not just the risks, but also how we know/do our correspondence,” Garcia indicated.  

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