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Thailand, Weed and Banking (3)

This is article 3 in a series. Read :
Part 1: here
Part 2: here
Further Reading: here

The US model is, therefore, relatively straightforward, at least in principle.

The European Union is a very different model. First, it's important to realise that the EU is not a country. It is, arguably, not even fully a jurisdiction. It tries to be so and it has created some of the institutions that we expect to see in a country. For example, it has - on the face of it, an apex court. But on examination, that court is a political, not a legal court and, as a political court, it has jurisdiction only in relation to those matters that are, or have at some time been, a priority of the then dominant political view. When people talk about "The European Court" they almost invariably mean "The European Court of Human Rights." While the Court constantly extends its influence by finding that human rights exist where others don't see those rights or who see the ECHR (as it is often called) as prioritising vocal minorities or even individuals over the rights of society as a whole, the fact is that its remit is limited.

There is a European Parliament and there is a President. This is, itself, a cause for annoyance because several members are constitutional monarchies but the EU is attempting to set itself above those and to operate as a republic. However, the President does not have the authority of the President of the USA, for example. The EU does not have citizens in the sense that term is usually understood: individuals remain citizens of their individual states and, through them, are citizens of the EU. Because of this, the EU does not, historically, make laws that directly affect individuals or corporations: EU Directives, which are, supposedly its most powerful legislative measure, are actually instructions to member states to pass and implement laws in accordance with the Directive. But those laws are rarely passed and implemented in exactly the form that the European Parliament passed them leading to as many variations as there are member states.

As a response to the global financial crisis, the EU began to make more use of a device called "Regulations." It first used them extensively in relation to the financial sector, using the argument that the European Central Bank needed to take control of financial stability and that to do that it required control over the operations of the financial sector in general and banking in particular. Regulations sidestep the (already deeply flawed) democratic process to which Directives are subject. Critics argued that it was the latest step in the long war between Frankfurt, Paris and London for supremacy over financial markets and it is difficult, if one looks at history since the 1990s, to say that they are wrong.

Having established that Regulations can be used in relation to the financial sector, the EU decided that its next primary target would be money laundering. It announced that there would be a reduction in reliance on Directives and that in future Regulations would be used. Recently it has announced the creation of The Anti Money Laundering Authority (which therefore gets to redefine the long-used acronym AMLA). However, the result is not as we might expect. The Authority is an EU institution that will "contribute to the harmonisation and coordination of supervisory practices in the financial and non-financial sectors, the direct supervision of high-risk and cross-border financial entities and the coordination of financial intelligence units." It will therefore usurp the powers of supervision of national regulators and have the authority to define the regulatory regime across the whole of commerce and finance. It is truly federal law but law made by bureaucrats not elected officials. It appears to relate to all financial crime, not only money laundering. It follows, then, that once the Authority is set up that we can expect to see something that is notionally similar to the position in the USA.

In fact it is fundamentally different to the USA because there is no pan-European law to combat drugs or the proceeds of the drugs trade, be it legal or illegal. The EU's proposed Regulations relating to money laundering do not relate to the predicate crimes except insofar as money laundering is a predicate crime for money laundering purposes.But the Regulations relating to the supervision, for financial crime purposes, of the commercial and financial sectors, is a land-grab similar to that imposed in relation to the financial sector in response to the global financial crisis/ However, in this case it goes into the regulation of non-financial sector businesses and will create a European enforcement regime in relation to e.g. bribery and corruption where there is cross-border activity. It will also, at least on the face of it, provide jurisdiction over activity by EU businesses outside the EU.

This, then, creates a complex position in relation to money earned from trade with is legal in one member state but illegal in another.

The basic position is that money is laundered in jurisdiction A when it arises from criminal conduct in jurisdiction B when the conduct would also be criminal conduct in jurisdiction A. It's called "commonality of offence." Therefore, using the Netherlands as an example, lawful trade in cannabis in the Netherlands generates profit which can be legally exported to e.g. the UK. Note: the profit not the cannabis can be imported into the UK.

Possession and small-scale distribution of cannabis has long been largely ignored in the Swiss city of Zurich, even though both are actually illegal. Indeed, the smoking of weed in public parks in Zurich has for at least 20 years been commonplace. Cannabis oil and other products are openly on sale, including over the internet, and are legal so long as they have less than 1% THC. Others sell products which are high in cannabidiol which does not cause the "high" created by THC. It is the cannabidiol, or CBD, that is widely regarded as having many health benefits. Low THC hemp products are, depending on interpretation, legal or decriminalised, for possession and use. On some reports, out of a population of some 8 million, an estimated 500,000 are regular, if not frequent, cannabis users. Other reports put that figure at about 200,000. Switzerland is therefore reviewing its law and Zurich has a plan: like Thailand, perhaps it's best to accept that the war on some drugs is lost. In September 2020 both Houses of the Swiss National Parliament voted to allow cities to undertake "scientific studies on the effects of the controlled use of cannabis to be carried out. This is intended to help evaluate the effects of new regulations on the recreational use of cannabis and ultimately, combat the black market distribution of cannabis." (SwissInfo). The Zurich "study" will start in the autumn of 2022. Interestingly, in two referenda, the vote has gone against the legalisation of cannabis but non-state sponsored surveys are in favour of legalisation provided minors are protected. But the numbers involved mean that a quiet form of civil disobedience is underway - and again there is a part of the political spectrum that says that growing cannabis will be a positive benefit to agriculture.

In Thailand some have argued that as a rapidly growing crop, cannabis will make good animal feed. It's hard not to laugh at the prospect of cows fed on cannabis producing the milk that ends up in Swiss Chocolate.

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Nigel Morris-Co...