A report commissioned by the government of British Columbia and released this week has found that billions of dollars in cash were laundered through BC casinos.

The 1,800-page report on laundering between 2008 and 2018 was released on June 15 by former BC Supreme Court Justice Austin Cullen after 133 days of hearings and found that “an unprecedented volume of cash was laundered through BC casinos”.

“This inquiry explored the myriad ways in which the greedy and the devious seek to make their crime-stained money appear legitimate,” the report said, per CTV News.

“In 2014 alone, British Columbia casinos accepted nearly $1.2 billion in cash transactions of $10,000 or more, including 1,881 individual cash buy-ins of $100,000 or more – an average of more than five per day,” the report said. The report estimated the “unprecedented” total value of the money laundered amounted to billions each year.

BCLC, politians, RCMP “culpable”

Cullen was highly critical of the BC Lottery Corporation (BCLC) and several provincial ministers responsible for gaming for not doing enough to stop rampant money laundering that was happening “in plain sight”.

“For too long money laundering has been kept on the sidelines. Too often it has been largely ignored. It’s time for that to change,” Cullen said, speaking at a news conference after the release of the report, per CTV.

Per Global News, Cullen heard during the inquiry how money laundering in BC casinos involved loan sharks delivering bundles of $20 bills that had been packaged in a manner consistent with the proceeds of drug trafficking to high-profile gamblers who had travelled primarily from China to Canada to play In secluded areas of BC casinos. The report said “bricks” of cash were frequently delivered to casino patrons at or near casinos very late at night or early in the morning by unmarked luxury vehicles. The gamblers often paid back the loan sharks the funds they gambled via transactions in China and Hong Kong.

“It should have been apparent to anyone with an awareness of the size and character of these transactions that Lower Mainland casinos were accepting vast quantities of proceeds of crime during this time period,” Cullen said.

Cullen wrote that despite repeated warnings from various levels of law enforcement, no meaningful action was taken to address the issue until 2015. “BCLC resisted these calls for action and continued to allow these transactions, almost without exception,” the report said.

Cullen added that BCLC’s corporate security and compliance managers “stood by and permitted BC casinos to accept vast sums of illicit cash. BCLC’s approach reflected a completely unacceptable and unreasonable risk tolerance.” He also found the RCMP culpable, noting there was “no sustained effort” to investigate money laundering activity in BC casinos.

BCLC said, though its lawyer, per CTV: “Viewed from the lens of what we now know, everyone could and should have responded more quickly to those large cash transactions.”

While Cullen was critical of former Liberal politicians’ handling of the money laundering problem, he said “there is no evidence” that any of these individuals knowingly encouraged, facilitated, or permitted money laundering to occur in order to obtain personal benefit or advantage.

CGA welcomes findings

In a statement emailed to CGB, the Canadian Gaming Association (CGA) thanked Cullen and said it welcomes the report.

“The Canadian gaming industry is committed to working with all stakeholders and policymakers at the federal and provincial levels of government to continue to enhance our comprehensive and effective AML regime in Canada, leverage advances in technology, and utilize payment technology to provide a safe playing environment,” said the statement.

“In short, it’s a partnership that is strongest when we all work together.  As representatives of an industry with very robust controls and which generates significant benefits across nearly every region in the country, the CGA believes the nation’s AML ecosystem, supported by diligent monitoring and detection that is backed by strong enforcement, will continue to ensure the Canadian public can have confidence in Canada’s gaming industry.”

Recommendations

Cullen said the Financial Transactions and Reports Analysis Centre (FINTRAC), the agency tasked by the federal government to identify money laundering threats is “ineffective” and that BC needs to strike out on its own to make progress, per CBC News. He specified that FINTRAC has encouraged high-volume, low-value intelligence gathering, wherein entities responsible for reporting potential suspicious activity err on the side of caution by making a report at the slightest sign of uncertainty.

“If the province is to achieve success in the fight against money laundering, it must develop its own intelligence capacity in order to better identify money laundering threats,” the report said.

In total, the Supreme Court Justice made 101 recommendations as part of his report, including that the province should appoint a dedicated anti-money laundering commissioner and lower the threshold for requiring proof of funds for casino transactions conducted in cash from $10,000 to $3,000.

The CGA noted it will be reviewing the final report and the four recommendations that are specific to the casino industry to better determine potential next steps and implications for the Canadian gaming industry.

Image: tuchodi via Flickr