Report Seeks Sweeping Changes To Tackle Dirty Money In British Columbia

June 16, 2022
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The long-awaited final report on British Columbia’s public inquiry into money laundering confirmed that for more than a decade casinos in the province accepted hundreds of millions of dollars linked to organized crime and the drug trade.

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The long-awaited final report on British Columbia’s public inquiry into money laundering confirmed that for more than a decade casinos in the province accepted hundreds of millions of dollars linked to organized crime and the drug trade.

Those transactions from 2008 to 2018 were an integral part of a money laundering scheme known as the “Vancouver model,” in which wealthy casino patrons were provided illicit cash by “cash facilitators” who were affiliated with criminal organizations.

Typically, these customers were not themselves involved in the criminal activity that generate these funds. Some were wealthy Chinese gamblers who could not access their wealth in Canada because of Chinese currency export restrictions.

In a final report released Wednesday (June 15), former B.C. Supreme Court Justice Austin Cullen found the British Columbia Lottery Corporation (BCLC) and Gaming Policy and Enforcement Branch (GPEB), which were responsible for stopping the problem, were aware of the issue but “failed to intervene effectively.”

“In 2014 alone, British Columbia casinos accepted nearly $1.2bn 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.

Speaking to reporters after the release of his report, Cullen said sophisticated money launderers have used the province “as a clearing house and for laundering an astounding amount of dirty money.”

“Even though we cannot accurately put a dollar figure on the volume of money laundering that takes place, I concluded in my report that it is a vast amount,” he said. “Money laundering has been and continues to be poorly understood even by some of the public bodies that need to address it.”

Cullen was critical of the BCLC and several provincial ministers responsible for gambling for not doing enough to stop the money laundering, which he says “occurred … in the shadows with some happening in plain sight.”

He wrote that despite repeated warning from various levels of law enforcement, no meaningful action was taken to address money laundering at B.C. casinos until 2015.

“BCLC resisted these calls for action and continued to allow these transactions, almost without exception,” the report said.

Cullen wrote that compliance managers and corporate security “stood by and permitted B.C. casinos to accept vast sums of illicit cash.”

“BCLC’s approach reflected a completely unacceptable and unreasonable risk tolerance,” the report said.

In a statement, BCLC board chairman Greg Moore said the Crown-owned corporation welcomed the final report.

“As Commissioner Cullen noted in his report, the industry is in a better place where the issue of illicit cash is taken seriously and adequately addressed by BCLC, which he noted has taken ‘significant and appropriate efforts’ to address suspicious transactions and money-laundering activity in B.C. casinos,” Moore said.

As the report has just been released, BCLC will now be reviewing it and supporting the provincial government’s work to respond to the recommendations.

“BCLC has completed significant work with government in recent years to strengthen safeguards that protect B.C. casinos from financial crimes, and we are ever committed to building on that momentum to help stamp out crime from our communities,” said Marie-Noelle Savoie, BCLC chief compliance officer and vice president of legal, compliance and security.

“We are determined to continually improve our programs and work in lockstep with our partners in the anti-money laundering regime to obstruct the sophisticated and ever-evolving tactics of criminals who attempt to target our communities,” she said.

Cullen’s report contains 101 recommendations to combat money laundering in the province, from expanding the mandate of the civil forfeiture office to establishing an independent anti-money laundering (AML) tsar to provide strategic oversight to the provincial response to money laundering.

In addition to the new AML tsar, Cullen recommended the creation of a provincial money laundering intelligence and investigation division.

Specific to casinos, Cullen recommended lowering the threshold for requiring proof from casino patrons of their source of funds to C$3,000 and for the government to direct BCLC to “implement 100 percent account-based, known play in British Columbia’s casinos” within a set timeframe.

The report also said it was important that a newly formed independent gaming authority being established to replace the GPEB maintain the authority to issue directives to BCLC without requiring government approval.

Cullen was appointed to lead the inquiry into money laundering in 2019 by Premier John Horgan after reports of illicit funds being used in casinos and to purchase upscale homes and luxury cars.

The commission’s final report comes after testimony from around 200 witnesses, including B.C. attorney general David Eby, former B.C. Premier Christy Clark, several former and current Cabinet ministers, police officers, gaming officials and financial crime experts and academics.

At a news conference Wednesday, Eby said he supported the recommendations and thanked Cullen and his staff for their work.

Eby said the volume of money laundering in B.C. was “enormous and profoundly concerning.”

“I believe these recommendations will help us transform the meaning of the ‘Vancouver model’ from a description of unchecked dirty money moving through our casinos to a model of governments responding forcefully to the threat of money laundering.”

He said the provincial government continues to work on AML measures based on previous reports, and much of this work overlaps with Cullen’s recommendations.

During his hour-long news conference, Cullen also stressed that he found no evidence of corruption among former and current elected officials who oversaw the various ministries responsible for monitoring money laundering in casinos.

“Despite the failure of these elected officials to take steps sufficient to resolve the extensive money laundering occurring in the industry for which they were responsible, there is no basis to conclude that any engaged in any form of corruption related to the gaming industry’s or to the commissioner’s mandate generally,” Cullen wrote.

“While some could have done more, there is no evidence that any of the failures was motivated by corruption,” Cullen added.

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