B.C. UNVEILS DIRTY MONEY BATTLE PLAN
New report lists steps to take in crackdown on gamblers
The B.C. government has pledged sweeping oversight reforms of the casino industry as recommended by a damning independent report on money laundering released Wednesday.
The report by Peter German, a former deputy commissioner of the RCMP, found there was a collective system failure that grew over time and outstripped the ability of existing legislation, processes and structures to manage it.
For many years, certain Lower Mainland casinos unwittingly served as “laundromats” for the proceeds of organized crime, German’s 247-page report said.
German concluded that money laundered through casinos was linked, in some cases, to domestic and international organized crime groups involved in illicit drug and precursor chemical purchases, drug importing, distribution and trafficking. He also found that some of those that arranged money laundering were buying real estate.
In releasing the report Wednesday, Eby said money laundering in casinos was linked to the opioid crisis that has claimed thousands of lives and to escalating housing prices that have made life unaffordable for British Columbians. “There is little that is obvious about the nefarious tactics about money laundering. However, I believe the only way to combat money laundering is to tackle it full on, bring the public along in full view so they understand the work and consequences of failing to take action, as well as the costs of taking action,” said Eby.
The review by German, who is also a lawyer and author of the definitive textbook Proceeds of Crime and Money Laundering, wasn’t intended to be a fault-finding exercise.
Asked whether senior executives such as the B.C. Lottery Corp. CEO should be held accountable for not doing more to prevent money laundering, Eby said he puts responsibility on the former B.C. Liberal government.
German recommended creating an independent regulator of the casino industry similar to the Alcohol and Gaming Commission of Ontario, and a specialized police force dedicated to gambling that has a 24/7 presence at casinos.
The current regulator, the gaming policy and enforcement branch, is within the Ministry of Finance, and is restricted in what it can do about money laundering. It has no power over the B.C. Lottery Corp., which has responsibility for casinos. BCLC, to some extent, acts as a regulator, and that’s not ideal, said German.
The recommendations would also put more responsibility on casino operators, recommending they report directly on suspicious transactions to the federal Financial and Transaction Reports Analysis Centre ( better known as Fintrac) rather than to the B.C. Lottery Corp.
German also recommends putting more authority and responsibility on casinos to know their gamblers.
The B.C. government said Wednesday it has already adopted nine of German’s 48 recommendations. Those include requiring casino patrons to show the source of cash and cash equivalents of $10,000 or more and putting regulators in large casinos in the Lower Mainland around the clock.
The B.C. Gaming Industry Association also welcomed the German recommendations on Wednesday and said it will commit to an “efficient implementation” of them.
“We have always taken seriously our responsibility to report any and all suspicious activities at our properties to BCLC and regulators. We will continue to play a key role in fighting any illegal activity,” said executive director Peter Goudron.
Goudron called the recommendations “sensible measures” to prevent money laundering in casinos.
German issued two interim recommendations in December. One requires casinos to make people who deposit more than $10,000 in cash or bearer bonds to provide identification and the source of the funds, and reject the money after two consecutive transactions unless it can be proven that it doesn’t come from suspicious or illegal activity.
The second recommendation called for more government inspectors to be available 24/7 at busy Lower Mainland casinos to help scrutinize suspicious transactions.
The B.C. NDP government says it identified another 15 recommendations that can be implemented in the short to medium term, including changes to reporting processes.
An internal committee of deputy ministers will be working with German on implementation and policy-related work. That group will study the more complex recommendations as they affect an array of ministries and jurisdictions.
The government will move as quickly as possible to implement them, said Eby.
The B.C. government launched the German review in September 2017 over concerns about Chinese high-roller VIPs purchasing gambling chips with massive wads of cash that could be “proceeds of crime.”
The concerns were outlined in a confidential report commissioned by the B.C. Lottery Corp. from auditor MNP LLP that found that $13.5 million in $20 bills had been accepted in the River Rock Casino in July 2015.
German said he estimates that in excess of $100 million was laundered in casinos, but acknowledged that figure could be greater.
He stressed the recommendations are forward looking, meant to ensure casinos are not again used to launder money.
“In my opinion, partial implementation of the recommendations would be a mistake. There cannot be a weak link or history will repeat itself,” said German.
During the peak, in July 2015, $20 million in suspicious transactions flowed through casinos. In February, suspicious transactions were pegged at just $200,000.
However, German told journalists, the challenge now that organized crime is giving casinos a wide berth is to determine where drug money is currently being laundered.
That’s why it’s important to lobby the federal government on rule changes that will require reporting of suspicious transactions on luxury goods such as cars and boats, and also why the province should license money service companies.
On Wednesday, Eby reiterated his oft-repeated position that the B.C. Liberal government ignored the money laundering problem in casinos for far too long.
The NDP came to power last summer after 16 years of B.C. Liberal rule. However, Richmond Queens borough Liberal MLA Jas Johal said Eby was sensationalizing the report’s findings. The Liberals took steps that stemmed suspicious transactions as much as 60 per cent from their peak in 2015, said Johal.
Any government would say they could have done more, but now it’s time to focus on implementing the recommendations, said Johal.
In response to questions on why casinos didn’t say no to bags of $20 bills wrapped in rubber bands, Goudron said they followed the rules by reporting suspicious transactions.