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BC Casino Money Laundering a ‘Collective Failure’

‘We need a strong provincial regulator, which is not currently the situation.’

By Andrew MacLeod 28 Jun 2018 | TheTyee.ca

Andrew MacLeod is The Tyee's Legislative Bureau Chief in Victoria. Find him on Twitter or reach him here.

Money laundering in British Columbia casinos is tied to both the opioid and housing crises in the province, Attorney General David Eby said Wednesday.

“It’s a serious crime with serious consequences to the people of British Columbia,” Eby said while releasing a new report by expert on money laundering Peter German and promising to implement the report’s 48 recommendations to crack down on the ways criminal organizations move money from illegal activities into the mainstream economy.

While some of the money laundered in casinos comes from the sale of drugs that have killed thousands in the province, Eby said, “It’s linked to the real estate market and housing prices that have made life unaffordable for British Columbians.”

German, a lawyer who was a member of the RCMP for 31 years, said criminal groups laundered at least $100 million through casinos in the province. Officials have known about the problem, which intensified after 2010 and peaked in 2015, since at least 2011, he said.

His 250-page report conducted for the Attorney General of British Columbia takes a close look at the problem and what can be done about it.

“For many years, certain Lower Mainland casinos unwittingly served as laundromats for the proceeds of organized crime,” the report said. “This represented a collective system failure, which brought the gaming industry into disrepute in the eyes of many British Columbians.”

He traced the role of the Gaming Policy Enforcement Branch in the ministry of finance, the B.C. Lottery Corporation and the companies that run the province’s casinos, as well as the ministers responsible.

“The combined effects of years of denial, alternate hypotheses and acrimony between entities made for a perfect storm which reached its apex in July 2015,” he wrote.

Both German and Eby credited reporters for bringing stories about money laundering to public attention.

Along with the report, the provincial government released videos of people bringing into casinos bags of cash containing stacks of $20 bills wrapped in elastic bands, which German said was a hallmark of money from illegal activity.

The report provides a troubling picture of the last 15 years, Eby said. “The first report was in 2011. Dr. German identifies that nobody said ‘no’. Nobody said, ‘Do not accept this money unless you know where it came from.’”

851px version of German.jpg
Money laundering expert and former RCMP officer Peter German says criminal groups have laundered at least $100 million through B.C.’s casinos: ‘We know that the same people who arranged for money to be laundered in casinos were buying real estate and were advising others on how to conduct real estate transactions.’ Photo by Government of BC.

German includes various examples of officials learning about the problem but failing to act, Eby said. “He outlines that little is done to detect, pursue or prosecute those engaged in money laundering, despite abundant evidence of a serious problem.”

The 48 recommendations in the report include creating a new Crown corporation to independently regulate the province’s casinos and establishing a dedicated policing unit to provide a 24/7 presence in Lower Mainland casinos.

“We need a strong provincial regulator, which is not currently the situation,” German said.

German also recommended researching how organized crime has infiltrated the provincial real estate industry and closely watching other sectors likely to attract money from illegal activity, including luxury vehicle sellers and the horse racing industry.

“We know that the same people who arranged for money to be laundered in casinos were buying real estate and were advising others on how to conduct real estate transactions,” he said.

With casinos under close scrutiny the situation has improved since 2015, but criminal organizations are very adaptable and it’s unknown where they are laundering money today, German said. “What we don’t know is where it went. What vehicle is currently being used to launder drug cash in Greater Vancouver?”

German observed that the gambling industry provides $1 billion to provincial government revenues each year, employs thousands of people and provides entertainment for hundreds of thousands. It has a role supporting public services and community groups, he said.

Some gamblers — often either people who had received loans from criminal organizations or “smurfs” who may not have realized what they were being asked to do — used the casinos to turn small denomination bills into more useable denominations or other financial instruments, he said. “Why did this occur? Because it could.”

River Rock Casino in Richmond was at the epicentre, but money laundering has been an issue throughout the province, he said.

And while some of the crime organizations involved are rooted in Asia, there’s more to the story, German said. “We must always remain mindful of the fact that organized crime survives because there is a market for its product,” the report said. “This is not an Asian problem. It is about those who purchase illegal drugs, counterfeit products, and stolen property, as well as those who operate in the underground economy and subvert tax laws. It is our problem, not China’s problem.”

Rich Coleman, previously responsible as a cabinet minister for gambling and law enforcement in the province, was interviewed for German’s report. But instead of him, leader Andrew Wilkinson, or another former cabinet minister, the BC Liberals made Richmond-Queensborough MLA Jas Johal who was first elected in 2017 available to answer questions.

“I’m available,” Johal said when asked how he got the task. “I was here today downtown and as a member of this opposition I said I would take those questions. It’s that simple.”

He said German’s report makes clear the former government took steps to address the problem and that they worked. “Our Attorney General has sensationalized this issue, so now we’re asking ‘Where’s the beef?’” he said. “Where are the arrests? Where is the prosecution?”

Instead of playing politics, Eby should focus on implementing the recommendations, Johal said.

The B.C. Green Party released a statement quoting leader Andrew Weaver saying the report shows the need for a “wholesale” change in policy.

“Outdated policies have left our province vulnerable to exploitation as transnational criminal entities have become increasingly more sophisticated,” he said. “What is most important now is that government provide clear timelines for implementing the recommendations and is transparent with regards to progress.”  [Tyee]

Read more: BC Politics

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