Casino Money Laundering Bc

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The province has been rumored to have international money laundering issues for roughly ten years now, with casinos situated there reporting more than $20 million in suspicious transactions in July of 2015 alone. The River Rock Casino in particular had seen fit to accept $13.5 million in $20 bills in one month, all of which police believe to. Casino Money Laundering Flourished Under Former BC Minister. Sat, Dec 5, 2020. SHARE ON: Twitter Facebook LinkedIn. The Cullen Commission in British Columbia, Canada.

Between 2012 and 2015, a reported $100 million and as much as $2 billion may have been laundered through British Columbia casinos. In the words of one report, law enforcement “went looking for a minnow and found a whale.”

Early reports suggested that Chinese high rollers—“whales” in industry parlance—may have washed some $1.7 billion in currency through patron gaming accounts (PGAs), with one VIP said to have personally pushed through $200 million. Alarming surveillance images showed alleged couriers lugging sacks of $20 bills, which one report called the preferred currency of the drug trade. Lurid headlines called out a “rat’s nest of rot” and suggested that the dirty money originated in the deadly opioid epidemic.

But gaming regulators and others in the industry say the problem of money laundering, at least as it involved casinos, was resolved years ago.

“These things are not going on today,” said Paul Burns, president and CEO of the Canadian Gaming Association, in an interview with GGB News.

Burns said casinos in British Columbia and the British Columbia Lottery Corp. that oversees them reported suspicious transactions as required, passing the ball to law enforcement and fulfilling their legal responsibility.

The casinos “filed all necessary reports,” said Burns. “They were never sanctioned or fined by FinTRAC (the Financial Transactions and Reports Analysis Centre of Canada) during the period in question or subsequently.”

According to Burns, FinTRAC “performs regular audits and never found deficiencies in any of the casinos’ or BCLC’s reporting.”

In May, Premier John Horgan established the Commission of Inquiry into Money Laundering in British Columbia, led by BC Supreme Court Associate Chief Justice Austin Cullen. The Cullen Commission is looking at the full scope of money laundering in the province—in real estate, banking, and the corporate and professional sectors, and will “examine regulatory authorities and barriers to effective law enforcement of money laundering activities.”

In effect, its charge is to send the rats running. The task force must submit its initial findings by May 2021.

Toronto-based gaming law attorney Michael Lipton of Dickinson Wright LLP rejected the suggestion that money laundering is rampant in BC casinos, and agrees that the onus was on law enforcement to act on suspicious transaction reports that were duly submitted by casinos.

“There’s no evidence I’ve seen that money laundering is more widespread in Canada than in any other jurisdiction,” he told GGB. “I don’t believe the systems, processes and controls in Canada are anything but top-notch—that’s not to say that they can’t be enhanced, but it is just a matter of being very dogged and ensuring that people comply with those laws and controls.

“In this instance,” he said, “I think there was a failure by some of the law enforcement authorities and regulatory individuals.” He added that the activity was “centered in a couple of casinos in the province, which is indicative it was not endemic to the whole province.”

Burns agreed. “One of the most important issues I think the public inquiry needs to explore is why were there no charges and little action taken by law enforcement,” he said. The subject “makes for salacious headlines but look at it deeper the casino industry was taking action supplying information to the Royal Canadian Mounted Police but saw a couple charges not much action on law enforcement.”

In essence, casinos may have served as the canary in the mine, alerting BC lawmakers to a problem that was widespread in other cash-driven businesses such as high-end jewelry, luxury car sales, and real estate. According to a May report by CBC News, an estimated $5.3 billion worth of real estate transactions in B.C. last year were the result of money laundering, driving a 5 percent rise in housing prices, particularly in Metro Vancouver.

Patrick McGowan of the Cullen Commission was noncommittal about the issue, saying only, “There is a widespread belief that money laundering is well-established and wide-ranging in British Columbia, and in part because of this perception the inquiry was called.”

According to an email sent to GGB from the Ministry of the Attorney General of British Columbia:

“Our government is committed to keeping dirty money out of B.C. and has taken immediate action to identify and disrupt money laundering activities in our province. Here are some highlights of how we are tackling this issue:

  • B.C. has put in place world-leading legislation with Canada’s first public registry of beneficial owners and interest holders, ending hidden land ownership in real estate.
  • We’re working on major amendments to the Securities Act to improve BC Securities Commission’s fine collection and enforcement abilities. We expect to see legislation coming soon.
  • The province is also now requiring a receipt to show the source of funds for any transaction in casinos of $10,000 or more. Unsourced cash over $10,000 is refused.
  • We have also made it easier to seize the proceeds of crime by updating our civil forfeiture legislation. This makes it more difficult for organized crime to hide their assets.
  • Another step we have taken is hiring additional casino investigators to ensure we have an enhanced presence at Lower Mainland casinos during peak hours.
  • We are holding a public inquiry into money laundering that will help uncover who knew what when, and who has profited from money laundering in our province. This decision is backed by overwhelming public support from British Columbians, municipalities and unions.”
Rich Coleman, pictured in 2014. BC Government photo

Former Minister of Public Safety and Solicitor General Rich Coleman heard directly from a lead casino investigator in December 2010 how VIP patrons were routinely gambling with larger and larger bundles of suspected illicit drug proceeds, the Commission of Inquiry into Money Laundering in B.C. was told Thursday.

Larry Vander Graaf, former Gaming Policy and Enforcement Branch (GPEB) executive director of investigations, told Commissioner Austin Cullen how following the 2010 Winter Olympics in Vancouver, large cash buy-ins were increasing exponentially.

“Money laundering was on the move,” in B.C. gaming facilities, said Vander Graaf.

As such, Coleman met briefly with Vander Graaf at GPEB headquarters in Burnaby, alongside Deputy Minister Lori Wanamaker.

“Mr. Coleman opened the conversation,” said Vander Graaf. “He said, ‘What about this money laundering?’ And I said they're bringing it in in $10,000 bundles. He says, ‘I know lots of people with $10,000 in their pocket.’ I said, ‘If it's in $20 bills with elastic bands on both ends, you better check your friend zone,’” added Vander Graaf to commission counsel Alison Latimer.

“I explained to [Coleman] about the horrendous problem we were having in the casinos with the $20 bills, that $20 bills are a problem to drug traffickers. And it's a [$6 billion to $7 billion] industry,” said Vander Graaf.

“Money Laundering was resurfacing as a problem in the casinos,” he added. “It was an integrity issue to gaming. I felt that we had to do something about it. I felt that we should,” said Vander Graaf, who noted Coleman was receptive to his assertions.

“The only thing that Miss Wanamaker said was ‘Rich, we have to do something about this.’ That was the extent of that conversation,” said Vander Graaf.

Vander Graaf said he did not follow up with Coleman’s office following the meeting; however, he said his superiors, who would be in direct contact with the ministry, were well aware of the concerns from GPEB investigators.

However, by November 2011, one casino patron brought in $1.38 million worth of $20 bills across 13 transactions, the commission heard.

Furthermore, RCMP E-Division was aware of the issue at the time, as Latimer raised a 2010 letter from Vander Graaf’s superior Derek Dickson, GPEB director of investigations, to the BC RCMP Integrated Proceeds of Crime (IPOC) unit that notes meetings between the two agencies — which both report to Coleman.

“Mr. Dickson sets out that he and Mr. Schalk [GPEB senior director of investigations] met with the officer-in-charge of the RCMP integrated proceeds of crime unit. And they are well aware of this issue and seriously concerned that the casinos are being used as a method to launder large sums of money for organized crime groups. And they say they are of the opinion that this is without doubt, large-scale money laundering.”

At the time, Vander Graaf had suggested to superiors limiting buy-ins with $20 bills to $10,000.

“That was not a long-term permanent fix. That was a fix that could have been instituted immediately.

“It may have created some smurfing, you know, under a limit, but it would have eliminated the problem fairly quickly,” said Vander Graaf.

The suggestion was never accepted and Vander Graaf said he later suggested a $20,000 limit that was also rejected.

“You're raising the threshold just to try to make the suggestion more palatable?” asked Latimer.

“Exactly,” said Vander Graaf.

“We were constantly going to [IPOC] and dealing with them and trying to get them to instigate action in relation to the money laundering issue,” he said.

But whereas Vander Graaf had begun communicating with IPOC, the unit was subsequently disbanded in 2013, despite being “the logical first response unit for allegations of money laundering,” according to the 2018 report Dirty Money by former RCMP assistant commissioner Peter German. Prior to IPOC being disbanded, the Integrated Illegal Gaming Enforcement Team (IIGET) had received the same fate in 2009 on Coleman’s watch.

The commission has heard testimony from a number of current and former government employees from the three major entities tasked to regulate gaming and enforce laws: GPEB, the RCMP and the B.C. Lottery Corporation.

GPEB is the province’s equivalent of the Nevada Gaming Commission, in that it is mandated to set gambling rules and enforce them. BCLC is the government body that licenses casinos and other gaming venues. BCLC also has a mandate to manage and promote gaming, and issues net gaming revenue to the provincial government.

Casino Money Laundering Cases

Commission counsel has focused questioning on how government balanced gambling regulations and revenue.

Vander Graaf, not unlike other casino investigators who have testified, asserted the B.C. government was in a conflict of interest. He also spoke to how deregistering casinos was never in the regulatory toolbox, at least up until the time he was fired in December 2014 for what he believes to be his honest criticisms toward his own agency.

Laundering Money Definition

Vander Graaf explained that neither GPEB nor BCLC investigators, whose mandates appeared to overlap, had perceived to have power to stop large cash buy-ins on casino floors. Rather, the job was to observe and report.

Money Laundering Through Casinos

“We knew, and I always knew, that we could never investigate money laundering and proceeds of crime at GPEB and that neither could BCLC. And we all knew that they're too complicated. You need the full-blown policing agency to take a run at them,” he said.

Around 2013, police efforts to address casino-related crime appeared to turn toward the RCMP Combined Forces Special Enforcement Unit, which would later open an investigation called E-Pirate, focusing on loan sharks working with local underground banks connected to Asia that dispersed local drug money to wealthy Chinese nationals who would skirt capital controls in the People’s Republic of China.

Vander Graaf stated how for several years the BCLC took the position that because a gambler lost money it meant that money laundering was not occurring. Documents presented by Latimer showed Vander Graaf raising concerns about such misguided beliefs, as he noted the loaned (and lost) drug money would have to be repaid in some form.

Casino money laundering cases

“The loan sharks would have loved getting something other than the $20 bills back,” he explained.

And so, regardless of any police presence, Vander Graaf said GPEB and BCLC failed to properly regulate casinos that were also “blatantly” violating federal cash transaction laws, including not reporting any cash buy-in under $50,000 as suspicious for upwards of four years.

Bc Casino Money Laundering Report

Despite his efforts to tip off police, “that didn't absolve us of the role that we had to play and we didn't do it,” said Vander Graaf.