BC Commission Says Politicians Didn’t Do Enough to Fight Money Laundering

Politicians could have done more to combat money laundering in British Columbia, says a much anticipated report from a wide-ranging inquiry into the issue released on June 15. It also recommends that the province set up its own money laundering intelligence and investigation unit rather than relying mostly on the federal agencies dedicated to the issue.

“Money laundering in the province’s casinos persisted over the tenures of multiple ministers responsible for gaming,” says the report compiled by former B.C. Supreme Court Justice Austin Cullen. “Each of these ministers was privy, on some level, to information showing that the gaming industry was at elevated risk of money laundering.”

In his report, Cullen names former B.C. government senior cabinet members, and says they all received some indication the gaming industry was at elevated risk of being taken advantage of for money laundering.

Cullen says officials did take some limited action, such as conducting a review of the industry’s anti-money laundering regime and implementing its recommendations, but the actions didn’t make a significant impact in resolving the issue.

“None of these actions, however, was sufficient to resolve the extensive money laundering present in the industry through much of the 2010s.”

Cullen also says former premier Christy Clark learned in 2015 that casinos managed by a Crown corporation and regulated by government were reporting a large amount of suspicious cash transactions.

“Despite receiving this information, Ms. Clark failed to determine whether these funds were being accepted by the casinos (and in turn contributing to the revenue of the Province) and failed to ensure such funds were not accepted.”

Cullen says even though those politicians could have done more against money laundering in the gaming industry, he didn’t find evidence of corruption.

The Cullen Commission of Inquiry into Money Laundering was established in May 2019 by Premier John Horgan.

Almost 200 witnesses testified during the over 138 days of the inquiry. The report was due earlier but delayed due to various factors, including a large number of commission staff catching COVID-19.

The inquiry found that between 2008 and 2018, hundreds of millions of dollars in proceeds of crime were laundered in Lower Mainland casinos.

What has been dubbed the “Vancouver model” involved individuals with large fortunes in China obtaining illicit gambling cash from criminal affiliates. They would then repay the cash advance through e-transfer, often in another jurisdiction, says the report.

Federal Agencies

The report lays blame on federal agencies for not providing the tools or the enforcement to tackle money laundering.

It says that Canada’s financial intelligence unit FINTRAC does not provide an adequate proportion of intelligence for the quantity of suspicious transactions reports it receives from regulated entities.

“Law enforcement bodies in British Columbia cannot rely on FINTRAC to produce timely, useful intelligence about money laundering activity that they can put into action,” says the report.

Cullen also identifies the disbanding of the RMCP’s Integrated Proceeds of Crime (IPOC) unit in 2012 as a “pivotal” moment “which allowed for the unchecked growth of money laundering in the gaming industry and other sectors of the economy for the better part of a decade.”

Government budget cuts led to the unit formed in 1990 to be disbanded. Afterwards the RCMP had to juggle priorities and money laundering fell down the list, says the report.

Solutions

Though the report notes that the RCMP has taken steps to increase resources and improve enforcement in the province, Cullen says he has “serious concerns” the commitment could be “short-lived.”

As a solution to tame the problem, he recommends the creation of a dedicated provincial money laundering intelligence and investigative unit.

“My goal in recommending this unit is to build the permanent infrastructure necessary to mount a sustained and effective response to money laundering,” Cullen says.

Another recommendation involves the creation of an independent anti-money laundering commissioner to provide strategic oversight on the issue.

Cullen says it’s the only way to avoid the issue not being given proper attention as it doesn’t fit easily under one ministry.

The mandate of the commissioner would include conducting research, advising government, informing the public, and coordinating efforts across sectors to combat money laundering.

Cullen also addresses the concern that proceeds of crime and money laundering have inflated the housing market in the province.

“While the impact of money laundering and anti–money laundering measures on real estate prices is something that would benefit from further study, I am unable to conclude that money laundering is a significant cause of housing affordability in the residential real estate market,” he said.