British Columbia’s Attorney-General says the province has failed to prevent widespread money laundering through its casinos, and hopes an independent report to be released on Wednesday will severely hinder the ability of organized crime groups to illegally clean their cash.
However, Attorney-General David Eby also argued that recent reforms are already working, citing last month’s arrest of an international casino money-laundering suspect.
On Wednesday morning, Mr. Eby will reveal the final report and 48 recommendations of Peter German, a former deputy commissioner of both the RCMP and Correctional Service Canada. Mr. German began his review last September after Mr. Eby retained him to investigate “some serious allegations about widespread, trans-national money laundering in gaming facilities in the Lower Mainland.”
Mr. German has crafted a detailed chronology of how the province became a hotbed of illegal money laundering, with much of the blame landing on the former provincial Liberal government, Mr. Eby said in an interview on Monday.
“The report will really help British Columbians understand why this is a concern and the scope and scale of the issue that we face,” he said.
“And, more importantly, for government and the province and hopefully other jurisdictions, it will illustrate how a regulatory system can fail and how we can avoid that in the future.”
Mr. Eby, who first received the report in April, said changes made after Mr. German’s interim recommendations in December have already shown success, such as the arrest of international money laundering suspect Dan Bai Shun Jin at Richmond’s River Rock Casino last month.
Mr. Jin faces an arrest warrant in the United States for alleged fraud of over $1.4 million from the state of Nevada. The RCMP also say he is suspected of laundering $855 million through Australian casinos. On June 13, almost three weeks after his arrest, B.C.’s civil forfeiture office filed a civil suit in provincial Supreme Court seeking $75,000 in chips from River Rock as well as $805 in American cash seized from Mr. Jin by police.
“That arrest reflects a shift in the culture and the approach, so I’m very pleased to see law enforcement taking these very necessary steps,” Mr. Eby said.
Mr. Eby said more federal money is needed to help improve the investigative capacity of police targeting money laundering.
The province has also introduced new rules forcing big-money gamblers to disclose the source of their funds, which have led to a dramatic reduction in suspicious cash transactions at casinos, he said.
At their peak in July, 2015, casinos around the province reported $20-million in suspicious transactions, Mr. Eby said.
“The most recent month that I’ve seen [March] there were $200,000 in suspicious cash transactions through B.C. casinos – so a reduction of a 100 times,” he said.
The province has budgeted a loss of $30-million in lost revenue this fiscal year as a result of this overhaul in casino regulation, he said.
“We need to be prepared to take a loss if we’re not going to allow criminals to gamble,” he acknowledged.
Still, he added, Mr. German found money launderers are also using other avenues to clean their cash, such as real estate, luxury cars and horse racing.
The province began the review after a report was released saying the River Rock had accepted $13.5-million in $20 bills within one month, which police said could be proceeds of crime.
The Great Canadian Gaming Corp., which runs River Rock, has said compliance procedures are strictly followed and the company is committed to preventing illegal activities at all its locations.
Christine Duhaime, a Vancouver lawyer who specializes in anti-money laundering and counter-terrorist financing, said she expects the report will adopt some best practices from Ontario, where Mr. Eby said Mr. German studied during his research.
Namely, the province could force uniformed police officers to be stationed within each of the largest casinos. That doesn’t necessarily lead to more investigations of playing customers, but rather, the adoption of a stricter approach to regulations among the casino and its employees, she said.
“I don’t think the customers need it, I think the industry needs it,” she said. “It hints at the fact that this is a more compliant culture and things won’t be tolerated – and I think that’s a good thing.”
With a report from The Canadian Press.