British Columbia's Attorney-General is bringing in new rules designed to crack the so-called Vancouver model of money laundering in its casinos that require high rollers to provide more information about where they got the money. It will also step up enforcement, with government regulators on site as part of its effort to end the free flow of illicit cash from international criminals.
David Eby said the changes were recommended after he retained an outside expert to dig into "some serious allegations about widespread, trans-national money laundering in gaming facilities in the Lower Mainland."
He has said the money-laundering method was so successful that it was named after the city and on Tuesday announced new rules that will require big-money gamblers to declare the source of any funds over $10,000.
"There is an issue in our Lower Mainland casinos related to suspicious cash transactions that needs to be remedied," Mr. Eby told reporters.
Casinos will have to complete a "source of funds declaration" for cash deposits or bearer bonds of $10,000 or more.
The declaration will include the customer's identification and state the source of the funds, including the financial institution and account.
After two consecutive transactions, officials with the British Columbia Lottery Corporation will review the circumstances of the transaction and the gambler will receive greater scrutiny to determine if the cash is suspicious or illegal. No further transactions will be accepted until the review is complete. The details of the verification process have yet to be worked out.
The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) already requires some reporting in this area under federal legislation, but the new, mandatory gathering of information is over and above that.
As well, for the first time, regulators with the provincial Gaming Policy Enforcement Branch would be on-site around the clock to assist casino operators and ensure compliance with the province's Gaming Control Act.
Peter German, a former deputy commissioner of both the RCMP and Correctional Service Canada, was appointed by the NDP government in September to review anti-money-laundering policies and practices and look into criminal and suspicious activity in B.C. casinos. The new rules are based on his preliminary recommendations. His final report is due next March.
"Mr. German has confirmed for me there is cash coming from unknown, illegitimate sources in Lower Mainland casinos – these are sizable cash transactions," Mr. Eby said.
Concerns were sparked after the province's Gaming Policy and Enforcement Branch reported that $13.5-million in $20 bills was accepted at the River Rock Casino in Richmond, B.C., in July, 2015. The department discovered that money from unknown persons that could not be traced was dropped off for patrons at the casino or just outside casino property at odd times, generally late at night.
In response, a new investigative unit was set up last year, and in June, the Combined Forces Special Enforcement Unit of B.C. (CFSEU-BC) announced a string of arrests believed to be connected to money laundering and illegal gaming houses.
Mr. Eby has said the Vancouver model has been called the tool of a complex network of criminal alliances.
B.C.'s prosecution service has not filed money-laundering charges since 2015.
Peter Goudron, executive director of the BC Gaming Industry Association, said in a written statement that casino operators welcome the changes to improve safety and security for their customers.
"Mr. German's interim recommendations provide enhancements to how B.C.'s casinos handle large cash transactions that we believe represent the continued evolution of the framework we work within in the province."
But Christine Duhaime, a lawyer who specializes in financial crime, including money-laundering, said it would be more effective if the province stationed police officers, rather than regulators, on casino floors. Ms. Duhaime said the increased accountability and oversight measures are positive, but she said far more rigorous training of casino employees is key because the current federal reporting requirements are not well understood.
Ms. Duhaime said the increased accountability and oversight measures are positive, but she said far more rigorous training of casino employees is key because the current federal reporting requirements are not well understood.
Mr. Eby has also empowered the body that oversees the province's new gaming rules to impose penalties directly and even strip operating licences from casinos for the first time.
Ontario Attorney-General Yasir Naqvi said the types of changes being introduced in British Columbia are not required in his province.
However, he said the changes in B.C. will be reviewed "to see if there is any opportunity for us to move forward as well. I think it's fair to say that we have not seen the kind of issues that British Columbia has faced here in Ontario, and it's because of the strong regulatory model in Ontario."
With a report from Justin Giovannetti in Toronto