Bc Casino Money Laundering Report
The British Columbia government has been accused of hiding a money laundering report that implicates a BC casino. On Friday, the British Columbia General, David Eby released a report written in 2016 that contains allegations of money laundering at the River Rock Casino Resort in Richmond, Vancouver.
A 'decade of dirty money'. That’s what an explosive new report is calling British Columbia's years under BC Liberal rule.
- June 27, 2018: Peter German releases his report, confirming the prevalence of money laundering in BC casinos. His report suggests that money laundering impacts both the fast-growing fentanyl crisis and affordability in BC’s real estate market. German highlights the BC Liberal decision to disband IIGET as making matters worse.
- A 2016 report to British Columbia’s Gaming Policy and Enforcement Branch said gamblers from China used underground banks to bring large volumes of potentially dirty money to play at River Rock Casino Resort in Richmond. The anti-money laundering report was commissioned by the previous BC Liberal government and dated July 26, 2016, but not.
According to Peter German's report, the BC Liberals allowed millions upon millions in dirty money from illegal activity to be laundered through BC casinos on their watch. This money powered the fentanyl epidemic and contributed to the housing affordability crisis — and it happened largely because regulators refused to act and chose to look the other way.
Not once. Not twice. But time and time and time again.
So what happened when — and who knew what? We’ve done our best to break it down for you, going all the way back to 2002.
2002: The BC Liberal government passes a new Gaming Control Act, creating a new regulator called the Gaming Policy and Enforcement Branch.
2004: The BC Liberal government and the RCMP create the Integrated Illegal Gaming Enforcement team (also known as IIGET) with a mandate to investigate crimes surrounding “common gaming” houses, animal fighting, and bookmaking. It falls under the purview of Solicitor General Rich Coleman.
December 2007: The Integrated Illegal Gaming Enforcement Team prepares a report on its future; warning that high-level illegal gambling targets would conduct their operations with 'impunity' if the unit were disbanded.
November 2008: Reporter Sean Holman reveals that the BC Liberal party accepted more than $250,000 in donations from private bingo hall and community gaming centre interests between 2002 and 2007. This is despite an internal BC Liberal party bylaw banning donations from gaming.
Note: By the end of 2017 when corporate donations are banned, the BC Liberals accepted more than $500,000 in political donations from gaming companies.
January 2009: IIGET prepares a “Threat Assessment” report warning that BC casinos are extremely vulnerable to money laundering. They ask for an expanded role including BC casinos.
April 2009: Then-Housing Minister Rich Coleman eliminates funding for IIGET, disbanding the unit. He suggests the unit was not cost-effective and had failed to produce a business plan. Journalist Sean Holman later publishes a leaked copy of IIGET’s business plan.
October 2009: IIGET’s former commander Fred Pinnock speaks to journalists, stating that his team should have been expanded, not shut down. He comments “I'm not sure how motivated the provincial government was to have high-profile enforcement of illegal gaming in the province.'
January 2011: Inspector Barry Baxter from the RCMP’s Integrated Proceeds of Crime Section speaks to media about suspicions of dirty money in BC casinos and “sophisticated money-laundering activities by organized crime.”
He highlights a period of three months in 2010 where employees at 2 lower mainland casinos reported a combined total of $8 million in 90 large cash transactions, an average of one a day.
Rich Coleman criticizes Insp. Baxter, saying “Yeah, I know what he said, and I don’t agree with him, neither do all the superiors of his in the RCMP.”
August 2011: Following a request by Solicitor General Rich Coleman, the BC Office of Civil Forfeiture prepares a report on money laundering at BC casinos. The report recommends that BC Gaming update its approach to tackling money laundering.
November 2012: The head of the Gaming Policy and Enforcement Branch identifies 543 suspicious transactions, totalling $39.5M between 2010 and 2011. According to the German report, most occurred at Richmond’s River Rock Casino.
March 2013: Over email, the investigator leading gaming enforcement warns that money laundering is taking place at BC casinos. He suggests that illegal sources are supplying loan sharks with dirty money, who are then supplying gamblers.
Less than a year later, Finance Minister Mike de Jong fires the investigator. No other action is taken.
July 2015: The money-laundering crisis reaches historic levels with one casino accepting $13.5 million in twenty-dollar bills in a single month.
Later that month, the BC Lottery Corp sends the ‘Section 86’ report to the BC Gaming Enforcement Branch (an arm of the BC Ministry of Finance). It details the discovery of a massive underground banking network allowing organized crime to use illegal money transfer businesses in Richmond to lend cash to gamblers for chips at the River Rock Casino.
The 600 account holders in the underground banking network include known drug dealers in Mexico and Peru, and terrorist financiers in Iran.
July 2016: The BC Liberal government receives a report from accounting firm MNP LLP recommending changes to anti-money laundering practices.
They fail to implement the recommendations and withhold the report from the public.
May 2017: Rich Coleman accepts a $390 donation from Gateway Casinos to his personal re-election campaign. One year later in July 2018, he will tell CKNW’s Lynda Steele that he never accepted donations from gaming.
September 28, 2017: BC NDP Attorney General David Eby hires Peter German to investigate money laundering at BC casinos.
October 4, 2017: The ‘Section 86’ report is leaked to the Vancouver Sun. Mike de Jong refuses to comment.
October 19, 2017: Andrew Wilkinson cashes a cheque for $5,000 from Gateway Casinos for his leadership campaign. Other BC Liberal leadership contenders receive another $20,000.
June 27, 2018: Peter German releases his report, confirming the prevalence of money laundering in BC casinos. His report suggests that money laundering impacts both the fast-growing fentanyl crisis and affordability in BC’s real estate market.
German highlights the BC Liberal decision to disband IIGET as making matters worse.
Former BC Liberal cabinet ministers go into hiding. Instead, Andrew Wilkinson puts forward new MLA Jas Johal. He fails to accept any responsibility and blames the RCMP.
The RCMP issues a statement correcting the record, saying “At times, government is briefed on sensitive information concerning police investigations that cannot be released. However, it was the decision of government to disband [the] Integrated Illegal Gaming Enforcement Team (IIGET).”
June 28, 2018: Speaking to the CBC, BC Liberal leader Andrew Wilkinson refuses to accept responsibility, saying that asking politicians to do so is a “sad exercise.”
July 3, 2018: Former BC Liberal Attorney General Suzanne Anton (2013-2017) is asked by a CBC reporter whether her government’s response to money laundering took too long. She agrees, saying “That's correct. And it was slow.”
July 5, 2018: Calling into the Lynda Steele show on CKNW, Rich Coleman finally speaks to the issue. He calls the suggestion that his government did little to staunch money laundering ‘a load of garbage’. Like Johal and Wilkinson, he blames the RCMP for disbanding IIGET.
When asked if he’d act sooner knowing what he does now, replies 'I think it's difficult to say you would do anything differently.'
July 10, 2018:In an explosive interview with Global BC, former IIGET commander Fred Pinnock lays into the BC Liberals for their complicity in allowing money laundering to flourish in BC casinos.
“Fault lies at the feet of the BC Liberals while they were in government...They all knew what was going on in those casinos and racetracks. Primarily casinos, in particular, the big ones. It was wild west in those large casinos where organized criminal activity was running amok. It was no secret to government. At all.” - Fred Pinnock
Fall 2018:A sprawling, three-part investigation by Global News estimates that fentanyl drug traffickers laundered between 1 and 6 billion in metro Vancouver’s white-hot housing market, between 2012 and 2016.
“Fentanyl killed so many Canadians last year that it caused the average life expectancy in B.C. to drop for the first time in decades. But for crime kingpins, it has become a source of such astonishing wealth that it has disrupted the Vancouver-area real estate market.” - ‘Fentanyl: Making a Killing’
Meanwhile, Andrew Wilkinson and the BC Liberals refuse to waive cabinet confidentiality that would allow RCMP investigators access to records of high-level government discussions around what they knew about the money laundering at BC casinos, and when.
January 2019: A new freedom of information request from the CBC reveals that the estimated '$100 million' laundered through BC casinos is at least $700 million — and potentially as high as 1 billion in dirty money.
'The numbers would have exceeded $1 billion for sure in suspicious currency transactions. It was a staggering amount of money.' - Joe Schalk, former senior director of investigations with the Gaming Policy Enforcement Branch
Years later, the alarm keeps ringing — and the BC Liberals still won't say anything about it.
March 2019: In late March Global TV's investigative reporter Sam Cooper revealed a new twist in the money laundering saga — implicating the office of former BC Liberal Finance Minister Mike de Jong.
According to Cooper's research, officials from de Jong's office intervened to allow the BC Lottery Corporation to raise casino betting limits to $100,000 in early 2014 — against the recommendations of BC's gaming regulator.
'Since late 2010, the regulator — GPEB — had warned the Lottery Corp. (BCLC) to limit massive cash transactions involving Chinese VIPs at private baccarat tables, documents show. But instead, Lottery Corp. managers did the opposite. They repeatedly raised baccarat limits, from $5,000 per hand to $100,000. And they refused to implement the regulator’s suggested “remedy” of capping VIP buy-ins with $20 bills — the denomination associated most with drug trafficking — to under $10,000.' - Sam Cooper, Global TV
When questioned about his decision by Global TV, Mike de Jong said he didn't recall.
On May 15, 2019, the BC NDP government announced a public inquiry into money laundering led by BC Supreme Court Justice Austin Cullen. Here's what John Horgan had to say during the announcement:
'Criminal activity [from money laundering] has had a material impact on people: whether it be the rise of opioid addictions, the rise of opioid deaths as a result of overdoses, whether it was the extraordinary increase in housing costs, people were being affected by criminal activity in British Columbia.' - Premier John Horgan
In the last week of February 2020, the Cullen Inquiry opened public hearings into money laundering in BC. As the hearings opened, Andrew Wilkinson was still refusing to release cabinet-level documents detailing what he and the BC Liberals knew about money laundering, and when.
After 19 months of BC Liberal delay tactics, there's still so much we don't know — and what British Columbians deserve to know.
John Horgan and the BC NDP are committed to ending dirty money and holding people accountable. If you're with us, too, please add your name.
At 9:30 PDT this morning (June 27, 2018) BC Attorney General David Eby QC convened a press conference to discuss the release of the much anticipated report by Peter German QC. Minister Eby was joined by German, a classic quadruple threat. Quite boring really. Lawyer (BC and Ont), former RCMP member of 31 years, Correctional Service Regional Deputy Commissioner, money laundering expert and textbook writer, PhD, and Queen’s Counsel. He does not, so far as we know, hold any Olympic medals, important medical patents or Eurovision victories.
Those who tuned in to the live stream, as I did, were given a summary rundown of the astonishing links between BC’s broken regulation of casinos, the absurd Vancouver real estate market, and the devastating opioid crisis.
The “Vancouver Model” of money laundering revealed in the report is a trailer of BC’s shame, although this was not the first we have heard of it. The BC AG had appeared in Ottawa a few months back to sound the alarm before the House of Commons Standing Committee on Finance.
But few had seen the actual report until today.
It is somewhat edited, we are told, by German himself to assure necessary privacy considerations, but it is now shared on the BC Government’s news portal (posted at the same time as the conference): https://news.gov.bc.ca/files/German_Gaming_Final_Report.pdf
The report was not searchable, however this version is: https://www.scribd.com/document/382738528/German-Gaming-Final-Report-OCR
Highlights of the Report and Press Conference
Recommendations of the report
I’m using the term “casinos” instead of “service provider”, but basically these are the Great Canadian Gaming Corporation, Gateway Casinos & Entertainment, and Paragon Gaming.
The report recommends:
Gaming in BC
R1 – Gaming Control Act (B.C.) be amended to facilitate the recommendations in the report.
R2 – GCA clearly delineate the roles and responsibilities of BCLC and the regulator, the Gaming Policy & Enforcement Branch.
Crown Corporation – BCLC
R3 – BCLC in concert with casinos and regulator, annually review the source of funds declarations (to see if adjustments are needed).
R4 T- BCLC remind casinos not to accept cash if they are not satisfied with a source of funds declaration.
Federal Reporting
R5 – make casinos responsible for completing reports to FinTRAC, including STRs (suspicious transaction reports).
R6 – discuss with FinTRAC how to get casinos to directly report to them, or at least how to get BCLC to do this.
R7 – BCLC provide Corporate STRs if its files contain relevant information not contained within an STR from a casino.
R8 – casinos develop the necessary capacity to assess risk and perform due diligence on suspicious transactions.
R9 – casinos copy STRs to BCLC, the regulator and a new designated policing unit (DPU), and the RCMP.
R10 – the regulator/DPU have access to iTRAK in its offices.
Provincial Reporting
R11 – eliminate existing “suspicious currency transaction” and “unusual financial transaction” reporting.
R12 – develop a Transaction Analysis Team to review all suspicious transaction reports.
R13 – weekly meetings for the Transaction Analysis Team to review all suspicious transaction reports and develop strategies to deal with each.
Joint Integrated Gaming Investigation Team (JIGIT)
R14 – provide JIGIT with support for its investigative mandates.
R15 – consider transitioning JIGIT to a permanent, fenced funding model within the RCMP’s provincial budget.
BCLC Goes Undercover
R16 – stop BCLC from doing undercover operations, except in conjunction with the regulator and, or the police.
Software Debacle
R17 – stop BCLC from spending money on the SAS AML software system.
Very Important Patrons
R18 – BCLC ensure that VIP hosts do not handle cash or chips.
R19 – those working in VIP rooms get an independent avenue to report incidents of inappropriate conduct by patrons.
Cash Alternatives and Cash Limits
R20 – make cash alternatives the responsibility of the casinos, subject to their compliance with overarching standards.
R21 – don’t impose cash limits on buy-ins.
R22 – eliminate patron gaming fund accounts once responsibility for cash alternatives is transitioned to casinos.
Bc Casino Money Laundering Report Template
Chips Go Walking
R23 – BCLC implement a chip tracking system for casinos.
Standards-Based Industry
R24 – transition casino industry to a standards-based model.
R25 – develop standards-based model via cross-sector of industry and government, building on Ontario Standards.
R26 – make the CEO / Registrar of the regulator be the keeper of the standards.
A New Regulator
R27 – transition to an independent regulator in the form of a Service Delivery Crown Corporation, with a Board of Directors and a CEO / Registrar
R28 – have the regulator’s board be a governance board and not be responsible for appeals from decisions of the Registrar.
R29 – regulatory investigators to be Special Provincial Constables.
R30 – make anti-money laundering and mandatory training a responsibility of the Regulator (re front line gaming personnel, VIP hosts).
R31 – make Regulator the regulator of BCLC and make BCLC Board, officers and employees be subject to registration.
R32 – have Regulator provide a 24/7 presence in the major Lower Mainland casinos, until a designated policing unit is in place.
R33 – appeals from Registrar decisions to be sent to an administrative tribunal constituted for this purpose, or already in existence.
R34 – fund Regulator from gaming revenue still.
R35 – ensure Regulator has dedicated in-house counsel.
R36 – hire Regulator investigators to meet core competencies.
Gaming Police
R37 – create Designated Policing Unit to specialize in criminal and regulatory investigations in legal gaming industry, with an emphasis on Lower Mainland casinos.
R38 – make DPU an integral part of the Regulator.
R39 – DPU not responsible for investigating illegal gaming outside casinos.
R40 – provide DPU with an Intelligence Unit.
R41 – study OPP Casino Bureau and the Nevada GCB Enforcement Division to determine an appropriate role for the DPU.
R42 – make anti-money laundering a specific responsibility of the DPU.
R43 – fund DPU from gaming revenue.
R44 – ensure Provincial prosecution service has prosecution counsel familiar with gaming law.
Vulnerable Sectors
R45 – undertake research into allegations of organized crime penetration of the real estate industry.
R46 – consider a licencing and recording regime for money service businesses, similar to the Metal Dealers Recycling Act.
R47 – consider researching the vulnerability of the luxury car sector and the horse racing sector to organized crime.
R48 – continue to encourage the federal government to amend the POCMLTFA to broaden the entities subject to reporting, specifically luxury goods of interest to organized crime.
The interim recommendations
The report includes letters German earlier sent to the AG Eby in late November 2017 and in March 2018 with interim recommendations:
- Require Gaming Service Providers to declare source of funds for cash deposits over $10,000, and include ID, financial institution and account of source money.
- Put a Gaming Policy and Enforcement Branch investigator on shift 24/7 at high volume casinos.
- Appear before the House of Commons Standing Committee on Finance
Security footage: bags and stacks of dirty money
Some of this stuff looks like a poorly shot Guy Ritchie homage. Bags of dirty cash, in bricks of $10,000, wrapped with elastic bands, run into the casino by “smurfs” and dumped at the teller’s cage. As German himself makes clear, these are definitely not banking kosher.
Video released along with a new money laundering report shows bags of $20 bills being carried into a B.C. casino. More here: https://t.co/Vxq6D4M9hkpic.twitter.com/y45NAL9mto
— CTV Vancouver (@CTVVancouver) June 27, 2018
Jesus –> David Eby shows video of $500,000 in bundles of $20 bills held by elastic bands like drug dealers use, being taken out of plastic grocery bags being laundered by 2 guys at River Rock Casino. #moneylaundering
— Christine Duhaime (@cduhaime) June 27, 2018
In the Dirty Money report, at paras. 433-434, we get this less than sterling example of enforcement from an old Gaming Policy and Enforcement Branch report:
A GPEB investigator reported that in September 2010, a patron entered the Starlight casino with $3.1 million, of which $2.6 million was in $20 denominations, bundled in bricks of $10,000, wrapped with an elastic band at either end and carried in inexpensive plastic bags. The same patron made numerous other buy-ins, always with used currency. Sometimes he left the casino and returned minutes later with another bag of cash. He was known to associate with individuals who had previously been involved in loan sharking.
On November 24, 2010, GPEB wrote a letter to BCLC expressing concern over the September 2010 buy-in. Despite having filed an STR on the transaction, BCLC responded
that the patron’s buy-in patterns “does not meet the criteria that would indicate he is actively laundering money in British Columbia casinos.”
Praise for journalists
Peter German and Minister Eby both praised the work of journalists.
Bc Casino Money Laundering Reporting
German thanks reporters who 'doggedly pursued' stories of money laundering over the past decade, mentioning by name @scoopercooper and @KathyTGlobe
— Jon Woodward (@ctv_jon) June 27, 2018
It’s about policy and regulatory reform, but no public inquiry at this time
Seeing that the “Vancouver Model” is a term touting an especially profitable and bespoke money laundering strategy developed in BC, it comes as no surprise that BC’s approach to enforcement is hardly the beacon other jurisdictions turn to for enforcement wisdom.
German recounts an exchange with Nevada authorities at para 872 of the report:
I met with the Deputy Chief of the Enforcement Division, who heads the Las Vegas office, as well as with one of the investigators. I hypothesized that a box of cash arrived with rubber
bands at a cash cage. What would occur? The officers doubted that this would occur in Las Vegas, although it might have happened in the past. Today, their expectation is that the
casino will contact the on-duty enforcement agent, who would attend at the casino and deal with the suspicious money.
Attorney General Eby spoke to the need for a new casino regulator, one with dedicated police agents, and stricter reporting of suspicious cash transactions. But when it came to questions over commencing a full public inquiry launched by the government, Minister Eby noted that those are long processes and that this is a matter of urgency.
I noted this:
It's clear that the @Dave_Eby and Peter German strategy is to steer entirely away from scapegoating the individual people in charge of the various agencies/orgs and point towards rehabilitating the system at a policy and restructuring level.
— Nate Russell (@nrusse) June 27, 2018
Stages of money laundering
Money laundering is usually divided into three stages:
- “Wash cycle”, or placement stage, where dirty money is put into a financial vehicle.
- “Spin cycle”, or the layering stage, where money is moved through other vehicles by purchasing precious metals, fancy cars, through offshore trusts and “brass plate” banks, and… of course, real estate. “Intermediaries, including lawyers, wittingly or not, may be used as conduits for many of the foregoing schemes.”
- “Drycycle”, or integration stage, that puts the funds back into the legitimate economy.
Role of lawyers: victims and gatekeepers
German upholds the regulatory efforts of the Law Society of BC, and gives it credit for keeping its own house in order. But the independence of lawyers to run trust accounts under the protection of solicitor client privilege is targeted.
German says, at para. 971:
Without question, the absence of reporting by lawyers to FinTRAC is a gap in Canada’s AML regime and is a significant impediment to police investigations […]. Canada is an outlier, as other common law jurisdictions, including the United Kingdom, have robust provisions in place which require financial reporting by lawyers. Although not an answer to the issue, the Law Society of B.C. is leading the way in terms of self-regulation of lawyers and has extensive policy in place regarding lawyers receiving and recording cash transactions.
– Find Nate Russell on Twitter