Casinos in British Columbia have found themselves at the centre of an international money laundering scandal.
The stunningly picturesque west coast of Canada may not be the first place that sprints to mind when you think of organised crime and money laundering, but it seems that British Columbia has a shady side, with upwards of $100m having been laundered by its casinos over the last ten years or so.
Like the plot of a gripping crime movie, the BC casino money laundering story crosses the pacific, with evidence that the proceeds of crime have made their way through the casinos, into property, drugs, and even politics as far afield as China.
In case things aren’t seeming Canadian enough, the conspiracy was blown open in a 247-page report from a Peter German – a former Mountie (former Royal Canadian Mounted Police deputy commissioner, to be precise). Though, we aren’t sure if he carried out his investigations dressed in a scarlet tunic, midnight blue breeches and a brown felt hat.
On a more serious note, British Columbian Provincial Premier, John Horgan, declared the findings of the report to be “absolutely horrifying” – and we’re pretty sure many of the criminals involved would second that.
Though the inquisitive Mountie probed several casinos, an illustrative example of the scale of the problem is the River Rock Casino, that reportedly accepted C$13.5m ($10.27m) in dirty $20 bills in a single month.
The Chinese Connection
China crops up again and again, with miscreants apparently favouring the “Vancouver model”, whereby dirty money (the proceeds of crime) was loaned to gamblers, who then paid it back as clean cash after cashing out. Of course, offshore accounts and various other tools of financial skulduggery were employed too.
Pushing dirty cash through casinos like this is nothing new, and helps launder the money by obscuring where it originally came from and who owns it, turning the actual dirty cash into ‘clean’ cash, and giving providing a plausible cover story for the funds.
The surprising thing about this case is the sheer scale, and the fact that it took place in what was thought to be a highly regulated, monitored and policed environment, seemingly with no one noticing for over a decade.
A possible explanation for the debacle comes in the form of the somewhat ‘complicated’ relationship between the British Columbia Lottery Corporation and the Gaming Policy and Enforcement Branch.
German identified that there was no effective working relationship between the BCLC and GPEB, and as such criminals were able to take advantage. Illustrating the scale of the failures of the authorities involved, he recommended no fewer than 48 changes – including the formation of an entirely new anti-money laundering regulator.
Other recommendations in the report were for a dedicated force to be available 24/7 to fight money laundering activities, and that high rollers in British Columbian casinos should be required to provide the source of funds before they can gamble.
With the political shock waves rippling through the BC establishment, and further afield, politicians and public officials have been lining up to express their anger and concern. Premier Horgan questioning the previous reign for the BC Liberals, and Suzanne Anton, the former Attorney General insisting that any failures had been unintentional.
Whether British Columbia might take a lead from Ontario, adopting a more effective standards-based model, as recommended by German’s report, remains to be seen. However, the authorities are said to be prepared for a C$30m ($22.8m) in their annual budget, due to a planned overhaul of gambling regulations.
Just the Tip of the Iceberg?
A big problem for those trying to clean up British Columbia, like German, is that the casinos might just be the tip of a dirty money iceberg, that consists of other parts of the economy, especially property and developments, and even Canadian national politics – with donations to the BC Liberals being recorded from several casinos over the past few years.
Given that trails of rotting breadcrumbs also lead across the Pacific to China, and southwards to Mexico and Colombia, it seems that German really has opened a can of worms, and there are sure to be many more investigations to come.
The episode also illustrates how much more difficult it can be to enforce compliance in land-based casinos as opposed to online casinos – where it is easier to employ a range of screening technology.