The Commission of Inquiry into Money Laundering in B.C. has largely concluded its probe into casinos – a key issue that propelled the inquest, due in large part to media reports.
So, what can the public glean from six combined weeks of testimony from gambling sector stakeholders?
Commissioner Austin Cullen has not heard any explicit admission or allegation of corruption from officials who have testified.
However, Cullen has heard testimony that shows regulatory failures and ineffective policy and law enforcement, as a result of alleged wilful ignorance, miscommunication and slow-moving bureaucratic responses.
Cullen is expected to draw his own conclusions and determine facts in his final report sometime this year. His mandate is to determine “the extent, growth, evolution and methods of money laundering” in six sectors of the economy, including gambling. Cullen is to determine “the acts or omissions of regulatory authorities or individuals” and “the scope and effectiveness” of their powers, including “barriers to effective law enforcement” regarding money laundering in B.C. One barrier could be corruption, however he may define it.
But Cullen has yet to hear from politicians responsible for gambling. And he is expected to hear more about law enforcement on the matter, but because the RCMP is a federal entity and the Canadian government’s actions are not subject to the provincial inquiry’s mandate, it’s unclear how much can be revealed about specific money laundering investigations.
Nor is there any apparent clearer understanding of exactly how much proceeds of crime flowed through B.C. casinos, particularly in the decade spanning 2008 to 2018.
Cullen, in July 2019, cautioned the public about expectations before the hearings started: “It is important to note that because of its secretive nature, money laundering activities do not leave behind much clear evidence of their existence, nor do they generally produce witnesses who are motivated to publicly speak about it.”
The six major players involved, ranked in order of highest to lowest authority, are: government; police; the regulator Gaming Policy and Enforcement Branch (GPEB); the administrator of casinos British Columbia Lottery Corp. (BCLC); the casinos; and the gamblers.
The inquiry has heard of how government expanded casinos in the early 2000s and maintained a cash-only buy-in program – a policy that’s been said to attract organized crime.
Although there were hints of criminal problems early on, more frequent concerns about drug cash being used by gamblers were raised by lower-level investigators at GPEB and BCLC starting around 2008.
Testimony has largely left an impression that the RCMP was absent up until 2015 when an investigation was launched into a transnational organized crime network.
Cullen has heard of the 2009 cancellation of the Integrated Illegal Gaming Enforcement Team by then B.C. Solicitor General Rich Coleman. A similar team (JIGIT) was re-established in 2016.
The inquiry hasn’t heard testimony from RCMP involved in the 2015 investigation dubbed E-Pirate – the most complex, if not only known investigation into casino money laundering. But commission counsel Patrick McGowan and Allison Latimer have inquired along the lines of what E-Pirate purported – that cash from Vancouver’s deadly drug trade made its way through casinos via so-called underground bank operators in Richmond, on behalf of transnational organized crime networks. Gamblers who lost would repay the drug cash by other means, including asset transfers back in China to a partner of the local underground bank. If a gambler won, there have been many regulatory and enforcement gaps that would allow them to launder their funds regardless, the commission heard.
The inquiry has heard plenty of testimony on how the problematic funds were gambled exclusively by Chinese nationals or locals, who were purported to be evading China’s currency controls – which would be money laundering itself, according to officials.
Analysis from GPEB shows suspicious transactions amounted to about $40 million in an eight-month period in 2011 but reached $85 million in 2012 and $174 million in 2014 – most of it in $20 bills, typically bundled in elastics. But such transactions are not proof of money laundering in and of themselves, BCLC and casinos have argued.
Also, a February 2016 review by BCLC of River Rock Casino and Resort found systemic underreporting of suspicious transactions. Employees were generally not reporting buy-ins under $50,000 as suspicious and regular high rollers had their transactions overlooked. Cullen has heard of close relationships between licensed casino employees and these gamblers frequently bringing in duffel bags full of $20 bills.
Throughout much of this time, GPEB and BCLC officials were not seeing eye-to-eye. When GPEB officials did raise concerns, changes were not implemented or were slow. BCLC has generally shot back at GPEB for not imploring them to make changes via official directives through the government. At the same time both agencies had gone years without having their respective investigators interview gamblers about their source of cash. Cullen has heard how Great Canadian Gaming Corp. was cold to this important anti-money laundering policy.
BCLC and the casinos have defended their actions by noting efforts such as a unique electronic funds account for gamblers – initially voluntary and thus underutilized for years. The casinos took the line that their job was to properly report all transactions, and that’s what they did – for the most part.
But it was up to the regulator and police to gather this information and make policy changes and/or lay criminal charges, the casinos argued.
The inquiry is not allowed to delve into specific allegations and so it’s not yet clear how much the public will learn about E-Pirate.
The inquiry is expected to call ministers responsible for gambling in B.C. during this time. John van Dongen, Rich Coleman, Shirley Bond and Michael De Jong were the four ministers responsible for BCLC between 2008 and 2014.
B.C. NDP Attorney General David Eby, who called the inquiry, has also faced criticism. BCLC officials have alleged Eby throttled new AML measures for political purposes. Reports commissioned by Eby on money laundering by consultant and former RCMP executive Peter German have been accused of bias and of being overly anecdotal. German himself was among top RCMP brass in B.C. when the Integrated Gaming Enforcment Team was disbanded but he denies being involved in the police response on the gambling files.
The commission now turns to a four-week inquiry of potential money laundering in real estate.