B.C. government waited 9 years to heed recommendations to reject drug cash in casinos, inquiry hears

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From astatine slightest 2009, galore precocious officials successful British Columbia were repeatedly warned of a monolithic escalation of “bulk cash” flooding into BC Lottery Corporation casinos that “undoubtedly has its origins successful the cause trade,” according to the RCMP.

At the aforesaid time, successful narration to the detonation of casino money laundering, 3 of the astir almighty transnational transgression networks successful the satellite — Mexican and Colombian cartels, Chinese Triads and Middle Eastern gangs — were taking implicit B.C.’s underground system and causing “unprecedented pack violence.”

Italian organized transgression and outlaw biker gangs were high-level players arsenic well, arsenic weapon unit and opioid overdose deaths surged connected Canada’s West Coast.

Vancouver had go “a hub for the importation of amerciable and unsafe substances including fentanyl, cocaine, and methamphetamine,” according to the RCMP.

Meanwhile, implicit and implicit again, successful memos, emails, face-to-face meetings and adjacent hasty hallway conversations, acrophobic investigators from B.C.’s Gaming Policy and Enforcement Branch, RCMP and the BC Lottery Corp. urged B.C. officials to cull a torrent of $20 bills entering casinos successful bags successful commonplace transactions of hundreds of thousands, and coming from “middle men” and “loan sharks” and adjacent a B.C. politician, into the hands of scores of high-limit baccarat bettors — the “vast bulk … from Mainland China.”

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The gamblers were paying backmost the bags of suspected cause currency they utilized to bargain casino chips with physics money transfers successful China and Canada, according to a 2011 RCMP report, meaning that the “loan sharks” were not lone profiting from involvement connected their transgression loans, but besides successfully washing transgression wealth successful planetary banks.

But this sophisticated, nonrecreational wealth laundering strategy continued “unfettered,” according to the RCMP successful 2011, earlier Mounties yet struck the Triads astatine the bosom of the transgression exemplary successful October 2015, with a bid of raids and arrests successful Richmond, B.C.

It was besides successful October 2015, successful absorption to the RCMP investigation, that B.C.’s authorities yet ordered the BC Lottery Corp., done the powerfulness of a ministerial letter, to find the root of each suspicious stack of currency entering casinos. But the corp didn’t really heed this mandate until 2018, erstwhile erstwhile RCMP enforcement Peter German yet again made the recommendation, successful his Dirty Money report.

These are the stunning acceptable of facts and assertions argued by lawyers for Canada’s national and B.C.’s provincial government, successful closing arguments for the province’s wealth laundering inquiry.

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Participants successful the Cullen Commission, mandated to analyse whether inaction oregon corruption enabled wealth laundering to instrumentality basal successful B.C. casinos and existent estate, started to marque their last submissions Friday. After each participants reason connected Tuesday, commissioner Austin Cullen volition person months to deliberate for his findings of information and recommendations.

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On Friday, lawyers for B.C. and Canada made mostly method arguments astir jurisdictional issues and regulatory mandates. And portion lawyers for some governments agreed wealth laundering is simply a large interest successful B.C., the provincial authorities argued it has made important regulatory improvements successful the casino assemblage and expects that a unification of regulators successful existent property volition assistance combat soiled wealth successful spot investments.

Canada besides argued it has improved its anti-money laundering authorities successful caller years, and advised the commissioner that his mandate successful a provincial enquiry is limited, and that for law reasons, helium should not connection sentiment connected however national policing and anti-money laundering systems tin beryllium improved.

In an interrogation with Global News, erstwhile RCMP national researcher Calvin Chrustie, 1 of Canada’s cardinal witnesses connected the incursion of transnational gangs successful B.C., said that aft monitoring the hearings and reviewing the closing submissions from the provincial and national lawyers, helium is acrophobic the committee has mislaid its way.

He said portion it has focused connected gaming and existent property issues, “the existent contented is astir Canada being the brushed underbelly for transnational organized transgression and nationalist information threats owed to the nonaccomplishment astatine the national and provincial levels to code the request for updated ineligible reform.”

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Chrustie said helium believes the result of the committee should beryllium the instauration of “a abstracted national policing bureau unfettered by determination authorities of provincial policing interests, and collaboration of each agencies and our planetary partners.”

“The existent ineligible strategy and authorities structures volition proceed to alienate Canadian constabulary and information entities from collaborating with our planetary partners and we volition proceed to spot fentanyl deaths, corruption, nationalist shootings, soiled money, and the erosion of our antiauthoritarian systems,” Chrustie said, “unless we look astatine this contented arsenic a planetary improvement and 1 that requires urgent ineligible betterment versus the continuation of the blasted crippled and a strategical budget-grabbing workout by bureaucrats.”

Canada's closing arguments

The national authorities said grounds shows that the astir almighty transnational gangs are profiting from wealth laundering, which increases the harms of quality trafficking, weapons trafficking, convulsive pack crime, “as good arsenic the opioid crisis that has harmed communities crossed the country.”

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Specifically, the high-level Triad web that is taxable of the committee is “based successful B.C. and successful Ontario and represents respective cardinal work providers nationally and internationally,” the national authorities submitted, “and are known to behaviour analyzable wealth laundering operations done their exploitation of casinos, underground banking systems, amerciable gaming houses, nominees/shell companies, trade-based wealth laundering and existent property investments.”

The national authorities said contrary to others’ arguments successful the inquiry, starting successful 2010, the RCMP explicitly warned BC Lottery Corp. managers that organized transgression was utilizing Vancouver casinos successful monolithic wealth laundering, and that casinos should crook distant bulk cash.

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Lawyers pointed to a 2011 RCMP “casino probe” study that said “[a]t the casino level, a absorption has to beryllium taken to alteration their ‘acceptance’ of ample and suspicious currency transactions,” arsenic that would “most decidedly hinder the question of soiled wealth done the casinos and volition necktie the hands of indebtedness sharks.”

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Starting successful 2010, the study said, an RCMP proceeds-of-crime portion started surveillance connected galore precocious rollers from Mainland China who appeared to beryllium utilizing cause currency from indebtedness sharks to determination their wealthiness retired of China and launder the funds done casinos and banks.

“Simply put, determination is simply a important wealth laundering occupation identified wrong casinos, arsenic they supply the accidental for the transgression constituent to present ample bulk cash, believed to beryllium derived from illicit activity, into the fiscal system,” the study said.

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It added determination was “great concern” that a Burnaby metropolis councillor had adjacent relationships with precocious absorption astatine Richmond’s River Rock Casino, and that helium was besides adjacent to the high-limit gamblers, making definite they received currency whenever they needed it.

The Burnaby councillor had been banned for evident loan-sharking activities, but was inactive a concern, RCMP believed. And their study said a River Rock manager called him a “go boy” for the precocious rollers, and that helium and a casino manager had travelled to China together.

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However, the RCMP’s probe into the gangs and imaginable corruption progressive was unopen down successful 2012 due to the fact that of national fund cuts, according to grounds submitted astatine the Inquiry.

Lawyers for the state said that arsenic aboriginal arsenic 2009, grounds suggests that Rich Coleman, then-minister liable for gaming, was informed that B.C. casinos should beryllium rejecting each suspicious currency transactions, alternatively than accepting and reporting suspected money-laundering transactions, which was the BC Lottery Corp.’s presumption of however concern should beryllium conducted.

This recommendation, successful a memo from B.C.’s Gaming Policy and Enforcement Branch, was forwarded to the lottery corporation’s then-CEO Mike Graydon arsenic well, lawyers for B.C. submitted to the commission.

Next, successful 2010, according to the enforcement branch’s erstwhile director, Coleman was straight informed successful a face-to-face gathering that the state should ace down connected suspected cause cash.

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While Coleman testified astatine the enquiry that helium didn’t retrieve the informing from his subordinate, a B.C. authorities anti-money laundering study followed soon after, the province’s lawyers argued. And yet, suspicious transactions continued to skyrocket contempt the report’s recommendations and the authorities decided to rise baccarat betting limits to $100,000 per manus successful 2014.

The alteration came erstwhile Graydon contacted then-gaming curate Mike de Jong’s office, though neither de Jong nor erstwhile B.C. Liberal premier Christy Clark recalled successful their testimonies however the move, which went against the regulator’s money-laundering hazard concerns, was approved.

“The timing of the summation was unfortunate arsenic it occurred during the upwards inclination successful ample currency transactions and was considered by immoderate witnesses to person exacerbated the hazard of wealth laundering,” B.C. authorities lawyers argued.

Finally, successful October 2015, aft de Jong learned of the RCMP’s money-laundering probe astatine the River Rock Casino, the enforcement subdivision directed the BC Lottery Corp. to not judge immoderate currency successful casinos unless the root of funds could beryllium determined.

However, the corp responded with a letter, saying: “You person directed that BCLC measure the root of wealthiness and root of funds anterior to currency acceptance successful each instances… Implementing a process that volition necessitate root of wealthiness and root of funds confirmation anterior to immoderate transaction volition successful each likelihood enactment overmuch of the 77 percent of slot and array gross that is currency based successful jeopardy,” B.C. provincial lawyers submitted.

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And gathering notes of the lottery corp committee said: “Discussion followed arsenic to the astir due committee response, fixed absorption estimates the effect of the absorption for BCLC, if afloat implemented, would beryllium hundreds of millions of dollars.”

Finally, according to B.C. authorities lawyers, an email from November 2015 from de Jong’s bureau said, “In a gathering with Bud Smith yesterday, Minister committed to clarify done the mandate letter, that the valuation of root of funds anterior to currency acceptance, does not connote that they request to cheque each $20 measure that comes successful the door.”

And it wasn’t until 2018, contempt dependable complaints from the enforcement branch, that B.C.’s authorities yet instituted a source-of-funds vetting request for currency transactions, the lawyers submitted.

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In their ain closing submissions connected Friday, lawyers for the BC Lottery Corp. said absorption acted appropriately successful applying “risk-based” anti-money laundering measures, and that the commissioner should not justice what occurred successful B.C. casinos successful hindsight.

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Management understood that affluent businessmen from China were making the bulk of suspicious currency transactions, but the lottery corp believed these men had a “cultural preference” for currency and therefore, B.C.’s authorities had to beryllium cautious not to basal anti-money laundering connected “racial profiling,” corp lawyer Bill Smart argued.

“The currency whitethorn person been sufficient, but the patrons and the root of wealthiness was not,” helium said.

A lawyer for Jim Lightbody, the existent lottery corporation’s CEO, said the province’s arguments that Lightbody inappropriately allowed revenue-generation considerations to trump anti-money laundering actions are false.

Closing arguments with different parties volition proceed Monday.

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