Metro Vancouver casinos gang destinations for money laundering: report

FILE: “The fact that we played not just a local role, but an international role in this should be troubling to everybody,” he said.
(Pixabay photo)

VANCOUVER — Money-laundering operations in casinos have been tied to British Columbia’s opioid overdose crisis and the real-estate market, the attorney general said Wednesday as he released an independent report detailing how organized crime groups used the gaming industry to distribute its profits.

David Eby said the report highlights disturbing issues related to international gangsters discovering Vancouver-area casinos as destinations to launder illegal drug money and then invest it in real estate.

“The fact that we played not just a local role, but an international role in this should be troubling to everybody,” he said.

Eby said the problem surfaced in 2011, but the former Liberal government failed to address “serious crime with serious consequences.”

“It has to stop,” Eby told a news conference. “We can’t let organized crime get ahead of us.”

Eby tasked former RCMP deputy commissioner Peter German to conduct a review and make recommendations last September.

German’s report, “Dirty Money,” said B.C.’s gaming industry and the anti-money laundering system was not prepared for the onslaught of illegal cash flowing through the casinos and they failed collectively.

He estimated more than $100 million was funnelled through casinos as part of a scheme dubbed the “Vancouver model.”

German said the model is linked to Chinese crime organizations that would loan money from their proceeds, usually drugs, to borrowers who would gamble at B.C. casinos. The gambler would then receive Canadian dollars from the proceeds to repay the criminal groups.

“The ‘genius’ of the scheme is the ability to achieve two objectives and be paid for, both in the same transaction,” the report says. “The lender is both servicing a drug trafficking organization by laundering its money, and the Chinese gambler by providing him or her with Canadian cash.”

Much of the laundered money ended up being invested in Vancouver-area real estate, German said.

“Why did this occur? Because it could,” he told the news conference.

German’s report says the RCMP viewed real estate as a hiding place for illegal money.

“It has been said that ‘everything in B.C. comes back to real estate,’ “ the report says. “It has also been suggested that you can see a ‘rat move through all of it,’ meaning that each component of the industry is vulnerable to criminal actors who tend to operate in more than one discrete area of real estate sales, mortgages, insurance, and so forth.”

German said the amount of suspicious money entering casinos since a high point in 2015 has been greatly reduced due to police and industry actions, but the prevention measures must continue to ensure the problem does not resurface.

He warned organized crime will move on to other sectors of the economy, including luxury vehicles and horse racing.

“We need a strong provincial regulator, which is not currently the situation,” German said.

The report makes 48 recommendations, including the establishment of a gaming regulator and a police unit that specializes in criminal and regulatory investigations in the industry.

Eby said the government accepts all the recommendations.

“We will be moving as quickly as possible to slam the door shut on dirty money,” he said.

He said the former Liberal government turned a blind eye to money laundering in B.C. casinos for years.

“Nobody said No to taking this money and that is inexcusable.”

Liberal jobs critic Jas Johal said he expected the report to include announcements of arrests and crackdowns on organized crime.

Billions of dollars have been invested in B.C.’s real estate market in the last few years so “$100 million is a drop the bucket,” he said in an interview.

Johal said German’s recommendations will strengthen the system, and the Liberal government was moving towards making improvements before the last provincial election in May 2017.

Eby launched an investigation after the government’s gaming enforcement branch showed him surveillance video of gamblers walking into casinos with suitcases and a hockey bag full of $20 bills.

The BC Lottery Corp., which operates casinos, said the report is an important road map for multiple organizations involved in fighting money laundering in the province.

“We are poised to implement the direction set out by Attorney General David Eby to keep dirty money out of casinos alongside our industry, government and law enforcement partners,” corporation president Jim Lightbody said in a news release.