Money laundering report points to government, RCMP failures, but finds no corruption

(THE CANADIAN PRESS)

VICTORIA — Money laundering in British Columbia reached “staggering” levels due to inadequate efforts by police, politicians and regulators to curtail the crime, but there was no evidence it involved official corruption, a long-awaited public inquiry report has concluded.

The report released Wednesday by former B.C. Supreme Court justice Austin Cullen, who led the commission of inquiry into money laundering in the province, said billions in illicit funds linked to organized crime and the drug trade impacted the real estate, gaming and luxury vehicle sectors.

Cullen said the former B.C. Liberal government and gaming officials at the Crown-owned B.C. Lottery Corp., were aware of suspicious cash flowing into casinos around the time of the 2010 Vancouver Olympics but they did not exhibit the “will” to fully tackle the problem.

“The government took reasonable steps but not sufficient steps,” he said at a news conference. “The steps weren’t up to the task of abating money laundering in the casinos.”

Former B.C. gaming ministers Rich Coleman, Mike de Jong, and Shirley Bond, and former premier Christy Clark each took some anti-money laundering actions, but with limited results, said the report.

All four testified at the public inquiry, saying their actions were based on the best information they had on fighting money laundering.

“There is no evidence that any of these individuals knowingly encouraged, facilitated or permitted money laundering to occur in order to obtain personal benefit or advantage, be it financial, political or otherwise,” says the report.

Attorney General David Eby said he wanted explanations from members of the former government about their response to laundering, saying “they failed.”

“I’ll say frankly, that as a politician, I wouldn’t be satisfied with a sash awarded by the commissioner that says ‘not corrupt.’ I hold myself to a higher standard,” Eby said.

De Jong told a news conference it was “gratifying” the report found no evidence of “corrupt practices, collusion, any deliberate attempt to facilitate money laundering in this province by anyone within the previous government.”

Coleman said in a statement that the report’s conclusions “prove that allegations that the BC Liberals were ignoring money laundering, or were corrupt, were politically motivated oversimplifications.”

The inquiry heard testimony over 133 days from almost 200 witnesses, including politicians, government and gaming industry officials, law enforcement officers, academics and experts.

Cullen’s report makes 101 recommendations, calling on the B.C. government to establish an office of an independent commissioner to focus on anti-money laundering, amend the Mortgage Brokers Act and Real Estate Services Regulation, and force casinos to lower the threshold to $3,000 for requiring proof of a gambler’s source of funds.

The 1,805-page report also describes what became an indelible image associated with money laundering in B.C., of people arriving at Vancouver-area casinos with large bags of cash, usually in $20 bills.

“These vast quantities of cash were frequently delivered to casino patrons at or near casinos, very late at night or early in the morning, by unmarked luxury vehicles. It should have been apparent to anyone with an awareness of the size and character of these transactions that Lower Mainland casinos were accepting vast quantities of proceeds of crime during this time period.”

The report says in 2014, B.C. casinos accepted $1.2 billion in cash transactions of $10,000 or more.

Although it said it was not possible to put a precise figure on the amount laundered through the B.C. economy each year, the report said evidence pointed to it being in the billions.

“Sophisticated professional money launderers operating in B.C. are laundering staggering amounts of illicit funds,” says the report citing evidence that one underground banking operation was laundering up to $220 million a year at casinos.

The report says the federal government’s anti-money laundering regime is not effective and B.C. should focus on strengthening its own anti-money-laundering initiatives.

Eby said he was sure his colleagues in Ottawa would be disappointed by failures of the federal money-laundering regime described in the report.

He called it an indictment of federal enforcement. “This is not receiving priority attention from the federal government,” he said.

Cullen’s report is also highly critical of the RCMP, saying the Mounties’ “lack of attention” to money laundering allowed unchecked growth of the crime since 2012.

“There was no sustained effort to investigate money laundering activity in British Columbia. Between 2015 and 2020, there were only two other major money laundering investigations that progressed to the charge-approval stage. This level of attention by the RCMP to money laundering is not commensurate with the money laundering activity and risks in this province.”

The RCMP said in a statement it was reviewing the report, and it had participated fully in the inquiry.

“To be effective, the prevention, detection, and disruption of money laundering requires a collective effort,” said Deputy Commissioner Dwayne McDonald, commanding officer of B.C. RCMP. “The RCMP, in collaboration with its partners, remains committed to continuing to combat money laundering and financial crime.”

Premier John Horgan appointed Cullen in May 2019 to lead the inquiry after several official reports concluded that billions of dollars linked to organized crime and the drug trade had affected B.C.’s gaming sector and the real estate and luxury vehicle markets.

The public inquiry’s mandate was to make findings of fact and recommendations, determine the growth and methods of money laundering and find out if regulatory agencies or individuals contributed to the problem.

Cullen said the aim of his report was to offer advice that is realistic, practical and effective.

“For too long money laundering has been kept on the sidelines,” he said. “Too often it has been largely ignored. It’s time for that to change.”

This report by The Canadian Press was first published June 15, 2022.

Dirk Meissner, The Canadian Press