"Toxic." "Poisoned." "The enemy." In a report about money laundering in Lower Mainland casinos, you might hope those terms were used to describe the criminals whose dirty cash has fuelled both an opioid epidemic and a housing affordability crisis in Greater Vancouver. Instead, they show up in a section about the "testy relationship" between the B.C. Lottery Corporation and the province's Gaming Policy and Enforcement Branch — and how they view each other. It's the triumph of bureaucracy and in-fighting over common sense — a theme which runs throughout Peter German's deeply researched review of the problem. 'Crapping on each other' As he wrote, it's not that people on all sides of the issue didn't raise red flags. But the institutional players were often too busy fighting each other to properly focus on a common enemy. Which, as German points out in one notable 2016 case, left the "frustrated" head of compliance for Richmond's River Rock casino to issue a directive, himself, telling employees to stop accepting huge amounts of unsourced cash. The amount of money laundered through Lower Mainland casinos is estimated to be at least $100 million. (CFSEU-BC) The casino industry told the former RCMP deputy commissioner that it "craves" clarity between the BCLC — which oversees casinos — and the gaming branch — which regulates gaming. "It is their number one wish," German quotes the industry association as saying. "At present, the two entities 'spend mental energy crapping on each other.'" 'This stinks' And if not on each other — then on those who dared point out the glaringly obvious. German's report details the reaction of then-Liberal gaming minister Rich Coleman in 2011 to a comment from a veteran RCMP commercial crime investigator in a CBC exposé. Insp. Barry Baxter had seen video of stacks of $20s delivered to casino cash cages and large gambling buy-ins from women who described themselves as "housewives." He shared his suspicions with the CBC's Eric Rankin, telling him the casino industry appeared to have been targeted for "very sophisticated money-laundering activities by organized crime." German's report says Rich Coleman, then the minister responsible for gaming, objected to comments made by an RCMP officer in a CBC story about money laundering in casinos. (CBC) German's report says Coleman objected to Baxter's comments. The officer was cautioned by the RCMP and "his remarks would be the last public comment by an RCMP officer on any matter related to B.C. casinos for a number of years." Among Baxter's offending words? "We're suspicious that it's dirty money ... The common person would say this stinks." Indeed, German's report suggests that for years BCLC focused on the way the money was delivered, instead of asking the simple question at the root of the problem: where is the money coming from? 'The cash was rolling in' The answer was out there. German's report says the executive director of the Gaming Policy and Enforcement Branch nailed it in an email back in 2013. "What I am suggesting is a possibility is that the gambler receives the cash money from loan sharks, who receive the money from what I believe is criminal sources," the official wrote. "The gambler loses the cash money gambling at the casino and ultimately repays his debt in the foreign jurisdiction." B.C. Attorney General David Eby and Peter German at the release of German's independent report into money laundering in B.C. (Yvette Brend/CBC) But the lottery corporation was looking in another direction. German's report says the executive director "all but stopped dealing" with BCLC in the year that followed as the lottery corporation argued "the bundling of small denomination bills was not necessarily an indicator that money was the proceeds of crime, as there could be other explanations." And in 2014, the same executive director was dismissed without cause and directed to leave along with the gaming branch's senior director of investigations. Shortly after, another CBC story ran about people arriving at casinos with shopping bags full of $20s and $50s. The Ministry of Finance said the decision to investigate lay with police. And they touted efforts to provide "traceable cash alternatives" — focusing once more on the method of money movement, not the underlying madness. "In theory this was correct," German's report stated. "In reality, no police were investigating or tracing money and the cash was rolling in." Acceptable risk? In his overview, German points out that his task was to review, not to blame. He points out the absurdities, systemic infighting and lapses of oversight which led to the laundering of at least $100 million over the past decade. No individual is singled out for fault. But German raises questions about the beliefs underpinning an industry worth billions to B.C. 's economy — and what we're willing to risk for that revenue. "I disagree that issues of risk, certainly serious ones that impact on public safety, should be balanced with revenue generation," German wrote. "This may be acceptable in other industries where the risks simply involve financial expenditures. It is not acceptable in an industry which is susceptible to criminal risks, such as loan sharking and money laundering." As his report suggests — B.C. rolled the dice for far too long.<doc-sep>The new report charting B.C.’s rise to become a global money-laundering hotbed raises questions about how the former provincial Liberal government responded to the “Vancouver model” of money laundering that might have cleaned more than $100-million in dirty cash at local casinos. As early as 2011, the former B.C. government was alerted to the fact that staff at two suburban Vancouver casinos were converting millions of dollars into chips in what the RCMP suspected was a sophisticated money-laundering scheme for organized-crime groups. Rich Coleman, the minister overseeing the gambling portfolio at the time, objected to one Mountie’s public assertion – made in a CBC News investigation – that drug dealers were cleaning their cash in this manner. Instead, Mr. Coleman asked the head of the provincial office of civil forfeiture to investigate the issue. The resulting 2011 report stated that gangsters considered losing at casinos the cost of laundering their money and that B.C.’s gambling Crown corporation needed to update its approach to tackling this serious issue. Story continues below advertisement In response to that 2011 report, neither the Crown-owned B.C. Lottery Corp. (BCLC), which is responsible for maintaining and growing the business of gambling, nor the gaming policy and enforcement branch, the provincial casino regulator, implemented reforms that would have made casinos less vulnerable to such illegal activity. That is just one of several instances where the government and its agencies responsible for the gambling industry failed to take the action necessary to curb money-laundering in the province, according to a new report from Peter German. B.C. Attorney-General David Eby called for Mr. German’s independent investigation last fall, after the government’s gambling-enforcement branch showed him recent surveillance video of gamblers walking into casinos with suitcases and a hockey bag full of $20 bills. Liberal Party Leader Andrew Wilkinson, who was first elected in 2013, said he became aware of the issue through news reports in recent years, but that his government gave a joint illegal-gambling investigation team the funds and authority to “aggressively pursue money laundering” in 2015, which led to a 60-per-cent drop-off in the number of suspicious transactions reported at casinos. Mr. Coleman and Mike de Jong, who was the Liberal government’s long-time finance minister, did not answer their cellphones on Thursday. Mr. Wilkinson said he has only talked to those two “only in the most general terms, not about specific events” regarding money laundering in the province. “[Their] decisions have to be viewed carefully when covered in retrospect and with full facts in hand, and I’m not in a position to have the full facts in hand, so I’m not about to pass judgment,” Mr. Wilkinson said. “Obviously, our goal as a society is to drive that down to zero and we hope the German report helps in doing that.” Critics of the former Liberal government say the party could have handled this file much more effectively during its 16 years in power. Andrew Weaver, Leader of the three-MLA Green Party, said he was particularly troubled by the government’s 2009 disbanding of a specialized enforcement team set up to monitor and investigate illegal gambling. At the time, Mr. Coleman, the minister in charge, told The Globe and Mail that the force was shut down because it was inefficient, had a high staff-turnover rate, hadn’t prepared a business plan and was redundant. He also denied reports B.C.’s civil-service casino investigators did not have the resources or mandate to target criminals operating within those facilities. Story continues below advertisement Right before the unit was shuttered, the B.C. government had received reports of 284 gambling incidents involving organized criminals, including two murders and a child abduction. “Why was that shut down and then not replaced? They replaced it in 2016 and they came back with the other joint integrated gaming-investigation team,” Mr. Weaver said in an interview on Thursday. “Why did they wait for so long to actually do anything?” With a file from the Canadian Press.<doc-sep>Share this Story: 'They turned a blind eye to it,' says Eby on release of damning German report into money laundering at B.C. casinos 'They turned a blind eye to it,' says Eby on release of damning German report into money laundering at B.C. casinos Photo by Francis Georgian / PNG Article content The B.C. government has pledged sweeping oversight reforms of the casino industry as recommended by a damning independent report on money laundering released Wednesday. The report by Peter German, a former deputy commissioner of the RCMP, found there was a collective system failure that grew over time and outstripped the ability of existing legislation, processes and structures to effectively manage it. We apologize, but this video has failed to load. tap here to see other videos from our team. Try refreshing your browser, or 'They turned a blind eye to it,' says Eby on release of damning German report into money laundering at B.C. casinos Back to video For many years, certain Lower Mainland casinos unwittingly served as “laundromats” for the proceeds of organized crime, German’s 247-page report found. German concluded that money laundered through casinos was linked, at least in some cases, to domestic and international organized crime organizations involved in illicit drug and precursor chemical purchases, drug importing, distribution and trafficking. German also found that some of those that arranged money laundering were buying real estate and advising others how to conduct real estate transactions. Advertisement Story continues below This advertisement has not loaded yet, but your article continues below. Advertisement Story continues below This advertisement has not loaded yet, but your article continues below. Article content We apologize, but this video has failed to load. tap here to see other videos from our team. Try refreshing your browser, or The B.C. Gaming Industry Association also welcomed the German report on Wednesday and said it will commit to an “efficient implementation” of the recommendations. “We have always taken seriously our responsibility to report any and all suspicious activities at our properties to BCLC and regulators. We will continue to play a key role in fighting any illegal activity,” said executive director Peter Goudron. Goudron called the recommendations “sensible measures” to prevent money laundering in casinos. German issued two interim recommendations in December. One requires casinos to make people who deposit more than $10,000 in cash or bearer bonds to provide identification and the source of the funds, and reject the money after two consecutive transactions unless it can be proven that it does not come from suspicious or illegal activity. The second recommendation called for more government inspectors to be available 24/7 at busy Lower Mainland casinos to help inspect suspicious transactions. Photo by DARRYL DYCK / THE CANADIAN PRESS The B.C. NDP government says it identified another 15 recommendations that can be implemented in the short to medium term, including changes to reporting processes. An internal committee of deputy ministers will be working with German on implementation and policy related work. That group will study that the more complex recommendations as they affect an array of ministries and jurisdictions. The government will move as quickly as possible to implement them, said Eby. Advertisement Story continues below This advertisement has not loaded yet, but your article continues below. Article content The B.C. government launched the German review in September 2017 over concerns about Chinese high-roller VIPs purchasing gambling chips with massive wads of cash that could be “proceeds of crime.” The concerns were outlined in a confidential report commissioned by the B.C. Lotteries Corp. from auditor MNP LLP that found that $13.5 million in $20 bills had being accepted in the River Rock Casino in July 2015. German said he estimates that in excess of $100 million was laundered in casinos, but acknowledged that figure could be greater. Documents obtained as part of Postmedia’s freedom of information requests show that $650 million in suspicious transactions flowed through B.C. casinos between 2010 and 2016, two-thirds of it in $20 bills. It would take forensic accounting to track all the money laundered, noted German. We apologize, but this video has failed to load. tap here to see other videos from our team. Try refreshing your browser, or He stressed the recommendations are forward looking, meant to ensure casinos are not again used to launder money. “In my opinion partial implementation of the recommendations would be a mistake. There cannot be a weak link or history will repeat itself,” said German. During the peak, in July 2015, $20 million in suspicious transactions flowed through casinos. In February, suspicious transactions were pegged at just $200,000. However, German told journalists the challenge now that organized crime is giving casinos a wide berth is to determine where drug money is currently being laundered. That’s why it is important to lobby the federal government on rule changes that will require reporting of suspicious transactions on luxury goods such as cars and boats and also why the province should license money service companies. Advertisement Story continues below This advertisement has not loaded yet, but your article continues below. Article content On Wednesday, Eby reiterated his oft-repeated position the B.C. Liberal government ignored the money laundering problem in casinos for far too long. The NDP came to power last summer after 16 years of B.C. Liberal rule. However, Richmond-Queensborough Liberal MLA Jas Johal said Eby was sensationalizing the report’s findings. The Liberals took steps that stemmed suspicious transactions as much as 60 per cent from their peak in 2015, said Johal. Any government would say they could have done more, but now it’s time to focus on implementing the recommendations, said Johal. In response to questions on why casinos didn’t say no to bags of $20 bills wrapped in rubber bands, B.C. Gaming Industry Association executive director Peter Goudron said they followed the rules by reporting suspicious transactions. ghoekstra@postmedia.com twitter.com/gordon_hoekstra Photo by Nick Procaylo / PNG CLICK HERE to report a typo. Is there more to this story? We’d like to hear from you about this or any other stories you think we should know about. Email vantips@postmedia.com. Share this article in your social network<doc-sep>VANCOUVER—Plastic shopping bags bulging with cash dumped onto casino counters. Hundreds of thousands in $20 bills, bundled by elastic bands. Thirteen minutes spent just counting the money in one security video shown to reporters. British Columbia’s casinos “unwittingly served as laundromats for the proceeds of organized crime,” representing “a collective system failure” in which the province bears major responsibility, according to a long-awaited report released Wednesday by the Attorney General. The publicly owned BC Lottery Corp.’s anti-money-laundering unit doesn’t even work evenings or weekends, the nine-month investigation found. And the province’s gambling watchdog staff are “frustrated by the lack of tools” to stop laundering. Eby alleged the previous B.C. Liberal government “turned a blind eye” despite “thousands of suspicious transaction reports” with a total that “well exceeds $100 million” — and that alarms were raised by both casino staff and police as early as 2011. “The era of inaction and denial is over … It was so strange that it took so long to take action,” B.C. Attorney General David Eby told reporters Wednesday, as casino security footage played behind him. “The only way to combat money laundering is to tackle it full on, to bring the public on in full view.” Read more: Real estate investigation is next for author of B.C. casino money laundering report Quebec-style inquiry on B.C. realty money laundering only way to get truth: lawyer New B.C. realty review should address secrecy, laundering: advocates Eby alleged the province ignored the extent of the problem due to “the mistaken belief that this act is a victimless crime,” he said. “But it is tied to the opioid crisis that has taken thousands of people from their families, and it’s linked to the real-estate market and housing prices that have made life unaffordable for British Columbians.” Speaking to reporters, author Peter German — former deputy Western RCMP commissioner — said his investigation revealed to him “the modern face of organized crime” and the inability of existing legislation and policies to keep pace. “It is the underbelly of the violence that we see on our streets and the detritus that permeates society and engages in corruption,” German said. “Most of what (the RCMP) have uncovered has come from drug trafficking. “The tentacles aren’t just local drug trafficking but potentially international drug trafficking and laundering that money.” Security camera footage from B.C. casinos, showing clients depositing massive bags of $20 bills bundled with elastics. The footage helped spark an investigation into money laundering by the province's Attorney General, released on Wednesday, June 27, 2018. Casinos employ roughly 37,000 staff in B.C., generating “huge revenue” for the province. German urged B.C. to create a new gambling-funded Crown corporation to crack down on money laundering, as well as an entirely new gambling police force with an intelligence unit and an “emphasis on Lower Mainland casinos.” Ordered by the province’s crusading Attorney General, David Eby, the 250-page report made 48 key recommendations to address a problem long suspected but until now unsubstantiated. As early as 2012, German found, the problem was known to employees in the BC Lottery Corp. — which contracts private operators to run its casinos — and the Gaming Policy and Enforcement Branch, which enforces the rules. And two years earlier, German revealed, BCLC was hit with the largest fine ever handed out by the federal fiscal crime agency, the Financial Transactions and Reports Analysis Centre (FinTRAC). Lawyer and money laundering expert Christine Duhaime called the report a “good step in the right direction” and applauded its recommendation that casinos must report directly to FINTRAC. “This really is activity that takes place on the casino floor with people the casinos can see,” she said in a phone interview. “They know who they are; they’re clients of theirs. Loading... Loading... Loading... Loading... Loading... Loading... “So they really are the ones who are best suited to monitor activity to see if it’s suspicious, and do the actual reporting instead of sending it to BCLC head office and letting them make decisions out of context.” Another of German’s top recommendations is to call for a new independent regulator to enforce anti-money laundering rules — a Crown corporation with its own directors, registrar and in-house legal counsel, funded by gambling profits. The previous B.C. Liberal government, through its finance minister Mike de Jong, had axed funding to casino crime investigators. German urged that B.C. give its Joint Integrated Gaming Investigation Team “permanent, fenced funding” — presumably “fenced” from future government cuts — within the RCMP’s provincial budget. And casino staff in “VIP rooms,” he suggested, should not be allowed to handle cash or chips and be given an independent avenue to blow the whistle on “inappropriate conduct” by gamblers. Eby had warned in an earlier interview that the hotly anticipated report’s findings were “shocking.” And B.C.’s Lower Mainland was so well-known for the practices that Eby learned authorities around the world had begun referring to it as “the Vancouver Model.” German’s revelations have already led to reforms since he gave Eby a draft in April. Eby said he’d delayed releasing it publicly because it contained allegations against individuals, which required they be given a chance to respond and for law enforcement to weigh in on risks to criminal investigations. “Naturally with issues of money laundering, the secrecy is what makes it so difficult to track down the actual numbers and the actual scale,” said James Cohen, programs and engagement director of the anti-corruption watchdog Transparency International Canada, in a phone interview. “No doubt it was difficult to assess every aspect of money laundering, but it is important to look at why ‘the Vancouver Model’ was able to proliferate. “A huge part of it has got to be a lack of oversight, not-good-enough enforcement and Canada’s lax rules and laws around anonymous companies and trusts. The public needs to understand how these complicated tools work.” Here’s how such tools worked: According to the report, illegal drug trafficking gangs’ cash — from dealing, extortion, fraud and prostitution, almost entirely in $20s — was loaned to “local Chinese nationals” gambling at Vancouver-area casinos.<doc-sep>
Send this page to someone via email An independent report into widespread money laundering in Metro Vancouver casinos is calling on the establishment of a police unit to be created solely to investigate the legal-gaming industry. The recommendation is just one of 48 put forward in a report from Peter German that was released on Wednesday morning. “For many years, certain Lower Mainland casinos unwittingly served as laundromats for the proceeds of organized crime,” reads the report. “This represented a collective system failure, which brought the gaming industry into disrepute in the eyes of many British Columbians.” WATCH HERE: David Eby blames BC Liberals for money laundering issues 0:58 David Eby blames BC Liberals for money laundering issues David Eby blames BC Liberals for money laundering issues – Jun 27, 2018 German completed the report in March, but it is only being released now because of concerns information in the original report could jeopardize ongoing police investigations. Attorney General David Eby hired German, a former RCMP deputy commissioner, in September to look into casino money laundering after extensive journalistic reporting found that it was a major issue. Story continues below advertisement READ GERMAN REPORT HERE Eby says he can now with absolute certainty say that money laundering is taking place in B.C. casinos. The province has already started to implement the recommendations, with about 10 already completed and another 15 set to be tackled “in the short term.” “I can tell you based on Mr. German’s work that it is tied to the opioid crisis, it’s linked to the housing crisis and the real estate market that has made life unaffordable for British Columbians'” said Eby. “The report itself paints a troubling picture of the last decade and a half.” WATCH HERE: David Eby shows video of money laundering in action The Attorney General is pointing fingers at the previous government, saying the B.C. Liberals had “many opportunities” to take action to force casino visited to proof the source of the money coming in. German’s report is not the first into money laundering in casinos, with Eby mentioning a 2011 report by the province. Story continues below advertisement “The only way to combat money laundering is to tackle it full-on, to bring the public along in full view so that they understand they work and consequences for failing to take action as well as the cost of taking action,” said Eby. “In all cases we will be moving as quickly as possible to slam the door shut on money laundering in B.C. casinos and cut off funding to organized crime. It won’t be easy to reverse a decade and a half of neglect, but we are not waiting to get started.” LISTEN: BC Liberals respond to Peter German’s report on money laundering Speaking for the BC Liberals, Jas Johal, who became an MLA last year, says he hopes the recommendations are implemented. But he took issue with the allegation that the Liberals turned a blind eye to money laundering. “Changes initiated by the BC Liberal Government led to a reduction in those suspicious transactions,” Johal said. Story continues below advertisement WATCH: Government report blasts money laundering in B.C. 2:19 Government report blasts money laundering in B.C. Government report blasts money laundering in B.C – Jun 27, 2018 However, he said that information was kept under wraps. “Work was being done behind the scenes. And based on what law enforcement said, we decided not to make a lot of that work public,” Johal said. BC Liberal MLA Rich Coleman, who was the minister responsible for gaming at the time, was not made available to media on Wednesday. The designated police unit German is suggesting would be created to specialize in criminal and regulatory investigators arising in the gaming sector, with an emphasis on Lower Mainland casinos. For now, German is suggesting British Columbia transition to an independent provincial regulator for the industry that would be similar to the B.C. Securities Commission. Story continues below advertisement German is recommending that anti-money laundering be the responsibility of that new regulator until the police force can be established. EXCLUSIVE: A River Rock Casino VIP with links to high-ranking officials in China gambled with about $490,000 received in a suspicious transaction in a River Rock hotel room. Sam Cooper reports.