Red tape obscuring money laundering in B.C. casinos: financial crime expert

A Vancouver-based financial crime and money laundering expert says red tape is making it harder to crack down on criminal activity in casinos.

Lawyer Christine Duhaime made the comments on CKNW’s the Jon McComb show in the wake of a newly-released 2016 B.C. government report that found troubling irregularities at Richmond’s River Rock casino.

For the month of July, 2015 alone, the report identified about $13.5 million in $20 bills of unknown origin accepted by the casino.

Attorney General David Eby has since announced plans to appoint an independent expert to review money laundering concerns.

From Duhaime’s perspective, one of the key issues allowing money laundering to go unnoticed at B.C. casinos is the way regulation in the industry is structured.

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is the federal agency charged with catching financial criminals.

But casinos aren’t reporting directly to FINTRAC, Duhaime said. Instead, they report to the BC Lottery Corporation (BCLC), who then makes anti-money laundering (AML) reports to the federal regulator.

“BCLC is, wrongly, in my opinion, the reporting entity to FINTRAC,” she said.

That obscures what’s going on, said Duhaime.

It also causes problems at the ground level. Despite each casino needing to have its own anti-money laundering policies, Duhaime said the industry has long resisted investing in training to combat the problem.

Indeed, in a letter to the BCLC penned by FINTRAC in the wake of the report, River Rock’s staff were found to be poorly educated on how to spot or respond to money laundering.

“If they broke that down and unwound it and the casinos had to do the reporting, the casinos would be more responsible for AML, they would have to understand it better,” Duhaime said.

Tweet This Click to share quote on Twitter: "If they broke that down and unwound it and the casinos had to do the reporting, the casinos would be more responsible for AML, they would have to understand it better," Duhaime said.

LISTEN: Report delves into money laundering at B.C. casinos

Duhaime said B.C.’s regulatory structure also puts the government in the odd position of having to potentially investigate and regulate itself.

In the case of the 2016 report, she said one arm of the government, the Gaming Policy Enforcement Branch (GPEB) essentially had to report on another, the BCLC.

“BCLC is the reporting entity. So whatever they say about River Rock they really say about the B.C. Government,” she said.

“So if you look at this report and you kind exchange the words “River Rock” with “B.C. Government,” what they’re effectively saying is that the B.C. Government is allowing Chinese foreign nationals… with large amounts of cash, who are the VIP high rollers, to come in and gamble, and that they seem to be aware that this is proceeds of crime.”

Tweet This Click to share quote on Twitter: "So if you look at this report and you kind exchange the words "River Rock" with "B.C. Government," what they're effectively saying is that the B.C. Government is allowing Chinese foreign nationals… with large amounts of cash, who are the VIP high rollers, to come in and gamble, and that they seem to be aware that this is proceeds of crime."

Duhaime added that the 2016 report is problematic because it focuses on a single casino instead of a representative cross section of casinos and horse racing operators in the province.

What the province needs, she said, is a thorough look at the casino sector, along with a more competent anti-money laundering procedure.

She said any review undertaken by the government should not be done by accountants, but rather by lawyers who can advise officials on where a genuine legal standard is being violated and how to respond.