B.C. money laundering report says casino chips being used as ‘currency’ to traffic drugs

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Money laundering at B.C. casinos linked to housing, opioid crises
WATCH: A new report from British Columbia Attorney General David Eby shows rampant money laundering at casinos fueled the opioid epidemic and rampant real estate speculation. Robin Gill reports on the big changes planned – Jun 27, 2018

“Chips are the currency of gambling.”

That is how Peter German opens up Chapter 28 of his report into money laundering in B.C. casinos.

But as the German report finds, chips are used for far more than just gambling.

LISTEN: Peter German explains the findings of his report into casino money laundering

One of starling conclusion in the report released on Wednesday is that chips are taken from casinos and used “outside casinos to settle loans and to facilitate the movement of money from outside the country.”
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It’s a practice commonly known in the industry as “chip walking.”

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German also found that in at least two cases chips were used as currency in drug trafficking in the province.

“In bulk quantities, chip walking can be a serious problem. Chips have the advantage that their value equates with the current value of the dollar,” reads the report. “They are an alternate currency; preferred over precious metals that fluctuate in value.”

The findings are just a small part of German’s report on money laundering, but offer an insight into the different ways casinos have been used in crime and money laundering.

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There is just one recommendation put forward in connection with “chip walking,” but it’s an important one. German is calling on the B.C. Lottery Corporation (BCLC) to put “a chip tracking system” in place.

“The absence of an appropriate tracking mechanism for chips creates an opportunity for them to be used as an underground currency,” reads the report. “It is also a means by which unscrupulous gamblers can purchase chips for use by unknown third parties.”

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For now, chip walking isn’t seen as a major threat in B.C. But the experience has been different elsewhere. Jennifer Shasky Calvery, a former director of the U.S. Financial Crimes Enforcement Network (Fincen), told a bank secrecy conference in 2014 that she was concerned about the practice.

“A customer who walks out of your casino with a large amount of chips, or stores them on-site in a lock box for an extended period of time, may be trying to hide their funds or structure,” said Shasky Calvery. “This might be the kind of activity that you should report.”

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Currently there is no security feature in B.C. casinos that would prevent players from exiting a casino with one or more chips in their pocket. German remarks that in 2015 a large number of $5,000 chips went missing from the River Rock Casino. The report notes the chips were valued at between $4.4 million and $13.6 million.

One possible solution would be to position radio frequency detention devices at casino exits, but there doesn’t seem to be a lot of interest because of inconsistent technology.

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German also suggests that inserting a serial number on chips or personalizing chips to a particular high-limit customer are possibilities for tracking chips.

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