B.C. launches money laundering reviews into real estate, horse racing, luxury cars

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BC NDP government launches phase two of crackdown on money laundering
WATCH: BC NDP government launches phase two of crackdown on money laundering – Sep 27, 2018

The B.C. government is launching new, twin reviews into money laundering in the province.

The reviews come in the wake of a critical report on money laundering in B.C. casinos conducted earlier this year by former high-ranking Mountie Peter German.

Like the initial German probe, the new reviews will be “fact-finding,” not “fault-finding” investigations.

Attorney General David Eby said the new reviews grow out of concerns German raised about the spread of money laundering from casinos to other sectors of the economy.

“We know the money has gone somewhere, and there is good reason to believe the bulk cash we saw at casinos is a fraction of the cash generated by illicit activities that may be circulating in British Columbia’s economy,” Eby said.

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“In short, we can not ignore the red flags that came out of the casino review of a connection between individuals bringing bulk cash to casinos and our real estate market.”

One of the prongs of the review, headed by Eby’s ministry, will focus on “specific examples” of troubling activity in vulnerable sectors, including real estate, horse racing and luxury vehicles.

Eby has asked Peter German to conduct a second review looking to verify concerns he raised in his original report about the scale and scope of organized crime in those three sectors.

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David Eby announces next steps in B.C. money laundering review

The second review, led by the Ministry of Finance, will focus on risks to the real estate and financial services sector.

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Finance Minister Carole James said the review’s focus on real estate is driven both by recommendations from the German report, along with a second report initiated this spring to look at regulation of the real estate industry.

James said that report, spearheaded by independent consultant Dan Perrin, made a number of recommendations regarding regulatory structure and policy development, but also raised red flags about suspicious transactions.

“We now have two independent reports suggesting that our housing market could be used to launder money,” James said.

“In that report [Mr. Perrin] pointed out that our hot housing market and regulatory gaps have created opportunities for market manipulation with the potential for people to profit from questionable real estate activity.”

The Ministry of Finance has appointed Maureen Maloney to chair an Expert Panel on Money Laundering in Real Estate.

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That panel will work to find gaps in enforcement of existing laws, consumer protection, financial services regulations, regulation of real estate professionals, and jurisdictional gaps between B.C. and the federal government.

German concerns

But some have argued the German report on money laundering in B.C. casinos didn’t go far enough, and that future reviews need to hold someone accountable.

Former Crown attorney and anti-casino activist Sandy Garossino is among the voices arguing that fact-finding isn’t enough.

“We have to have some investigations into what actually transpired,” Garossino said.

“We’ve seen from the casino story that this is the gift that keeps on giving.”

Global News has also learned that German serves on the board of directors of the Richmond Olympic Oval with Walter Soo, an executive at Great Canadian Gaming Corporation, the company that owns the River Rock Casino.

German insists that connection has not affected his investigation, and said he and Soo discussed his appointment and how they should not talk about related matters at board meetings.

“As soon as I was appointed, he made it very clear that we should not, he didn’t want to confuse the two issues, so I didn’t,” German said.

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German decided not to interview Soo at all, but instead spoke to his superiors.

When asked if he disclosed what might be a perceived conflict of interest, German said he was not aware of any conflict.

WATCH: B.C. gov’t announce actions to close gaps in real estate market leading to money laundering

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B.C. gov’t announce actions to close gaps in real estate market leading to money laundering

The Ministry of the Attorney General has also confirmed that German was hired in 2016 to conduct an external review for the BC Lottery Corporation and the Gaming Policy and Enforcement Branch.

Those two entities were both key focuses of German’s 2018 report.

That has some critics arguing B.C. should go further afield for someone to head up the probe.

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“With respect, we would recommend that the government go outside of British Columbia,” said Canadian Taxpayers’ Federation B.C. director Kris Sims.

“Find a firm that has no contacts and no connections with any of these people in order to make sure, in essence, it’s double-blind.”

But Eby insists there’s no problem with keeping German aboard.

“It wasn’t a conflict. It was why we hired him. We needed that advice from someone who was an expert in the systems in B.C.”

Both reports from Peter German and Maureen Maloney are due in March, 2019.

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