On Monday, B.C. Attorney General David Eby said he was shocked to find the RCMP is doing “nothing” to investigate money laundering in the province, despite years of negative headlines and estimated billions of dollars in dirty money flowing through the province’s casinos and real estate.
He cited a finding from former RCMP executive Peter German’s recently filed review of money laundering in the province’s housing market, that Eby said, shows currently there is not one dedicated federal RCMP officer in B.C. investigating criminal money laundering.
“What is happening is nothing,” Eby said. “Police experts need to be recruited from across Canada for a specialized team that can start now. The money launderers here are already experts, they’re already rich, and now we know they’re better resourced.”
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Some investigators that have shared information with Global News over the past year, said Eby’s surprise seems misplaced. It has long been known by government insiders that the RCMP and Canadian courts have little or no capacity to prosecute transnational money launderers, they said.
These investigators — including current and former federal and municipal police officers and casino investigators — say that due to weak laws, poor police leadership, lack of funding for financial crime investigators, and disinterested prosecutors, laundering investigations have often been outright avoided by police.
Their views are supported by data in a Global News investigation, which found that from 2000-2016, Canada recorded only 321 guilty verdicts in money-laundering cases, according to an analysis of data provided by Statistics Canada.
One source — Joe Schalk, a former B.C. Gambling Enforcement Branch director of investigations and RCMP officer — said there should be no shock about German’s finding.
“I am not surprised at all by the recent disclosure of Dr. German,” Schalk said Tuesday. “For years, police resources, especially for drug, commercial crime, and proceeds of crime, have been in my opinion, grossly underfunded.”
Schalk said B.C.’s provincial government and the federal government both “must take responsibility for under-funding and cuts of … ‘federal policing’ responsibilities.”
According to German and Eby, the few RCMP officers that are looking at money-laundering cases in B.C., are only referring cases to civil forfeiture, and not supporting criminal prosecutions.
A number of police experts in B.C. said this has long been the case, for both RCMP and municipal forces.
The issue is that criminal money-laundering cases in Canada have a difficult, two-step process. The crime that produces dirty money must be proved, as well as the act of cleaning this money. This requires traditional boots-on-the-ground policing, but also forensic accounting and increasingly complex international fund-tracing expertise.
Police forces in Canada have not invested, for the most part, in resources to prosecute the financial crime side of these cases.
And prosecutors, therefore, don’t like to accept criminal money-laundering cases, partly because they are understaffed and lack money-laundering expertise, and they understand the challenges police face in proving these cases.
Therefore, the lower standard of investigation and proof needed for police to refer cases for civil forfeiture — allowing government agencies to seize assets owned by criminals — has become the favoured path to a limited type of success on money-laundering files for Canadian police forces.
WATCH (March 1, 2019): Timeline of money laundering in B.C. casinos
Also, one veteran Vancouver investigator said after a Supreme Court of Canada ruling in 2016 that set strict time limits on criminal trials, police are even more challenged, and the Vancouver municipal force can’t afford to dump resources into complex criminal money-laundering cases that will likely fail under these new court procedure rules.
“Thank goodness we have civil forfeiture,” the source said.
Other sources have pointed to the cancellation of the B.C. RCMP Integrated Proceeds of Crime Unit (IPOC), which was wound down from about 2011.
German pointed to the unit’s demise in 2013, in his comments Monday.
A source told Global News that IPOC experts have been following major organized crime figures from Mainland China and Macau that have been active in B.C. casinos since the 1990s. But despite many violent incidents connected to these high-rollers, gang bosses and loan sharks, IPOC and the RCMP were never able to mount concerted probes.
And the RCMP’s E-Pirate probe of 2015 — which appeared to finally clamp down on a Macau crime network in B.C. casinos — failed in late 2018, due to evidence disclosure errors. Sources with knowledge of the case point to a lack of resources in the RCMP and federal prosecution services, as well as a number of leaders leaving the federal organized crime RCMP unit that conducted E-Pirate, before the case was stayed last year.
WATCH: No federal RCMP officers assigned to money laundering in B.C.
A source with knowledge of earlier IPOC probes said the unit always seemed to lack support among RCMP brass, who wanted to fund investigators “with guns and not pencils.”
According to the source, some federal prosecutors flatly denied considering IPOC’s criminal money-laundering cases, which were often linked to initial drug-trafficking charges.
And so, with weak support in Canada’s legal system, a steady reduction in funding and executive support from RCMP brass, coupled with a lack of financial crime expertise among B.C. police leaders, civil forfeiture referrals became the default option for IPOC, the source said.
Another source, who could not be named, informed Global News last year that front-line RCMP officers understand the scale of real-estate money laundering and the reach of Mainland China-connected gangs in Vancouver. But the RCMP doesn’t have any officers in place to criminally investigate real-estate money laundering, the source said.
WATCH: David Eby releases new money laundering info from Peter German’s latest report
The RCMP has responded to German’s partially released findings, and Eby’s pointed criticism.
“The dedicated employees in our Federal Serious and Organized Crime sections have been, and are currently, engaged in a number of money laundering investigations,” says a response from Gilles Michaud, Deputy Commissioner of RCMP Federal Policing. “As the report highlights, the RCMP faces significant challenges and pressures in delivering federal policing services to Canadians. However, this requires transforming and modernizing the RCMP in a variety of areas that cut across the organization and impact all types of investigations.”
Meanwhile, findings from the U.S. government also confirm what Global News investigator sources have complained of.
In a March 2019 report, the U.S. Department of State designated Canada a “major money-laundering country” where foreign drug-trafficking gangs are exploiting weak law enforcement and soft laws.
“Foreign-generated proceeds of crime are laundered in Canada, and professional, third-party money laundering is a key concern,” the report states. “Transnational organized crime groups and professional money launderers are key threat actors.”
The report notes weaknesses in enforcement and prosecution — caused partly by Canada’s privacy laws and loopholes that allow Canadian lawyers to not report suspicious transactions.
According to the most recent data, from 2010 to 2014, only 169 charges of money laundering led to convictions in Canada, the report says.
“Canada has a rigorous detection and monitoring process in place but should further enhance its enforcement and prosecutorial capabilities,” the report says. “When the magnitude of the identified money laundering risks are taken into account, Canada’s money laundering conviction rate appears to be low.”
Federal Minister of Border Security and Organized Crime Reduction Bill Blair says his government is committing funding to crack down on money laundering and blames the previous government for the lack of dedicated officers.
“Through Budget 2019, our government brought forward very significant measures not only for funding for improved prosecutions and investigations, but also new legislative measures, that are in direct response to concerns that have been raised by Attorney General David Eby,” Blair said.
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