B.C. could have set up casino crime unit based on regulator’s concerns in 2013, inquiry hears​

Click to play video: 'Gaming enforcement branch didn’t have authority to investigate money laundering'
Gaming enforcement branch didn’t have authority to investigate money laundering
Gaming enforcement branch didn't have authority to investigate money laundering – Nov 2, 2020

Investigators with B.C.’s gaming regulator had been raising money-laundering suspicions with senior officials for several years before a shocking 2015 report revealed millions in suspicious transactions at a particular casino and led to a provincial casino crime unit. 

The details involving the River Rock Casino in Richmond were heard Monday at the government’s inquiry into money laundering in B.C., with testimony from Ken Ackles, formerly with the Gaming Policy and Enforcement Branch.

But ever since B.C.’s special joint team against illegal gaming was started in 2016, Ackles said, it has no money-laundering convictions to show for its efforts.

Ackles, who now manages investigations on the joint team, told the inquiry that from 2013, he and other B.C. gaming enforcement staff stationed at the River Rock saw numerous large cash transactions take place every day that they believed were money laundering.

Story continues below advertisement

The Cullen Commission is tasked with probing dirty money in casinos and real estate and determining whether corruption has enabled money laundering to take root in British Columbia.

Based on his previous experience as an RCMP officer, Ackles said, when high rollers would come to River Rock’s cash cage with bundles of banknotes — oddly assorted, wrapped in elastics, carried in large sacks, and totalling anywhere from $200,000 to $300,000 — he strongly suspected it had come from drug trafficking.

He said he forwarded reports of individual suspicious transactions to his bosses, including Larry Vander Graaf, the executive director of the Gaming Policy and Enforcement Branch, who in turn escalated reports to senior B.C. government officials.

The inquiry heard of one email from Vander Graaf that said everyone at the regulator suspected that organized crime was presenting cash to loan sharks, who was then providing it to high rollers potentially linked to gangsters, and then the gamblers were using the cash to buy chips at B.C. casinos.

But there were questions over whether investigators with the enforcement branch should — or even could — intervene on the casino floor and question high rollers about their source of funds. And for years, no one from the branch, the B.C. Lottery Corporation, casino ownership nor police intervened, the inquiry heard Monday.

Story continues below advertisement

And after Vander Graaf and his assistant, Joe Schalk, complained to senior officials in Victoria about what they believed to be massive money laundering in B.C. casinos, they were terminated in late 2014, Ackles said. 

Ackles was asked by B.C. Lottery Corp. lawyer Bill Smart whether his testimony was purposely connecting the fact that Vander Graaf and his assistant were terminated by B.C.’s government in late 2014, after they escalated their concerns about money laundering. 

“I have no direct knowledge of why they were terminated,” Ackles answered.

Said Smart: “Is it a coincidence that you say they were terminated and they were escalating the concerns in Victoria?”

Ackles replied: “Perhaps.”

Ackles said it wasn’t until he compiled a spreadsheet showing $20 million in suspicious cash transactions at the River Rock in July 2015 alone — including $14.8 million in $20 bills — that the provincial government finally saw the big-picture threat of money laundering.

When he sent his report to Len Meilleur, the enforcement branch’s then-executive director, Ackles said Meilleur couldn’t believe it at first.

Story continues below advertisement
Click to play video: 'Rich Coleman won’t run for Surrey mayor'
Rich Coleman won’t run for Surrey mayor

“He conveyed to me he was shocked,” Ackles testified. “He thought I was joking and I had set him up with erroneous information.”

Eventually, the province responded to that particular report and other information, Ackles said, by creating the joint team tasked with targeting high-level organized crime and money laundering in B.C. Lottery Corp. casinos.

Ackles was asked by one of the commission’s lawyer whether the B.C. government could have successfully intervened as early as 2013, including creating a provincial casino crime unit, based on the information that the regulator’s staff had been reporting up the chain of command in Victoria.

“Yes,” he said.

Story continues below advertisement

Even then — despite the fact that staff at the enforcement branch were raising their concerns with senior officials and after the joint casino crime unit was mobilized — Ackles said he saw no real change in how casinos accepted suspicious cash transactions from 2013 to 2018.

And the joint team on illegal gaming has yet to lead to any convictions of money laundering, he added.

The number of large suspicious transactions fell in 2018, he said, when the province enacted laws that required gamblers to prove that funds worth more than $10,000 came from a bank.

However, Ackles said, the number of suspicious cash transactions worth less than $10,000 is currently rising in B.C. casinos.

A lawyer for Great Canadian Gaming asked him if the River Rock Casino staff did a good job of filing reports for suspicious transactions, and he said he believed they did.

Ackles also acknowledged that no legal findings have proven that funds accepted at the River Rock were proceeds of crime.

Click to play video: 'Virtually no controls over money laundering in B.C. casinos, commission told'
Virtually no controls over money laundering in B.C. casinos, commission told

Great Canadian Gaming lawyers have also argued in the inquiry that the clients haven’t done anything wrong in relation to money laundering, and that their reporting helped police identify an alleged loan shark, Paul King Jin, who is at the centre of questions on organized crime and cash transactions in the inquiry.

Story continues below advertisement

Testimony was set to continue this week.

Sponsored content