Canada needs U.S.-style racketeering laws, current organized crime laws failing, B.C. AG tells Feds

Attorney General David Eby speaks to reporters before the province's money laundering inquiry begins. Richard Zussman/Global News

B.C. Attorney General David Eby, troubled by Canada’s inability to prosecute international drug cartels and vast money laundering operations, has urged federal public safety minister Bill Blair to institute the U.S.-style racketeering laws that are credited for dismantling New York City’s powerful Mafia families.

And some Canadian experts on the transnational gangs active in Toronto and Vancouver support Eby’s call for federal legal reforms.

The reason, they say, is Canada’s current organized crime provisions fail to address “actual” organized crime, leaving gang bosses immune from prosecution, while the nation’s justice system is outdated and overpowered by sophisticated transnational cartels.

Eby’s confidential January 2019 letter to Blair was obtained by Global News in evidence disclosed to the Cullen Commission, B.C.’s inquiry into money laundering. The commission, headed by B.C. Justice Austin Cullen, is mandated with examining whether systemic regulatory failures allowed money laundering to take root in B.C. casinos and real estate. The broad inquiry was triggered partly by the failure of E-Pirate, a massive RCMP investigation into large-scale drug-money laundering in B.C. government casinos.

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The transnational crime scheme, according to Fintrac, Canada’s anti-money laundering watchdog, used underground banks in China and Vancouver to fund the gambling of wealthy Chinese nationals in B.C. casinos, while moving drug cash collected in B.C., back to China and Latin America.

In his letter to Blair, which predated the Cullen Commission, Eby cited previous findings of anti-money laundering experts, including former RCMP executive Peter German. Eby stated “all reviews and information gathered to date by British Columbia strongly suggests there is urgent need for significant reforms,” including “a Canadian version of the Racketeer Influenced and Corrupt Organizations Act.”

Otherwise known as RICO, the aggressive racketeering law was passed by U.S. Congress in 1970, to combat the growing infiltration of “La Cosa Nostra,” the secretive Italian mafia networks involved in corruption and underground economies across American cities and directed by kingpins based in New York City, legal experts told Global News.

RICO laws have been successfully employed for decades in the U.S. and other countries, Eby’s letter says, while many Canadian investigators complain about the “inability, under Canadian law, for successful large-scale prosecutions of the leaders of organized criminal groups to proceed, regardless of resources in law enforcement.”

In his letter, Eby adds that German, the former RCMP leader and lawyer tasked by B.C.’s government with studying money laundering concerns, advised him that Canadian organized crime provisions have been “singularly unsuccessful” in tackling “actual” organized crime. And due to various impractical Canadian legal procedures, Eby wrote, organized crime prosecutions are often stymied by an “expanding criminal discovery process” that mostly benefits criminals, without “apparent significant benefit, to the goal of preventing wrongful convictions.”

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Eby concluded the legal “situation cannot be allowed to continue if public confidence in our justice system is to be preserved.”

A photo of a baccarat table in an alleged illegal casino in Richmond, B.C., as presented in evidence during B.C.’s public inquiry into money laundering on Monday, March 1, 2021. Cullen Commission counsel Brock Martland, left, and RCMP Cpl. Melvin Chizawsky look on during the virtual testimony. Screengrab / Global News

Eby also asked Blair to reform Canada’s criminal money laundering and asset seizure laws, citing recent findings from the U.S. government and the international Financial Action Task Force that labelled Canada as a “major money laundering jurisdiction” with ineffective laws and underfunded and poorly equipped enforcement agencies.

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In response to questions from Global News, Eby indicated he had E-Pirate’s failure in mind when he wrote to Blair.

In that case, in Fall 2018, charges against suspects were dropped after federal prosecutors erroneously disclosed information that could have endangered a police informant, Global News has reported.

According to evidence presented to the Cullen Commission and also a Financial Action Task Force report, the suspects and their clients, including drug traffickers and many foreign casino gamblers, were allegedly using a Richmond, B.C., currency exchange named Silver International, to launder over $1 billion per year for international drug cartels based in China, Latin America and the Middle East.

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“I am profoundly concerned that the individual or individuals alleged to be behind the transnational money laundering that took place in B.C. casinos have still not had their day in criminal court,” Eby stated to Global News, “following the collapse of the federal prosecution related to Silver International and associated activities in and around B.C. casinos.”

Eby said Blair has given him no indication whether the federal government will consider his recommendations, including a Canadian RICO-style Act and stronger criminal statutes for money laundering. Meanwhile, Eby told Global News he is waiting for Commissioner Austin Cullen to return his findings and recommendations in late 2021, but he doesn’t know whether the Commission “may be considering possible policy recommendations like RICO-type laws for Canada to respond to money laundering in our province.”

In a response, Public Safety Canada spokesman Craig McBride didn’t answer questions from Global News about whether Blair will consider Eby’s suggested legal reforms, including the implementation of RICO laws. McBride said the Canada Border Services Agency is increasing its capacity to detect money laundering that is disguised as import-export trade, and McBride pointed to the federal government’s 2019 budget pledge of $68.9 million in funds over five years to improve the RCMP’s investigative capacity on organized crime and money laundering.

Triads use Vancouver to launder massive funds for transnational cartels 

Calvin Chrustie, a former RCMP senior transnational crime investigator, said Eby is right, and that deep legal reforms are needed because international drug gangs are taking advantage of Canada’s outdated organized crime laws. He made the same argument in his testimony for the Cullen Commission.

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Chrustie told the Commission his teams became aware after 2010, that Mexican cartels were becoming dominant players in Vancouver, importing cocaine, heroin, fentanyl and methamphetamines into the west coast city and using it as a “major hub” to distribute narcotics internationally and across Canada.

In his testimony, he listed many cartels with high-level operatives active in Vancouver, including El Chapo Guzman’s Sinaloa Cartel, the La Familia Cartel, the Los Zetas Cartel, Gulf Cartel, Jalisco New Generation Cartel, and the Knights Templar Guadalajara.

And by 2014, Chrustie testified, the RCMP learned that Asian-based gangs had taken over global money laundering operations for Mexican, Colombian and Iranian cartels operating in Canada, and Vancouver had become a major criminal financial hub.

“Chinese triad-related networks operating in Vancouver” were “laundering very large amounts of cash for a variety of criminal organizations and transferring the money to various locations around the world, including many drug source countries,” Chrustie testified.

In an interview with Global News on Eby’s call for federal legal reforms, Chrustie said: “Currently, the laws are designed to catch small insects and allow the bumblebees to fly through the spider’s web. The current complexities of transnational organized crime, coupled with our outdated legal framework in Canada, will continue to perpetuate this national security threat.”

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He said he believes the federal government’s giving the RCMP more money to investigate transnational money laundering will change “little, without a robust legal reform that is congruent with the legislative framework of our international allies and partners.”

But, Chrustie added, he isn’t confident Eby’s letter to Bill Blair will trigger significant actions.

And Ken Yates, a former Toronto police detective and Canadian expert on Asian-based gangs associated with the E-Pirate suspect networks in Vancouver, agreed with Chrustie. Yates said new RICO-type laws, coupled with adequate funding, could be as effective in tackling sophisticated organized crime networks in Canada, as they were in the United States.

“RICO was hugely successful in dismantling La Cosa Nostra and Asian Gangs in New York,” Yates said.

The key innovation of RICO laws, experts including Yates said, is that crime bosses are convicted for serious crimes committed by underlings, and a criminal organization or member can be prosecuted due to the pattern of racketeering activities, such as murder, kidnapping, bribery, drug-dealing and gambling crimes, that police investigations reveal.

But not all legal experts are convinced Canada needs its own RICO Act. One Ontario prosecutor familiar with investigations into an international illegal casino money laundering network in Markham, Ont., said that Canada’s current organized crime provisions could be used more effectively if prosecution and police services were adequately staffed, trained, and funded to tackle complex, long term investigations. Often, the prosecutor said, government lawyers will only target relatively easy convictions on low-level gang members, and they may ignore money laundering charges, simply because Canadian prosecution services generally don’t have the training and resources to win convictions on complex organized crime cases, which often involve extensive international financial networks.

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Global News is not identifying the prosecutor, who was not authorized to comment for this story.

And Simon Fraser University criminologist Robert Gordon, a former RCMP officer, said U.S. style RICO laws are “worth exploring, but you don’t want to apply a solution (in Canada) that was made for another time and place.”

Gordon said while RICO laws apparently were effective in dismantling Italian mafia families, many other forms of organized crime have continued to flourish in the United States. That’s why, Gordon said, any application of RICO-style laws in Canada would have to be specifically formulated to address enforcement gaps agreed upon by provinces and the federal government.

“The Cullen Commission is the perfect vehicle with which to develop recommendations along RICO lines,” Gordon said. “This is a good time to look at solutions.”

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