VANCOUVER – The B.C. Lottery Corp. is the only provincial gambling commission to be fined for failing to report suspicious or large transactions at casinos, an official with the federal regulator said Wednesday.
Blaine Harvey, of the Financial Transactions and Reports Analysis Centre of Canada (Fintrac), would not comment on the $670,000 in penalties imposed on BCLC for more than 1,000 violations under the federal Proceeds of Crime Act.
But Harvey did confirm that Fintrac has not penalized any other gambling commission.
The B.C. Crown corporation is appealing the penalty. He said Fintrac will not comment on any compliance dispute until all appeals are complete.
However, Harvey said there has been a general problem across Canada with casinos not complying promptly with rules on reporting large or suspicious transactions.
“How they comply with the law is very uneven across the country. In general, though, they are not doing enough on the compliance side,” Harvey said.
A Fintrac review last November identified a number of ways criminals were abusing casinos to launder money. They included buying large numbers of chips and cashing them out almost immediately, and offering winning gamblers a premium for their casino cheques or their chips and using them as currency in criminal activities.
Last year, Fintrac referred 112 cases involving casinos to police agencies for criminal investigations, up from just 43 the year before.
“Our cases that involved some transactions from casinos in terms of money laundering more than doubled,” Harvey said. He said he could not provide a province-by-province breakdown.
Half of the 112 cases were believed linked to drug traffickers, 15 per cent were fraud-related, and the rest linked to other organized crime activities, the report said. Street gangs, bikers and international organized crime groups were all referred to in the report.
Harvey said gangsters and other criminals inevitably try to use casinos to launder money because “it is a cash-intensive business.”
“A standard thing for money laundering is, you go in and buy $10,000 worth of chips and you ask the casino to give you back $9,500 in cheques,” he said.
Because of the potential misuse by organized crime, the reporting requirements are critical to detect the problem, Harvey said.
BCLC president Michael Graydon said the agency is in complete compliance with FINTRAC rules now, and that most of its problems were related to late filing of reports because of technical glitches and human error.
FINTRAC requires casinos to report all transactions of $10,000 or more within 24 hours, even if a customer makes several transactions that add up to the limit. Casinos must report other suspicious transactions, even if they are under the limit, Harvey said.
“The casino sector is worrisome across the country. In the end, you are talking about the proceeds of crime, fraud, drugs, organized crime and that kind of thing and there is the underlying social harm that you’ve got to deal with,” he said.
Harvey said B.C.’s new online gambling service is “unknown territory” for FINTRAC.
“It really is. But there is no doubt that if a provincial government is running that, it will be subject to the same obligations as a chips-and-cash casino,” he said.
Asked about the B.C. government decision to limit online betting to $9,999 a week – $1 less than the FINTRAC reporting threshold – Harvey said, “We do find it interesting.”
Rich Coleman, the B.C. minister responsible for the lottery corporation, said the new online limit had nothing to do with the FINTRAC reporting requirement.
“It wasn’t driven by that. It was just that we were trying to reach a limit that made some sense,” Coleman said.
On Tuesday, B.C. Solicitor-General Mike de Jong said law enforcement agencies work with the BCLC to deal with the potential for organized crime to misuse gambling facilities.
But Sgt. David Gray, of the RCMP’s Integrated Proceeds of Crime unit, said IPOC does not have a direct relationship with the BCLC.
“We don’t have a formal relationship with them, no,” Gray said. “We will periodically get reports from casinos – not the BCLC per se. … We don’t have a sort of direct line of communication with them.”
Most of IPOC’s referrals related to money laundering and casinos come directly from FINTRAC, Gray said.
There have been investigations where somebody is involved in drug trafficking and when we delve into their financials, there is an element there of using casinos or getting third-party cheques,” he said.
“The criminals are going to target the places where large transactions are happening. Casinos are one area where criminals are looking.”
Gray said one of the simplest laundering techniques involves criminals approaching people who have just had a big casino win and offering to buy their cheques for 105 per cent of the face value.
“Then it looks like [the criminals] have winnings,” he said.
He said police are hearing more and more about casinos as money-laundering venues, “probably because of the proliferation of casinos that we have seen in the last few years,” he said.
“There have been investigations in the past where casinos have been used to try to clean money.”
Howard Blank, of the Great Canadian Gaming Corp., said he believes his organization does a good job of monitoring players and doesn’t believe there is a big problem related to organized crime.
Sgt. Shinder Kirk, of the Gang Task Force, said uniformed patrols routinely cruise Lower Mainland casinos along with bars and clubs when doing gang checks. “We have also attended special events at those casinos,” Kirk said. “And yes, we have checked known criminals and gang members during the course of our patrols at Metro Vancouver casinos.”