Commissioner Austin Cullen looks at documents before opening statements at the Cullen Commission of Inquiry into Money Laundering in British Columbia, in Vancouver, on Monday, February 24, 2020. THE CANADIAN PRESS/Darryl Dyck
An 1,800 page report commissioned by the provincial government has found hundreds of millions of dollars of cash was laundered through B.C. casinos between 2008 and 2018.
The report by Austin Cullen is the result of 133 days of hearings, where the Commission of Inquiry into Money Laundering in British Columbia heard testimony from 199 witnesses.
Cullen was highly critical of the B.C. Lottery Corporation and several provincial ministers responsible for gaming for not doing enough to stop the rampant money laundering, which he says was happening in plain sight.
“In 2014 alone, British Columbia casinos accepted nearly $1.2 billion in cash transactions of $10,000 or more, including 1,881 individual cash buy-ins of $100,000 or more – an average of more than five per day,” the report said.
Cullen wrote, in addition to the extraordinary amounts, the bills used in many of the transactions exhibited well-known characteristics of cash derived from crime.
“It often consisted predominantly of $20 bills, oriented in a non-uniform fashion, bundled in ‘bricks’ of specific values (as opposed to number of notes), bound with elastic bands, and carried in shopping bags, knapsacks, suitcases, gym bags, cardboard boxes, and all manner of other receptacles,” the report said.
The report also said the cash was frequently delivered to casino patrons at or near casinos very late at night or early in the morning by unmarked luxury vehicles.
“It should have been apparent to anyone with an awareness of the size and character of these transactions that Lower Mainland casinos were accepting vast quantities of proceeds of crime during this time period,” Cullen said.
Cullen wrote that despite repeated warnings from various levels of law enforcement, no meaningful action was taken to address the issue until 2015.
“BCLC resisted these calls for action and continued to allow these transactions, almost without exception,” the report said.
Of the lottery corporations corporate security and compliance managers, Cullen wrote: “They stood by and permitted B.C. casinos to accept vast sums of illicit cash. BCLC’s approach reflected a completely unacceptable and unreasonable risk tolerance.”
Cullen also had harsh words for former provincial minister responsible for gaming Rich Coleman.
“Coleman was aware of the concerns….that the province’s casinos were being used to launder the proceeds of crime. At the same time, Mr. Coleman also received information from BCLC stating that the province’s gaming industry had a strong and effective anti–money laundering regime,” Cullen wrote.
“Mr. Coleman responded to these mixed messages by arranging for an independent review of anti–money laundering measures in the gaming industry, but he did not take action to stem the flow of the suspicious cash transactions that he had been warned about.”
Cullen also said former premier Christy Clark could have done more to tackle the problem.
“Clark appropriately delegated oversight of the gaming industry to a succession of experienced ministers. In 2015, however, the premier learned that casinos conducted and managed by a Crown corporation and regulated by government were reporting transactions involving enormous quantities of cash as suspicious,” he said in the report.
“Despite receiving this information, Ms. Clark failed to determine whether these funds were being accepted by the casinos (and in turn contributing to the revenue of the province) and failed to ensure such funds were not accepted.”
While Cullen was critical of how former Liberal politicians handled the money laundering problem, he made it clear he did not think it amounted to corruption.
“There is no evidence that any of these individuals knowingly encouraged, facilitated, or permitted money laundering to occur in order to obtain personal benefit or advantage, be it financial, political, or otherwise,” he wrote.
The report found criminals also laundered money through B.C.’s luxury goods market.
“Luxury goods are inherently vulnerable to money laundering. Criminals can use large amounts of cash to buy such goods,” Cullen wrote.
“Then, they can be moved more easily and less suspiciously than bulk cash. Many of the goods criminals target retain or increase in value over time, and they can ultimately be sold.”
Cullen wrote criminals also laundered money by buying properties in B.C., but he doesn’t believe it had a significant impact on the overall price of real estate.
“There are strong reasons to think that fundamental factors such as supply and demand, population increase, and interest rates are far more important drivers of price,” the report said. “Money laundering should be addressed, to be sure, but steps taken to counteract money laundering should not be viewed as a solution for housing unaffordability.”
Cullen made 101 recommendations as part of his report, among them that the province should appoint a dedicated anti-money laundering commissioner, the threshold for requiring proof of funds for casino transactions conducted in cash be lowered from $10,000 to $3,000, and a reporting requirement for luxury goods transactions of $10,000 or more.
He also recommended more use of civil forfeiture, stricter regulations for money lenders, lawyers, accountants and mortgage brokers, and more money laundering training for police.
David Eby, Attorney General, has issued the following statement in response to the Commission of Inquiry into Money Laundering in British Columbia (the Cullen Commission):
“I would like to thank Commissioner Cullen and his dedicated team for delivering the final report of the Commission of Inquiry into Money Laundering in B.C.
“The findings of this commission validate the concerns of many British Columbians. They were right to be worried and right to be demanding action on money laundering. The commissioner’s finding, after more than a year of study, that the volume of money laundering in our province is ‘enormous’ is profoundly concerning. It is also well grounded in testimony from police, experts in the field and direct research. This important conclusion and the commission’s connection of money laundering to violent crime and the illicit and poisoned drug trade also confirms our government’s reasons for taking action, and the need for further efforts from governments, regulators and businesses.
“The commission has confirmed there was a serious and decade-long problem of organized crime laundering hundreds of millions of dollars in B.C. casinos, and that it was the work of our government in 2017 that uncovered this for the public and ended this criminality. I am proud of our response, and grateful for the support of colleagues, including then-minister of finance Carole James and Premier John Horgan who supported what needed to be done in our casinos, even though those actions jeopardized provincial revenue.
“Our government has continued work on anti-money laundering measures based on previous reports, and much of this work overlaps with the commission’s recommendations. Our government will evaluate these new recommendations from the commissioner and co-ordinate them with the work government already has underway, in particular in relation to housing and real estate.
“I am appreciative of Canada’s participation in this inquiry. This report is important for the federal government too. It contains significant and challenging findings and calls to action for our federal government. I hope and expect that the new federal minister with responsibility for this file will join with us in addressing this important shared challenge.
“I believe these recommendations will help us to transform the meaning of the ‘Vancouver model’ from a description of unchecked dirty money moving through our casinos to a model of governments responding forcefully to the threat of money laundering. I look forward to working on these reforms with my colleagues both inside and outside government, and all British Columbians.”
Learn More:
To read the final report, visit: https://cullencommission.ca/files/reports/CullenCommission-FinalReport-Full.pdf