Plenty of people in positions to respond to the rise of money laundering in B.C. — from cabinet ministers to high-level bureaucrats and law enforcement officials — were aware the province had a problem with dirty money for nearly a decade, but not nearly enough was done to turn the tide until 2018.
So concluded the Commission of Inquiry into Money Laundering in British Columbia, led by retired BC Supreme Court justice Austin Cullen, which made 101 recommendations to help the province address the issue, as well as identifying vulnerabilities in the institutions whose failures allowed “billions of dollars” in illegally acquired cash to be laundered.
Elected officials “were aware of suspicious funds” coming into provincial coffers in the form of gaming revenues, the commission concluded. Casino-based money laundering “persisted over the tenures of multiple ministers responsible for gaming,” each of whom was “privy, on some level, to information showing that the gaming industry was at elevated risk of money laundering.”
But while “there were failings” on the part of politicians and public officials as evidence of money laundering mounted, “none of those failures were motivated by the hope of personal financial [or] political,” the commission concluded.
“There was a failure of will to deal with it,” Cullen told reporters. “I don’t think that equates to deliberate or witting failure to deal with it, but I do think it does represent a failure of will.”
Concerns about money laundering at B.C. casinos surfaced in the early 2000s and peaked around 2014 — a year in which casinos “accepted nearly $1.2 billion in cash transactions of $100,000 of more, including 1,881 cash buy-ins of $100,000 or more,” per the report — before beginning to drop in 2015 following actions taken by the Liberal government.
“The government took reasonable steps but not sufficient steps,” Cullen said. “The steps weren’t up to the task of abating money laundering in casinos.”
In 2018, suspicious cash transactions at casinos dropped by “nearly 90 per cent” after casino cash buy-ins of $10,000 or more were subjected to proof-of-legitimacy requirements, as recommended by former RCMP deputy commissioner Peter German.
Similar measures “had been proposed repeatedly since” 2008, per the report.
Report highlights ‘actions and omissions’ of former premier, ministers
The report specifically evaluated the culpability of five politicians: Liberal cabinet ministers Rich Coleman, Shirley Bond and Mike de Jong — all of whom were responsible for the gaming file for varying periods of time — former Liberal premier Christy Clark and NDP Attorney General David Eby.
The commission concluded the “actions and omissions” of Coleman, de Jong and Clark — as well as the various regulatory and enforcement agencies — “contributed, to some extent, to the growth and development of money laundering in B.C.’s casinos.”
“No fault” falls to Bond during her time as gaming minister, per the commission, which noted that during her brief stint in the role, she worked to implement nine of 10 recommendations outlined in an expert report commissioned by Coleman.
While money laundering was an issue at the time, it was “not brought to the attention” of Bond’s office by either the BC Lottery Corporation (BCLC) — which was “actively denying” the extent of money laundering, per the report — or the RCMP’s Gaming Policy and Enforcement Branch (GPEB).
Cullen called the lack of reporting from BCLC and GPEB “undoubtedly alarming” but “unsurprising given the evidence before me regarding the attitudes of BCLC and the leadership of GPEB” at that time.
“More could have been done” to address evidence of money laundering by both Coleman and de Jong, the commission concluded, noting both ministers received assurances from the BCLC that anti-money laundering measures were “robust [and] industry-leading.”
While Coleman — who served as gaming minister from 2001 to 2005 and then again from 2008 to 2013 — was aware of concerns from GPEB and other law enforcement agencies by 2010 about money laundering in casinos, BCLC assured him they “had a strong and effective anti-money laundering regime” in place.
Coleman was credited for arranging an independent expert review of anti-money laundering measures but “did not take action to stem the flow of suspicious cash” he’d been warned about, per the report.
“A critical opportunity for decisive action was missed” on Coleman’s watch.
By the time de Jong took over the gaming file following the 2013 election, BCLC reported 1,631 suspicious cash transactions to FINTRAC, the federal agency responsible for overseeing financial intelligence, with a total value of more than $195.3 million.
As minister, de Jong did take some steps to address money laundering, including the creation of the Joint Illegal Gaming Investigation Team to focus on dirty money, which started to stem the tide. BCLC’s suspicious transaction reporting dropped to $79.5 million in 2016.
However, “the steps taken by Mr. de Jong were simply not commensurate with the urgency of the problem facing the industry at the time,” Cullen wrote.
Money laundering “remained at an unacceptably high level for several years” — a fact that Clark bears “some responsibility” for, according to the commission.
By 2015, “it should have been abundantly clear” to the then-premier that there was a crisis in the gaming industry that “required her urgent attention.”
Clark’s “lack of engagement at this time meant that she was not in a position to ensure her government took steps sufficient to make certain that casinos did not continue to accept illicit cash and that her government was not funded by the proceeds of crime,” the report concluded.
Beginning in 2018, Eby’s efforts to address money laundering “built upon the progress made during Mr. de Jong’s tenure [and] contributed significantly toward the final resolution of the problem.”
Independent anti-money laundering commission needed: inquiry
B.C.’s gaming industry is “greatly changed” from the 2008-2018 period, per the commission, which noted the BCLC “seems to have embraced its responsibility” to prevent money laundering in gaming “after many years of resisting” such “vital” measures.
But money laundering remains an ongoing issue for the province — partly due to the “ineffectiveness” of FINTRAC — and Cullen’s top recommendation is to create an independent anti-money laundering commission to “provide strategic oversight” of the province’s continued response to the issue, since money laundering “does not fit easily into one sector or ministry.”
The commission should produce publicly available annual reports on “money laundering risks, activity and responses” and conduct research to support further “internationally informed” efforts. The independent office could also provide policy advice and recommendations to the government and assess the performance of provincial bodies at preventing money laundering.
Eby pledged to “evaluate these new recommendations from the commissioner and co-ordinate them with the work government already has underway” with a focus on the housing and real estate sectors.
As for the finding the previous government’s response lacked corruption, Eby was blunt:
“I’ll say frankly, that as a politician, I wouldn’t be satisfied with a sash awarded by the commissioner that says not corrupt. I hold myself to a higher standard.”
De Jong responded to the report on behalf of the Liberals, calling it “gratifying” that Cullen made clear the previous government “took steps to address the issue.”
“But those of us who served in the previous government have to acknowledge an additional part of his report, and that is his findings that more could have been done,” he told reporters. “I need to acknowledge that and I certainly do.”
Cullen’s report “paints a pretty reasonable and balanced picture of what took place,” per de Jong.
The former minister pushed back against “the narrative that some politicians … and some media outlets have wanted to advance” that he says were refuted in the report.
“The attempts that have been made to argue that housing affordability have been directly influenced and are tied to money laundering activity and international money laundering activity simply are not supported by the evidence,” he said. “The commissioner says that is an incorrect linkage based on the evidence … let’s hope people are listening.”