Industry Reports

Institutional Discord and Flawed Regulation Are Not the Only Ones to Blame for Money-Laundering in BC Casinos

At the end of June 2018, the former Royal Canadian Mounted Police (RCMP) Peter German released the results of his independent investigation into alleged money-laundering schemes, Lower Mainland casinos were called “laundromats” used for washing the illegal money of organized crime groups.

It became clear that the problem is far more serious than initially expected, as a massive amount of money seems to have been laundered by local gambling enterprises, and the money-laundering scheme managed to even spread to other sectors of the local economy.

An independent report released as a result from the former Royal Canadian Mounted Police (RCMP) deputy commissioner Peter German has shown the troubling truth about the attention paid by local governments to the problem. According to the investigation held by auditors, the authorities preferred simply to turn a blind eye to money laundering in British Columbia casinos. BC General Attorney Eby also claimed that the Government has not taken any measures to stop the foul practice, saying that nobody protested accepting the money brought to the local casino industry unless they knew where this money had come from.

Mr. German’s report further confirms that no real action was taken to prevent the money laundering from spreading across the area, so the illegal activity proliferated in the province. The former RCMP deputy commissioner said that little was done to investigate on the matter in spite of all the evidence of a serious issue.

Also, despite the fact that some of the organized crime activities which took place across the province have foreign roots, Mr. German claims that it also begins domestically, as the residents of British Columbia were the ones buying the illegal goods. As previously revealed by Casino Reports, the Attorney General cast the blame for lack of law enforcement actions at the former BC Liberal Government, saying it did nothing to stop the scheme although it had been informed about what had been going on.

And still, has money laundering in BC casinos been a collective system failure, or there are others to be blamed for the problem as well?

Competition between Local Institutions Left the Schemes Go On

Apart from the revelations made in terms of the money-laundering schemes involving British Columbia casinos in illegal activities, other interesting facts emerged, too. Some juicy findings of the discord and internal competition between local institutions emerged, with the ill-natured relationship between the BC Lottery Corporation and the Gaming Policy and Enforcement Branch of the province also being blamed for the major gaps in regulation.

The bitter competition and institutional infighting were pointed out as the triumph of bureaucracy over common sense, as just like Peter German’s report showed, institutional players were sometimes too busy fighting each other instead of focus on schemes and illegal activities which have been flourishing in the province.

At the time of the investigation, the casino industry told Mr. German that it wants to see some clarity brought between the entity which currently oversees casinos and the one that regulates gaming. The former RCMP deputy commissioner, however, said that the two entities are more of spending their time and energy to throw mud on each other than trying to work in collaboration to resolve some issues.

BC Flawed Regulatory Regime Blamed for the Large-Scale Schemes

On the other hand, the province’s flawed regulatory regime for the BC casino industry was also blamed for the large-scale money laundering schemes which have been going on in local casinos. The report prepared by Mr. German not only revealed that transnational money laundering schemes in British Columbia, which was called the “Vancouver model”, took advantage of the competition between local government agencies and institutional infighting, but also found that flawed regulatory regime for casino gambling has also enabled the scheme.

According to the former RCMP deputy commissioner, the degree of sophistication which criminal organizations had demonstrated while carrying out the scheme. They have been working in unison across continents for years, targeting casinos in the province of British Columbia.

At the time of the investigation, Mr. German found that criminal organizations linked to various destinations around the world, including China, Mexico, Colombia, etc., have been using local casinos to wash illicit money by taking advantage of the gaps open due to internal struggles for supremacy which have been taking place.

Have Greedy Casino Operators Facilitated the Schemes?

With all of the above being said, could money laundering schemes be associated with another reason apart from institutional discord and flawed regulation in the province of British Columbia? Could one of the main reasons for the long-lasting practice be the greed of local casinos, which have let the schemes go undisturbed for years and years?

At the end of August, Casino Reports revealed a massive drop in the casino revenue in British Columbia in the first half of 2018. Local casino owners of the River Rock and Parq Vancouver blamed the new anti-money laundering measures taken by the government for the drop, which stripped the venues of millions in revenue in the first six months of the current year.

In August, the Dundee Corp. which owns and operates the Parq Casino in Vancouver reported that the gambling venue lost CA$80 million over the first half of 2018. The owner of the River Rock Casino, Great Canadian, suffered a decline which amounted to more than CA$6.5 million over the same period of time.

Considering the large money flow brought to the BC casinos as a result of the money-laundering scheme, what is the possibility for the casinos themselves to have let the scheme go on undisturbed, as more money was brought to their accounts? Casino Reports will continue to keep a close eye on the matter, making sure its readers are up-to-date with the latest news regarding BC casinos money-laundering schemes.