Casino Money Laundering Canada

British Columbia is going to crack down on large-scale transnational money laundering in its casinos that is tied to the opioid trade.

Money Laundering Meaning
Casino Money Laundering Cases
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From BC Govenment“Money laundering isn’t a victimless crime,” said Attorney General David Eby on Wednesday. “It’s linked to the opioid crisis, and deaths on our streets.”

OTTAWA, Nov 30 (Reuters) - The Canadian province of Quebec will launch an independent audit to gather information about possible money laundering and criminal activities in publicly owned casinos, the province's finance minister said on Monday. Investigators into money laundering in British Columbia said they went looking for a minnow but found a whale—or a whole group of whales, allegedly including casino high rollers. But gaming industry officials say the casinos reported the incidents as required to law. New anti-money laundering provisions relating to casinos were brought in by the Money Laundering Regulations 2017 (MLR 2017) on 26 June 2017. A key change is that all casino operators, both remote. The Canadian province of Quebec will launch an independent audit to gather information about possible money laundering and criminal activities in publicly owned casinos, the province's finance. VANCOUVER — A former RCMP officer 'ruffled some feathers' at the Great Canadian Casinos following an investigation of a loan shark at British Columbia's largest casino, an inquiry into money.

The announcement came after an independent report from Peter German, a former Canadian Mounted Police Commissioner, showed the extent to which casinos are being used to launder drug money.

At a news conference on Wednesday, German said it is hard to put a number on how much has been laundered in the past years but suggested a minimum of CA$100 million (US$75 million), and added it could be much higher.

The laundering scheme is based on the “Vancouver Model,” where money is relocated to Canada from China by loaning dirty money to gamblers who pay it back after they cash out, sometimes using offshore accounts.

German found that criminal organizations from China, Colombia, Mexico and elsewhere were using this scheme to launder drug money.

Usually, the money is laundered in three stages.

The crime groups loan money to high rollers and hire low-level members to gamble with small amounts. Those convert the cash into casino chips, gamble with parts of it for a while and then cash them out in form of legal checks or cash with a receipt proving they won the amount.

Video surveillance showing suspects carrying large bags stuffed with cash illustrates how this is when the launderers are most vulnerable.

The launderers walk out of the casinos with legitimatized money ready for the second stage called “layering.” The money they ‘won’ gambling is used to purchase cars or precious metals, invest in bonds or acquire near-bankrupt companies. Another way to layer or further disguise the money's origins is to place it in offshore accounts, shell companies and trusts.

In the third phase, the money goes back to its original owners, who spend it on real estate, cars, boats and the like. This can happen through simple wire transfers or can involve “sham companies, fraudulent accounting practices, and loan-back schemes.”

Loan sharks play a major role in the first phase and have historically been a part of the BC casinos, hanging around tables waiting for someone to run out of their personal funds and then offering them cash at exorbitant rates. The cash they carry with them mostly comes from illegal sources such as the drug trade.

While loan sharks initially operated on the game floor, casinos pushed their operations to the bathrooms and eventually outside the casinos.

“They began to arrange offsite cash transfers with patrons in nearby parking lots,” German's report said.

The former Mountie warned that a crackdown on casinos would send criminals to move cash through luxury goods, real estate, counterfeit products and horse racing and called for more investigations into these vulnerable sectors.

The Attorney General said that they have started implementing the 48 recommendations German put forth in his report.

When German talked to Vancouver Police, they said that while there is “significant money laundering in the legal casinos,” this is only “a drop in the bucket” of all the other ways money is being laundered throughout the region.

In response to the report, the British Columbia Lottery Corporation said it “will work in collaboration with service providers, law enforcement and regulators to keep dirty money out of B.C. casinos.”

A saleswoman shows customers an Aston Martin at a luxury car dealership in Vancouver, British Columbia on October 10, 2015. Sales of expensive cars and export to China have jumped and is being tied to money laundering (Julie Gordon/Reuters)

Money laundering definition from the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) : the process used to disguise the source of money or assets derived from criminal activity. There are generally three stages in the process:

-Placement: involves placing the proceeds of crime in the financial system;
-Layering: involves converting the proceeds of crime into another form and creating complex layers of financial transactions to disguise the audit trail and the source and ownership of funds (e.g., the buying and selling of stocks, commodities or property); and,
-Integration: involves placing the laundered proceeds back in the economy under a veil of legitimacy. (FINTRAC)

Last year an international investigation led by Peter German, former deputy commissioner of the Royal Canadian Mounted Police, estimated that British Columbia’s casinos were being used to launder up to $1 billion annually. The report suggested the money was coming primarily from Asian crime groups who then invested in expensive Vancouver and area real estate.

B.C. Attorney General David Eby (background) and investigator Peter German at the release of German’s report, Dirty Money, in Vancouver, June 27, 2018, into money laundering at B.C casinos, German’s latest report looks at laundering through exotic car purchase and export. (Yvette Brend/CBC

Casinos- now luxury cars

Suddenly Vancouver has also become a North American hotbed for extremely expensive exotic cars.

Now investigator Peter German has found the loophole. While large scale transactions involving cash raise alarms, this has not been the case for vehicle sales, including super exotic cars where dealers are not required to report large transactions to FINTRAC.

Money Laundering Meaning

B.C. Attorney General David Eby noted in a news conference about the findings said ,“In the luxury-car market, there is no financial reporting of large cash purchases, no oversight of international bank wire transfers and no apparent investigation or enforcement. The report also uncovered a complicated luxury-vehicle export scheme.”

Sales of exotic cars have skyrocketed in Vancouver and at other exotic dealerships elsewhere in the province. Provincial sates tax is returned to buyers if the car is not be licensed in B.C. such as if it is exported. Last year $28 million in tax was rebated to buyers who quickly exported the cars, mainly to China.(Christina Low)

Criminals use straw buyers who sometimes bring bags of cash for vehicle purchase or non-identifiable bank drafts, from small amounts of international wire transfers sent to multiple bank accounts., Perhaps surprisingly, a story in the Vancouver Sun noted that some of the so-called straw buyers were not able to speak English.

The vehicle then is turned over to the “real” buyer who may then resell to an exporter who ships it offshore, usually to China.

The Lamborghini Aventador SVJ on display at the Auto Exotica exhibit of the 2019 Canadian International AutoShow. Dealers at the show say sales have been kicked into overdrive in the last 3 years, from a few hundred to thousands, often to ‘well healed newcomers” (Philip Lee-Shanok/CBC

Adding insult to injury, once the car is sold abroad, the seller can apply for a rebate on the provincial sales tax. (PST) which on an expensive car can mean a huge sum is returned to the buyer.

Huge increase in exports and rebates given

German’s report notes that prior to 2014, PST rebates were fewer than 100. That jumped to over 700 in the following two years, then to over 3,600 in 2016. Last year the number of rebates give for luxury and exotic cars exported was over 4,400. The rebates total $85 million since 2013, with $28 million of that in 2018.

The report indicates several buyers have made multiple purchases and rebate requests.

The 300 page report is the second portion of investigator Peter German’s look into money laundering in British Columbia. Last June his “Dirty Money” report found substantial money laundering through the province’s casinos.

Video released by B.C’s attorney general shows casino customers bringing in bags of cash to one of B.C.’s casinos in an apparent act of money laundering. (B.C. attorney general)

British Columbia is now studying the report towards developing new rules, however coordination at the federal level would also be required

Casino Money Laundering Cases

German’s full report will include money laundering and the real-estate market in the province.