Lavish money laundering schemes exposed in Canada

VANCOUVER (NYTIMES) - Self-professed students were buying multimillion-dollar homes in the Vancouver area, with dubious sources of income, or none at all.

A family of modest means transferred at least CA$114 million (S$122.81 million) to British Columbia.

Loan sharks cleaned their dirty money by giving garbage bags and hockey bags full of illicit CA$20 bills to gamblers who took it onto casino floors.

Those were just some of the findings from a long-awaited report into money laundering in Canada's western province of British Columbia, which after two years of testimony was finally released by a special commission on Wednesday (June 15).

Canada is a "major money laundering country," with weak law enforcement and gaps in its laws, that put it on a list of countries that included Afghanistan, China and Colombia, according to a 2019 report by the State Department.

Few places in Canada launder as much money as the province of British Columbia, specifically the region around Vancouver, which has one of the country's biggest underground economies.

The province has earned an international reputation as a haven for "snow washing" - a term for money laundering in Canada, according to government officials.

Billions of dollars a year have been laundered there by criminals, using tactics such as gambling in casinos, buying and selling luxury goods, and taking out residential mortgages that are paid off in cash instalments small enough not to trigger any alarm bells.

British Columbia's gambling industry is a cash cow for the provincial government. At its height in 2015-16, gambling generated a record CA$3.1 billion in revenue, about one-third of which went to the government and was used to finance hospitals and health care, community organisations and other projects.

The commission was tasked to delve deeply into how bad money laundering in the province had gotten, and whether regulatory organisations, as well as the government itself, had failed to stem it, or even worse, turned a blind eye to it.

While the report found no evidence of corruption, some elected officials were aware that suspicious funds from the gambling industry were entering the provincial revenue stream and took no action to stop it.

The report, more than 1,800 pages long, lays out the staggering scope of money laundering in the province and sets out more than 100 recommendations for addressing it.

The province should create an anti-money laundering commissioner and a dedicated money laundering investigation and intelligence police unit to address this "corrosive form of criminality," the report says.

"Money laundering is fundamentally destabilising to the society and the economy that we all want for the province,'' Mr Austin Cullen, the head of the commission and a former British Columbia Supreme Court Justice, told reporters on Wednesday. "Sophisticated money launderers have used British Columbia as a clearinghouse or a terminus for laundering an astounding amount of dirty money."

The provincial government announced the inquiry in May 2019 after a series of government-sponsored reports found what the commission called "extraordinary" levels of money laundering in the real estate, casino, horse racing and luxury car sectors, fuelled in part by the illegal drug trade.

The commission, headed by Mr Cullen, a well-respected judge, has been a constant drumbeat across the country throughout the pandemic, hearing from almost 200 witnesses, including a former premier, a government minister accused of ignoring warnings about money laundering in casinos because they offered huge revenue for the government, and police officers alleging their investigations into illicit gambling were shut down for similar political reasons.

Witnesses told the commission how one scheme worked. Rich gamblers from China flew in, wheeling hockey bags stuffed with tens of thousands of CA$20 bills to play baccarat at private salons inside Vancouver-area casinos.

The money was suspected to come from loan sharks connected to Chinese criminal gangs and drug traffickers. The loan sharks laundered their drug money by lending it to the gamblers, who would in turn repay them with clean money deposited to bank accounts in China or Hong Kong. This became known as the "Vancouver Model."

Specialised gambling police and lottery investigators raised an alarm but found their investigations shut down or blocked, or even worse, they were fired, the commission heard.

The betting limits in casinos were hiked to CA$100,000 per hand, allowing even more money to be laundered.

British Columbia's Attorney-General David Eby, who has been campaigning against money laundering for many years, told reporters earlier this month he hoped the report would offer his government a road map for turning the province and Vancouver, "into a model for fighting money laundering instead of a centre where it takes place."

Already, the British Columbia government has taken some steps to combat the problem.

It has tightened the rules at casinos, requiring gamblers to declare their source of funds and in 2019, launched a public land ownership registry, requiring certain real estate holders in the province to disclose their owners, particularly those hidden behind shell companies, trusts, partnerships and other "beneficial owners."