British Columbia’s long-awaited report on money laundering was released Wednesday, June 15, with numerous recommendations, including the creation of a new law enforcement unit and a permanent commissioner dedicated to the resolution of the problem estimated at several billion dollars.
B.C. Supreme Court Justice Austin Cullen was tasked with leading the investigation in May 2019 after a series of government reports revealed ‘extraordinary’ levels of money laundering in the sectors. real estate, casinos, horse racing and luxury cars, fueled in part by the illegal drug trade. In his final report, Cullen said human trafficking and fraud also fuel the problem.
The 1,800-page Cullen Final Report says the lack of effective action by law enforcement, government and regulators is why money laundering has been allowed to flourish for so long. It also aims to blame the federal agency responsible for receiving and analyzing information related to money laundering threats, FINTRAC, which the commissioners say has done a poor job of relaying information to the provinces.
In 2019/20, for example, FINTRAC received more than 31 million reports, but only disclosed 2,057 to law enforcement agencies in Canada and only 355 to British Columbia, according to the report. As a result, reporting entities have started “defensive reporting”, where they send information even if they are unsure of its value. This results in a high volume of low value reports, Cullen found.
To address this issue, Cullen said BC law enforcement needs its own money laundering intelligence and investigation unit. At the legislative level, Cullen also recommends that the government create a permanent, independent Anti-Money Laundering Commissioner, who will provide strategic oversight of British Columbia’s response.
“Because the damage it (money laundering) causes is not as visible as that caused by other crimes (such as violent crime), it often receives less priority and attention,” says Cullen in his report.
He indicated that casinos were the main sector to target.
In Lower Mainland casinos alone, Cullen estimated that hundreds of millions of dollars from crime were laundered between 2008 and 2018. He said the method used by criminals is known as the “Vancouver Model”. where wealthy casino patrons are given large sums of money to gamble with, and when they cash out, they return the remaining funds as a wire transfer or other non-cash payment.
In 2014, BC casinos accepted nearly $1.2 billion in cash transactions of $10,000 or more, including 1,881 individual buy-ins of $100,000 or more, Cullen found. Often this money came in the form of $20 bills, wrapped with rubber bands and kept in gym bags, shopping bags, cardboard boxes or backpacks.
The real estate sector is another vulnerable area, Cullen said. Buying high-value properties gives criminals a safe place to store and launder their money, and real estate agents often don’t know it’s happening, Cullen said. Here, he said, more education about what money laundering looks like is needed. For example, criminals sometimes take out a mortgage to buy property and then make cash payments (any payment under $10,000 does not need to be reported).
Cullen also made some important clarifications in his report. He said that while government and BC Lottery Corp. were aware of suspicious funds entering provincial revenue streams through the gambling industry, there is no evidence of corruption on their part. He also said money laundering is unlikely to have a significant impact on housing affordability in British Columbia.
Its report calls for better regulation of a number of industries, including accountants, lawyers, money services businesses, mortgage lenders, the luxury goods sector and cryptocurrency.
It also highlights the importance of focusing on asset forfeiture. In 2019, he discovered that the BC Civil Forfeiture Office seized only $13.4 million in illegal assets, despite estimates of billions of dollars in illegal money circulating in the province each year.
Throughout the investigation, Cullen heard testimony from 199 witnesses and 23 additional witnesses by affidavit, received 1,063 exhibits, and held 5 community meetings.
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