Canada Money-laundering at B.C. casinos: Review calls for increased reporting of big cash deposits

07:21  06 december  2017
07:21  06 december  2017 Source:   Vancouver Sun

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The bank is still required to submit a report to the authorities about the large cash deposit . tribal casinos regulated, exemptions to CTR reporting Proposed rules for money service businesses Money Laundering and Financial Crimes Strategy Act SARs for casinos and card clubs.

Preliminary recommendations from a review into B . C . casino money laundering allegations say that casino operators must complete increased customer source of funds reporting for big cash deposits and a controversial form of currency known as 'bearer bonds.'

101517-no_object-237446745-PNG0922__11352-W.jpg: Preliminary recommendations from a review into B.C. casino money laundering allegations say that casino operators must complete increased customer source of funds reporting for big cash deposits and a controversial form of currency known as 'bearer bonds.' And secondly, government regulators must maintain a visible presence and increase investigative staff in B.C.'s largest casinos.© Francis Georgian Preliminary recommendations from a review into B.C. casino money laundering allegations say that casino operators must complete increased customer source of funds reporting for big cash deposits and a controversial form of currency known as 'bearer bonds.' And secondly, government regulators must maintain a visible presence and increase investigative staff in B.C.'s largest casinos.

High-stakes gamblers will no longer be able to walk into B.C. casinos and buy chips with bundles of $20 bills stuffed into hockey bags, Attorney General David Eby promised Tuesday.

Eby was explaining to reporters what he hopes will follow from the first two preliminary recommendations filed by independent reviewer Peter German, who was asked to probe allegations that large-scale transnational money laundering has been occurring in B.C. casinos. Eby said that based on German’s findings, gleaned from numerous interviews completed since late September, these allegations have been proven.

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The province said the independent review will assess B . C .’s anti- money - laundering policies and practices in the gaming industry. READ MORE: B . C . Attorney General calls for review on money laundering at casinos following report .

The report , which is not a full review , made a number of recommendations back then, including how casinos should refuse unsourced cash deposits over a certain amount. READ MORE: 9 people arrested in network connected to illegal gaming houses and money laundering in B . C .

German’s first recommendation is that casino operators must complete increased customer identity and source of funds reporting for cash deposits and bearer bond deposits of over $10,000. The second recommendation is that government regulators must maintain a visible presence and increase investigative staff in B.C.’s largest casinos.

Bearer bonds are a controversial financial instrument that is unregistered and therefore only owned by the person who is physically holding the document.

The Financial Times has reported that although the U.S. Treasury moved to eliminate bearer bonds from global finance in 1982, these opaque securities are still being used, especially in the offshore banking world.

Now in B.C. casinos, for gamblers presenting cash or bearer bonds of $10,000 or more, “at a minimum, the declaration must outline a customer’s identification and provide the source of their funds, including the financial institution and account from which the cash or bond was sourced,” German’s recommendation states.

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Anti- Money Laundering (AML) Programs and Nevada’s Casino Industry • Wiring funds into front money accounts and depositing cash the next day followed by withdrawing half of the funds through structured drafts The reporting casino indicated awareness that criminals engaged in such activity.

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If gamblers make two such transactions in a row, casinos can only accept the funds “once it has been determined that it is not of a suspicious or illegal nature,” Eby said. Eby said he understands that German’s recommendation will also cover bank drafts, which have been used in suspicious B.C. casino transactions, according to government documents.

Postmedia News asked Eby is this first recommendation did not simply mean more of the same type of transaction reporting that casino staff have already been filing under B.C. Lottery rules, while staff continue to accept suspected money laundering transactions. Eby said he understands that critics have reported that the business model of B.C.’s casino industry is to accept dubious transactions with little questioning.

“I have every confidence that when (German’s) final report is filed we will be able to comprehensively deal with this issue,” Eby said. German’s full recommendations will be filed in March 2018.

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"I received a series of briefings that caused me to believe that our province could do more to combat money laundering at B . C . casinos ," he said. The recommendations in the report include moving to cash -alternatives at gaming facilities, refusing unsourced cash deposits over a certain amount and

Last, money laundering can increase the threat of monetary instability due to the misallocation of resources from artificial distortions in asset and commodity prices. n Structuring cash deposits below the reporting threshold, or purchasing vehicles with sequentially numbered checks or money orders.

The allegations that German is reviewing were first revealed in an audit of B.C. casinos launched in 2015 by accounting firm MNP LLP after the RCMP started to investigate allegations of transnational money laundering networks that were mostly targeting Richmond’s River Rock Casino. According to the allegations, a network of organized criminals was lending suspected drug cash to high-stakes gamblers from China, who used the funds to buy chips. Eby says he decided to appoint German after learning that in July 2015 that $13.5 million in $20 bills that police suspected was proceeds of crime, was accepted at River Rock.

German’s first recommendation appears to respond partly to findings of the MNP audit.

MNP said that River Rock’s staff “fostered a culture accepting of large bulk cash transactions.” And because the majority of VIPs using cash to buy chips are from China or have recently acquired resident status in Canada, it is difficult for staff to build client profiles to judge if their wealth is legitimate, MNP’s report says.

MNP also recommended that “casinos refuse unsourced cash deposits exceeding a certain dollar threshold until the source can be determined and validated.”

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The rise of legalized gambling and the high cash volume associated casino money laundering cases gaming have increased the casino industry's vulnerability to this type of criminal activity. The Secrets of Online Money Laundering - MIT Technology Review .

WATCH: report alleges major money - laundering scheme is being operated through B . C . casinos . READ MORE: B . C . Attorney General calls for review on money laundering at casinos following report .

In a statement, Terrance Doyle, chief operating officer of Great Canadian Gaming Corp., which runs River Rock, said “Great Canadian supports the provincial government’s announcement regarding the interim recommendations made by Peter German. The declaration of source of funds for high value players is something virtually all our guests who play at these levels are familiar with completing, and we do not believe this will impact the guest experience.”

Also, considering the high volume of cash flooding into River Rock, MNP said the casino didn’t have enough staff to follow anti-money-laundering protocols and investigate risks. German’s second recommendation addresses this point for all large Lower Mainland casinos.

“Government regulators must be seen on site at large, high-volume facilities on the Lower Mainland and available to the (casino operators),” German’s recommendation states. “Once staffing is in place, a gaming policy enforcement branch investigator will be on-shift and available to high-volume casino operators in the Lower Mainland on a 24/7 basis.”

Eby said that gaming enforcement branch staff have a wide range of powers over casino operators and casino staff, and their presence on site will allow for an increased vigilance against money laundering in casinos. These investigators will also help casino operators monitor suspicious lending and questions about sources of funds, Eby said.

Eby said the government will hire the staff needed to fulfil German’s second recommendation by next year.

scooper@postmedia.com

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