Ottawa’s increase in funding for the country’s money-laundering watchdog is set to help it beef up outreach and examinations in B.C.'s gambling sector, including more on-the-ground visits to casinos suspected of laundering more than $100 million in ill-gotten gains over the past decade.
This week’s federal budget proposed an extra $16.9-million for the Financial Transactions and Reports Analysis Centre of Canada (FinTRAC) over the next five years as part of Ottawa’s plan to “modernize” Canada’s anti-money laundering regime, which has drawn major criticism over the past year for its inability to stop billions from being laundered through British Columbia real estate and casinos. The agency confirmed Wednesday that part of that budget boost will go toward more examinations in both those sectors.
During the 2017 fiscal year, FinTRAC completed one examination of a casino entity, but, due to privacy concerns, could not say whether that was the Crown-owned BC Lottery Corp. (BCLC), which collects reports of possible money-laundering from the province’s 18 casinos then filters them and passes them on to the federal agency. During the previous two fiscal years, FinTRAC examined 14 of the 18 other reporting casino entities across Canada.
British Columbia’s Attorney-General David Eby welcomed the new federal funding and resources, for which he has been pushing for months. He noted that fewer examinations can be more effective if they are properly targeted, but he found the number of examinations in recent years “surprisingly low.”
“If they are only visiting reporting entities like the BCLC and not individual casinos that’s not good enough,” he said. “If they had gone to Lower Mainland casinos over the better part of a decade – when this activity was taking place – I have trouble imagining that they wouldn’t have been shocked and amazed by what they saw in terms of the bulk cash coming into the casinos.”
FinTRAC said it can assess more than 90 per cent of compliance requirements by visiting the headquarters of a central reporting entity such as the BCLC.
“In relation to assessing training, FINTRAC interviews front line staff at various casino locations based on a risk-based approach,” spokesperson Renee Bercier said in an e-mailed statement.
Mr. Eby, who is expecting an independent review into the province’s real-estate sector to be completed within the next month, said the review he commissioned last year into money laundering in his province’s casino sector showed police didn’t have enough resources to properly investigate and FinTRAC was hamstrung in sharing much of the intelligence it gathers from the various sectors reporting suspicious transactions.
A key reform still in progress, he said, is designating another provincial regulatory body as the FinTRAC reporting entity so that unedited anti-money laundering reports from casinos are sent back to the federal agency by an organization that – unlike the BCLC – “isn’t also charged with maximizing revenue” in the sector. The BCLC deferred comment on this change to Mr. Eby’s Wednesday, but noted that all the 48 recommendations in last year’s casino report were accepted and are being implemented with help from the provincial government.
At the end of 2014, a FinTRAC employee completed a draft analysis of Canada’s vulnerabilities to money laundering and found sophisticated criminals were likely washing vast sums of money in the banking, real estate and casino sectors. The author of the comprehensive research was reassigned and the draft never published at a time when Metro Vancouver’s property market began skyrocketing and just before reports of suspicious transactions in B.C. casinos peaked in July, 2015, when more than $27-million in questionable cash reportedly passed through these establishments.
Tuesday’s budget outlined a raft of other changes aimed at cracking down on money laundering, including spending nearly $5-million annually over the next five years to create a new expert task force to identify threats and loopholes and improve how various agencies share intelligence. The budget also earmarked $50-million over the next five years for the Canada Revenue Agency to create four new residential and commercial real-estate teams to audit “high-risk regions” in B.C. and Ontario.
Mike Hager