Casino gambling has long been a profitable industry in British Columbia. Casinos located across Canada’s westernmost province have been particularly popular among high rollers from China, a trend that has turned into one of the main drivers behind its casino industry’s profitability.
However, while casino gambling may be considered a leisure industry by many, others have been exploring and exploiting weaknesses in the way it is monitored and controlled to reap benefits and mask their illicit activities.
Over the years, British Columbia’s gambling regulation bodies and local casinos have been blasted for poor money laundering controls quite often. And a 2016 report released on Friday by the province’s new Attorney General, David Eby, stirred the pot once again.
The 2016 Report and River Rock Casino Resort’s Role in It
River Rock Casino Resort is a hotel and casino complex, located in the city of Richmond, which is, in turn, part of the metro Vancouver area. As mentioned above, British Columbian casinos have long been attractive to Chinese VIP customers and River Rock’s casino floor has been a particularly favorite destination.
On Friday, Attorney General Eby made public a 2016 report that was centered around suspicious activities at the casino referring back to July 2015. Said report was aimed at probing the casino after it became known that it accepted the amount of C$13.5 million in just a single month (July 2015). The fact that the aforementioned sum was deposited in C$20 bills captured even greater attention, as it indicated that the gambling venue could have been used for money laundering or other criminal purposes.
According to the report, River Rock Casino featured special VIP rooms with Cantonese- and Mandarin-speaking staff. There were instances of players exchanging cash of over C$500,000 for its worth in chips. However, the sources of the money remained unknown.
The report found out that most of the C$13.5 million deposited in July 2015 came namely from Chinese high rollers. Here it is important to note that Chinese nationals are only allowed a foreign exchange quota of US$50,000 per year. On the other hand, there is no limit to the money that flows into Canada as long as it is registered with the competent agencies. The River Rock Casino report suggested that the money exchanged in July 2015 could have been loaned from underground banks.
Under British Columbia’s gambling laws, casinos must report all transactions of C$10,000 or over to Canada’s Financial Transactions and Reports Analysis Centre (FINTRAC). Such transactions could not be immediately and necessarily classified as suspicious ones. During the period between 2013 and 2015, River Rock Casino was found out to have filed reports on 54,187 large transactions. Of those, only 1,194 were classified as suspicious.
Casinos can also ban patrons that have been found out to have been trying to perform high-risk transactions or ones potentially aiming to mask illegal activities. During the above-mentioned reported period, River Rock Casino issued 1,209 such bans.
British Columbia’s Money Laundering Problem
The July 2015 instance of alleged money laundering activity at a British Columbia casino has not been the first one to have attracted media attention over the years.
In 2014, local news outlet CBC News reported that more than C$27 million flowed through River Rock Casino and Starlight Casino in New Westminster in the period between March and June 2014. The money reportedly came in large bundles of C$20 banknotes. According to various reports, twenty-dollar bills were the preferred currency among street drug dealers.
The greater portion of the money – around C$24 million – was deposited in River Rock Casino. The transactions were reported as suspicious by casino staff, yet actions were not taken by British Columbian police. Both River Rock Casino and Starlight Casino took central part in another similar news story produced by CBC News back in 2011. However, the amount flagged as suspicious exchange totaled nearly C$8 million that time.
Here it is important to note that 2011 was supposed to be an important year for British Columbia’s casino industry, one that was supposed to see stakeholders and regulators deploy stricter controls and intensify their attempts to combat money laundering and other illicit activities.
After the number of suspicious transactions increased at British Columbia casinos in the years prior to what was devised as a crackdown on money laundering, the British Columbia Lottery Corporation (BCLC), the Ministry of Finance’s Gaming Policy and Enforcement Branch, and other regulatory bodies eventually decided that stricter measures should be implemented.
Said measures tried to discourage casino patrons from depositing cash at the province’s casinos. Electronic means for money transfers were recommended instead. Thus, money exchanged for its worth in chips was hoped to be traced more easily both upon entering one casino or another and leaving it.
Six years after those recommendations were issued, cash transfers have remained the preferred option among customers, particularly among the ones who deposited larger amounts of money and were not very keen on disclosing the source of the money.
Back then, the BCLC was heavily criticized for failing to implement stricter anti-money laundering controls. The regulatory body was even blasted for wrongfully assuming that everyone losing money at one casino or another was immediately free of money laundering suspicions. According to British Columbia officials, that assumption was not in accord with the province’s general anti-money laundering policies.
In other words, people using casinos to exchange money for chips, then exchange the chips for money and present them as casino winnings, could still decide to lose some of that money at gaming tables and British Columbia’s casino operators and regulators should have born that in mind.
Earlier this year, the BCLC issued the Casinos and Perception of Crime manual putting an emphasis on the fact that it, as a regulator, and industry stakeholders have deployed powerful tools to prevent “would-be money launderers” from targeting the local casino industry. The regulatory body pointed out that all transactions taking place at any Canadian casino are video recorded and that no large financial transactions can be completed at any Canadian casino anonymously.
No matter whether the above-stated is true or not, it is important to note that the British Columbia casino industry seems to have become particularly reliant on proceeds from high roller players. Local casinos allow table limits of up to C$100,000 per hand, which only in 2015 contributed significantly to the regulator generating over C$1.25 billion.
On the other hand, multiple instances from the past several years clearly show that the province has a problem with preventing suspiciously high transactions on casino floors and probably has a bigger money laundering problem.
