Cash cap the only way to prevent money laundering in B.C. casinos, inquiry hears

A lawyer for a gaming expert says limiting the amount of cash flowing through casinos is the only way to stop money laundering at the facilities in British Columbia.

Christine Mainville told a public inquiry Tuesday that money is not being laundered through casinos in any traditional sense and it becomes easier to track dirty cash if fewer dollar bills are making their way through them.

"When only cash is permitted, it is more challenging to differentiate between legitimate cash and illegitimate cash," said Mainville, representing Robert Kroeker, who held top positions at the British Columbia Lottery Corp., the Great Canadian Gaming Corp. and with the province's civil forfeiture office.

While efforts have been made to reduce the amount of cash entering casinos, more needs to be done, she said.

Non-cash forms of payment such as cheques and bank drafts are preferable because they provide a paper trail and allow for better tracking of the movement of funds, said Mainville.

"Transactions coming directly from a bank are traceable and carry a lower money laundering risk than cash transactions," she said.

The provincial government called the inquiry after three reports last year said casinos and horse racing along with the real estate and luxury car markets are laundering the proceeds of crime. The inquiry is being led by Austin Cullen, a B.C. Supreme Court judge.

Blown out of proportion 

The inquiry should also pay more attention to financial institutions and unregulated banking channels, Mainville said, adding that money laundering in casinos has been blown out of proportion.

"Illegal schemes working in the financial sector and away from legal casinos are at the centre of this model," she told Cullen. 

Robin McFee, counsel for lottery corporation president James Lightbody, said the organization recognized the threat of money laundering in the gaming sector, and fostered a corporate culture that promotes ethical practices while also working with law Enforcement.

"Contrary to turning a blind eye to the possibility of money laundering, Mr. Lightbody made active efforts to be responsive to money laundering concerns in the gaming sector," he said.

"These efforts included efforts towards greater coordination with organizations, enforcement and regulatory agencies across the industry and with law enforcement, as well as working within BCLC to address money laundering concerns."

McFee said his client along with the lottery corporation has worked to draw attention to money laundering issues and to press for more collaboration and coordination across different organizations including law enforcement and regulatory agencies.

During his time as president of the corporation, Lightbody expanded its anti-money laundering investigation unit, which has the authority to act independently, including barring certain customers and advising casino service providers not to accept cash from certain people, he said.

"Money laundering is a complex and constantly evolving phenomenon," said McFee.

"It demands, by its nature, a collaborative and co-ordinated approach to anti-money laundering initiatives across various organizations and sectors."

Illegal vehicle exports

Morgan Camley, a lawyer for BMW, told Cullen the company is aware of a grey market for its vehicles in British Columbia as she laid out how the illegal export of its vehicles takes place.

Although customers who lease or buy certain BMW models in Canada must sign a non-export agreement and vehicles have GPS tracking equipment, it is not always possible to locate them because the technology can be tampered with, Camley said.

"Vancouver is known as the luxury car capital of North America" with BMW having a "substantial presence,'' with 85 dealerships selling BMW, Rolls-Royce or Mini vehicles, she said.

Cullen asked whether this is a "market issue" for BMW.

"Yes," Camley replied, adding it has hurt sales.

The British Columbia Civil Liberties Association, meanwhile, urged the inquiry to develop appropriate responses to money laundering by having checks and balances in place to protect rights and liberties.

"The risk to the privacy rights and civil liberties of British Columbians is profound," Megan Tweedie said.

"Developing an effective anti-money laundering regime cannot simply reflect calls for more invasive powers."