'Significant' disconnect between B.C. Lottery Corporation and gaming regulator over money laundering, AG says

Attorney General David Eby told a public inquiry Monday he encountered a "significant," confusing disconnect among B.C. gaming officials on the issue of money laundering around the time the problem peaked in the Lower Mainland.

Eby said he received such different stories from the B.C. Lottery Corporation (BCLC) and its regulator, he didn't know which officials to trust after he took over the gaming portfolio in 2017. 

"Either we had a FINTRAC-recognized, leading anti-money laundering program or we had a profound and ongoing money laundering problem in our casinos," Eby told the Cullen Commission during his testimony, referring to the Financial Transactions and Reports Analysis Centre of Canada, which is Canada's anti-money laundering agency.

Eby was the latest senior B.C. politician to testify this month before the Cullen inquiry, which is investigating the scope and impact of money laundering in the province over the past decade and a half.

The minister said he first grew concerned about a money laundering problem while he was Opposition critic. He wrote a letter imploring then-minister responsible Mike de Jong to act after seeing media reports about patrons going into casinos with piles of bulk cash, not necessarily betting and leaving fairly easily with a cheque.

'Profoundly different' perspectives

Eby said he was briefed by both the BCLC — which oversees casinos — and the Gaming Policy and Enforcement Branch — which regulates gaming — after he was sworn in as minister in the summer of 2017.

He said their stories were "profoundly different."

BCLC officials told him they had a successful, industry-leading anti-money-laundering program, but GPEB staff were "deeply concerned" there was a serious ongoing problem. Eby said the regulator showed him video of patrons bringing hundreds of thousands of dollars in $20 bills into casinos to drive their point home

"I left the briefing saying, 'Oh, my gosh, I need to talk to my deputy attorney general. I need to get some advice about how best to move forward here, because the correct route is not clear to me,''' said Eby.

"GPEB felt that their concerns about … the potential of money laundering in casinos were not being adequately heard by the B.C. Lottery Corporation and that they were at odds about what type of action was necessary. The core of it being that GPEB wanted more severe restrictions and B.C. Lottery Corporation did not," he said.

Eby brought in Peter German, a former lawyer and RCMP deputy commissioner, to run an independent review in 2017 on the extent of suspicious money and its links to organized crime.

German ultimately published the Dirty Money report in 2018. The lengthy review found at least $100 million had been laundered in B.C. casinos over a decade. It also detailed gaps in oversight created by systemic infighting and dysfunction between BCLC and GPEB.

Eby defends 'blind eye' allegations

After the report came out, Eby condemned the previous Liberal government for turning a "blind eye" to the problem. He stood by the comments during his testimony Monday after a tense exchange.

"Those are very serious allegations to make about politicians you sat in the legislature with," said Bill Smart, the lawyer representing BCLC.

"Yes, but with respect, Mr. Smart, you need to understand I was the [Opposition] critic for years .... I wrote to the minister responsible [then Mike de Jong] and said, 'It looks like there's a serious issue here,' and I got back a letter that said, 'No, there's not,' and when I asked about it in question period, I got the same response," Eby replied.

"I make no bones about the fact I would have handled this issue differently than the previous administration did."

De Jong said during his own testimony Friday the Liberal government made "serious attempts" to understand and address the issue of money laundering and disputed "frustrating" allegations anyone deliberately ignored the problem. Former premier Christy Clark told the inquiry no one from within her government alerted her to the problem until a spike in suspicious cash transactions in 2015.

Eby agreed a new BCLC requirement for some patrons to identify the source of their money starting in 2015 did result in lower suspicious cash transactions at casinos. Smart told the inquiry cash buy-ins at B.C. casinos dropped from $38 million in July 2015 to $6.6 million that September.

The NDP government called the Cullen inquiry after reports revealed B.C.'s gaming, real estate and luxury vehicle sectors were being used to launder proceeds of crime.

Rich Coleman, the former Liberal solicitor general, will testify on Wednesday. The inquiry has heard allegations Coleman did not act on money laundering because he was more concerned with preserving gaming revenue, allegations he has previously denied.