B.C. lottery corp could have controlled flow of dirty money in casinos: ex-regulator

VANCOUVER (NEWS 1130) – Large amounts of suspicious cash flowed into B.C. casinos for years and the province’s gambling corporation didn’t do enough to control it, a former provincial regulator testified on Friday.

Larry Vander Graaf, the former executive director of the B.C. Gaming Policy Enforcement Branch (GPEB), told the Cullen Commission of Inquiry into Money Laundering that the B.C. Lottery Corporation (BCLC) could have done more to stop gamblers from cashing in thousands of dollars in $20 bills.

Vander Graaf said it was a “problem” for both the province’s gambling regulator and the Crown-corporation for gambling reported to the same B.C. government minister.

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BCLC was primarily focused on generating revenue, but it also shared the responsibility of maintaining the integrity of gaming with GPEB, he said, adding, “that scale has to be tipped in the integrity direction.”

“I believe there has to be an independent oversight,” he said.

While the BCLC wasn’t responsible for investigating money laundering, it did have the ability to restrict dirty money from entering casinos.

The former regulator said he suggested BCLC cap the amount of in $20 bills that could be cashed and that it require a source-of-funds declaration of high-value gamblers.

“Without direct police intervention into organized crime, that was the method we felt would be most successful in stopping the flow of money in,” Vander Graaf told the commission.

Vander Graaf said GPEB had no mandate or ability to investigate money laundering.

He said his office received information from the Financial Transactions and Reports Analysis Centre of Canada (a federal intelligence agency) but could do little to act on the intelligence because it did not have proof of an initial crime from which suspect money came.

Even when FINTRAC tipped his team off to possible money laundering, Vander Graaf says, more investigation is still needed before anything can be done.

He said he would be more successful if he could tag on to a bigger investigation and focus on the money laundering component.

— kelvin gawley (@byGawley) November 13, 2020

The challenges of investigating international crime webs and Canada’s slow-moving courts bolstered Vander Graaf’s belief that cash restrictions at casinos provided an immediate and effective intervention into money laundering, he said.

When BCLC lawyer Bill Smart suggested Vander Graaf had been ahead of the curve in recognizing the severity of money laundering in casinos, the former regulator pushed back.

BCLC is in no better position than GPEB to prove money laundering.

BCLC wasn't able to perform a criminal investigation but had the responsibility to maintain the integrity of gambling, VG says.

— kelvin gawley (@byGawley) November 13, 2020

“I know what you’re trying to say: ‘There’s an evolution.’ But the evolution stops when you see it that significant coming into the casino. You have to react very quickly and limit the 20s or do something,” he said. “BCLC had significant resources and knowledgeable people to deal with that.”

On Thursday, Vander Graaf told the commission that the flow of dirty money through B.C. casinos took off during the lead up to the 2010 Winter Olympics in Vancouver, as the RCMP prepared for “the biggest security endeavour in Canadian history.”

With files from the Canadian Press