The Cullen Report chronicled in painful detail how vulnerable British Columbia, Canada’s casino industry was to money laundering. And how the highly placed officials responsible for fighting that issue largely ignored it for a decade, from 2008-2018. It has set off a firestorm of alarm among the gaming industry regulators in the rest of the country.
The 1,800-page report, written after two years of testimony from hundreds of witnesses in hearings led by Commissioner Austin Cullen, was released in June. It has put regulators in neighboring provinces such as Ontario on high alert, as they confront the reality of their own vulnerabilities.
Ontario has begun cracking down on venues that try to avoid anti-money laundering (AML) regulations. In July the Alcohol and Gaming Commission of Ontario fined HR Ottawa LP —owned by Hard Rock International—$227,250 which operates Ontario Lottery Gaming Corporation Slots at Rideau Carleton Raceway in Ottawa for dozens of violations.
The most serious offense was repeatedly failing to enforce AML policies and procedures. Shortly thereafter, Royal Canadian Mounted Police dug up money laundering activities in Toronto and Niagara-area casinos after a four-year investigation. Five persons were charged for laundering $3 million from the illegal sale of cannabis.
There are links between such activities in Ontario and British Columbia, says James Cohen, executive director of Transparency International Canada (TIC), interviewed by US Bets. He said, “As the crackdown came in B.C., there’s been a move towards Ontario — because the networks that work with B.C. definitely have linkages in Ontario.” He added, “With the Greater Toronto Area, it’s kind of everyone. There’s linkages to networks all over the world and there’s domestic networks.”
The illegal activities in B.C. would have remained uncovered if some officials, such as the B.C. Attorney General, hadn’t become interested, said Cohen. “So far, we haven’t seen the same level of concern in Ontario about the scale of money laundering.”
TIC leads the world in shining a light on governmental corruption. Cohen, who heads the Canadian chapter, said it has estimated that the amount of money laundered in the country is as much as $113 billion a year.
He added, “We’re still trying to figure out which province is at the highest risk. This is a problem that Canada has, and we think very regionally. We have to think about the whole country being at risk. … It’s the balloon analogy: If you squeeze one side, the air goes to another spot. I mean, just naturally because of the size of the Ontario economy, Ontario is vulnerable — highly vulnerable.”
Matt McGuire, an expert in AML, who founded the Toronto-based AML shop, told US Bets that port cities are especially vulnerable, and fewer than 1 percent of outgoing containers are inspected. The border towns and financial centers of Toronto, Vancouver and Montreal, are “huge centers for providing money laundering because you can find lots and lots of volume within bigger volumes.”
Among the top recommendations made by Cullen in his report was for the province to appoint a dedicated AML commissioner. He also urged that the threshold for gamblers to provide proof for the source of their cash be lowered to $3,000.
McGuire agrees, “Cullen rightly pointed out that there is a lot of money laundered in the country, despite the fact that we can’t put a finger on exactly how much.” McGuire added, “The second thing that I think he got very right is that we have very little in the way of prosecutions, or convictions, or forfeitures, to show for what has become a model of compliance and record-keeping.”
He concluded, “We know lots of it money laundering is happening because our international partners are showing the connection to the country. And we’re not prosecuting vigorously.”
