An internal memo within the British Columbia government warned earlier this year that organized crime in BC casinos, particularly money laundering using drug money, was a “viable threat to public safety” Postmedia reported last week.
The memo, which was sent to BC’s assistant deputy minister in charge of gaming enforcement, John Mazure, was obtained by Postmedia using a freedom of information request. It demonstrates that the government was aware in April of a problem that has now grown to a public scandal in the Canadian province.
The memo, penned by the gaming enforcement branch director of enforcement Len Meilleur, said, “The gaming policy enforcement branch intelligence unit reports that organized crime presence in and around B.C. casinos presents a viable threat to public safety.”
It cites Royal Canadian Mounted Police and Lottery Commission investigations that allege that “illegitimate lenders” linked to organized crime were lending money generated by criminal activities to gamblers, often in casino parking lots. These lenders were allegedly involved in larger criminal activities, such as drug trafficking, said the memo.
One of the sources of the illegal loans was an underground banking network with links to China, said the memo. That same network is allegedly lending drug-generated money to Chinese gamblers, who then played at BC’s River Rock Casino. This was a result of a crackdown by the Chinese government against gambling by Chinese residents, and attempts to prevent funds from flowing out the country.
This has led casinos to encourage the formation of “patron gaming funds” that use electronic funds transfers, rather than cash transactions. Nevertheless, high rollers have found ways around such funds. In 2016 the top 10 “whales” out of a total of 387 fund users accounted for nearly half of the $301 million funds that were deposited. Of those funds, a suspiciously large amount came from bank drafts, which the casinos made little effort to determine the source of the funds. The memo suggested that some effort should be made to determine if the patron has a legitimate bank account in Canada before accepting the funds.
Postmedia also obtained internal documents for 2015, 2016 and 2017 that showed that a few Chinese “whales” accounted for a significant percentage of the casino revenues in the province, despite efforts by the British Columbia Lottery Corporation (BCLC) to try to keep drug money out of local casinos.
One of the internal documents, “Cash in Casinos,” noted that in 2013, 55 percent of the total deposits in BC casinos were “Chinese-based wealth.” It said, “It is appreciated that a relatively few high-value patrons account for a significant portion of BCLC revenue and a corresponding number of suspicious transaction reports. It is also understood that these clients have a preference for cash.”
The same top 45 top gamblers mentioned accounted for more than a quarter of the suspicious transactions.
Documents show that government officials were warned that River Rock Casino had been accused of under-reporting large, suspicious cash transactions, despite the law. In many cases accepting cash in exchange for chippings, without confirming the source of the cash, or having policies in place for when such cash should be refused.
Statistics show that suspicious current transactions amounted to $176 million in 2014-2015, or about 10 percent of the total BC gaming revenues. Fintrac, Canada’s agency that fights money laundering, reported that in 2010-11 BCLC reported 491 suspicious transactions and that by 2014-2015 that number had risen to 1,737.
These allegations coming to light are proving embarrassing for the government since in 2009 it disbanded the illegal gaming enforcement team.
