The large-scale pattern by which millions of dollars were laundered under the noses of casinos that were largely and possibly deliberately blinded that they were being used by mob figures from China and elsewhere has been derisively dubbed the “Vancouver Model,” by law enforcement in British Columbia.
That money has been linked to the skyrocketing real estate market in BC that is beyond the reach of most consumers and to the province’s opioid crisis.
David Eby found out about the Vancouver Model in 2017 a few days after he was sworn in as British Columbia’s attorney general, when casino regulators showed him video of persons wheeling suitcases of $20 bills into casino and exchanging it for chips, which were later exchanged for clean money.
Extensive paperwork, which is legally required for large transactions, was often missing in such cases. More than $100 million had been laundered over the previous decade, before Eby became involved. Once he was involved, he became a crusader, calling for widespread investigations and financial reporting crackdowns on BC casinos. The government now requires proof of a legitimate source of funds for casino payments exceeding $10,000. It also instituted round the clock surveillance.
At that time Eby testified to a committee of Parliament a few months ago. “We are famous internationally—or, more accurately, we have become infamous—for money laundering.”
Since the crackdown suspicious transactions have declined 100-fold. But the effects of the money that was already laundered, most of it criminal in nature, has fueled considerable ills in the province. Eby told the Guardian, “I can tell you it is tied to the opioid crisis that has taken thousands of people from their families. It’s linked to the real estate market and housing prices that have made life unaffordable for British Columbians.”
Once Eby’s eyes were opened he set about opening up the eyes of many millions by commissioning a detailed report from former RCMP officer and money laundering expert Peter German. His scathing document was released in June, and it detailed the connections between wealthy Chinese visitors who sought to get around the PRC’s strict currency controls.
They would arrange for persons to deliver cash to them in Canada. They would pay them back by transferring money from one bank account in China to another.
Eby told the Guardian: “The money that they receive in Vancouver is the money that is the proceeds of some sort of crime – we just don’t quite know which. We have some guesses, but we don’t know yet.” He added, “They show up at the casino and someone meets them at the casino and gives them a box or bag full of cash and they then walk into the casino.”
The bundles were then exchanged for casino chips. Any gaming losses accrued to the benefit of the province, and winnings were clean.
As the day began a mob figure would hand over a bag of $20 bills that would end up being transferred to their bank account in China, or really anywhere in the world. “And the person who is actually spending the laundered money at the casino—when they do the background checks—is not the actual criminal who generated the 20-dollar bills in the first place,” said Eby.
No one knows the exact amount of these scams because the only physical evidence was the money mule hauling bags full of bills into the casino.
This is all believed to have begun around 2009, around the time that provincial police turned over law enforcement of casinos to local police. It was at its height in 2015, at which time it began to attract the notice of police and press.
Eby blames the former Liberal government for lax enforcement during the 16 years it was in power.
The Liberals are not inclined to be the fall guys and their BC caucus issued this statement last week: “Our government worked over a number of years to eliminate suspicious cash transactions in casinos. In a multi-agency effort that included regulatory bodies, gaming organizations, and police, we were successful in creating a model that reduced suspicious transactions in casinos by 60 percent. That model remains in use today.”
German blames interagency rivalries among those who were responsibility for regulating gaming for leaving the casinos ripe for the picking by international crime lords. He suggests that the players themselves who played with tainted money were in fact “dupes.” Others were trying to build a better life for themselves in Canada by moving their own money from China.
Eby is waiting for another report that could show that the influx of cash helped raise real estate prices in Vancouver until they are among the most expensive in the world.
A report by Transparency International Canada in 2016 claims that about half of the most expensive homes in the city were purchased using shell companies or trusts. In other words, financial tools that hid the true identities of the buyers.
Eby points out that someone stopped by the police and found to be carrying large amounts of cash would get into trouble—or at least be questioned extensively. Someone walking into a casino during the period between 2009 and 2015 never aroused suspicion.
