Eight years after the Vegas-sized River Rock Casino and Resort opened in Richmond, government anti-money laundering policies were still in their “infancy” and the “program was evolving,” the Commission of Inquiry into Money Laundering in B.C. heard Thursday
Two former Surrey RCMP drug enforcement officers turned casino investigators for the B.C. Lottery Corporation say they were effectively handcuffed in their roles while watching bags of suspicious money unloaded at tables and cages.
This, as profits for Great Canadian Gaming Corporation (GCGC) — that extended to government coffers — more than doubled between 2004 and 2012 in Richmond thanks to its new facility.
As the inquiry tries to determine how the money, stacked and wrapped in rubber bands, consistently ended up in casino cages, counsel for commissioner Austin Cullen raised several instances of what could be considered basic anti-money laundering policies not being carried out by BCLC staff and casino operators, around the time of 2010 to 2014.
Former BCLC assistant manager of casino surveillance John Karlovcec and his boss Gord Friesen, former BCLC manager of investigations, both former Surrey RCMP drug unit officers, addressed questions from the commission and others.
Commission counsel Alison Latimer and Patrick McGowan raised instances where there was the lack of suspicious transaction reports by River Rock surveillance staff, particularly in 2011.
Two River Rock-stationed BCLC investigators, Steven Beeksma and Ross Alderson, told their superiors, including Friesen and Karlovcec, of how casino staff were not reporting as suspicious any cash buy-in of small denominations under $50,000 (when there was actually no legal threshold and any amount could be deemed suspicious).
Alderson stated in an email to Friesen how certain patrons bought in with $49,960 and $49,980 in $20 bills and no suspicious transaction reports were filed to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and the Gaming Policy and Enforcement Branch (GPEB).
“Steve and I feel it’s too much of a coincidence and players must have been informed,” stated Alderson.
It is not yet clear who gave GCGC staff direction to not include any cash buy-in under $50,000 in a suspicious transaction report, or whether staff took it upon themselves not to do so.
Friesen told the commission Wednesday that GPEB managers only wanted those bigger reports and so, according to GPEB lawyer Alandra Harlington, cash buy-ins under $50,000 were not reported to the gaming regulator (GPEB) by the casinos or BCLC for four years.
Alderson wrote in one email that BCLC management set the $50,000 threshold, but Karlovcec said Alderson was “definitely mistaken.”
Friesen described inter-agency “confusion” over the matter.
Commission counsel also stated how River Rock staff was deeming any cash buy-ins using $100 bills as not suspicious as well.
In emails to colleagues, Karlovcec did express concerns about the reporting problems, the commission heard.
“I don’t think they (casino staff) were trying to avoid. I would suggest they didn’t comprehend that when it comes to reporting unusual, suspicious transactions the dollar amount is not the only circumstance,” Karlovcec told Latimer.
In 2011, casinos had limited options for non-cash buy-ins and little-used digital player gaming accounts were only there as a “convenience” for patrons, said Karlovcec.
Latimer asked if there had been any thought to place conditions on the few patrons who had been bringing in tens of millions of dollars in $20 bills annually. Karlovcec replied, “Certainly if you look back it would have benefitted but the program hadn’t evolved yet.”
He said BCLC anti-money laundering policies were in their “infancy” in 2012.
Although Friesen maintained his investigators’ role was to only “observe, record and report” cash buy-ins and there was no actual proof at that moment that the money came from crime, he conceded BCLC would have had the authority to implement policies for casinos to decline large sums of cash, regardless of proof.
GPEB directors of investigators Derek Dickson and Joe Schalk also corresponded with BCLC, in 2010 and 2011, asking why certain patrons were not being directed to banks to deposit their millions of dollars worth of $20 bills and to enrol in a player gaming (non-cash) account.
Karlovcec added to his testimony that, “searching for cash alternatives was top of mind for BCLC, GPEB and the government of the day.”
BCLC is the government agency that manages casinos, whereas the Gaming Policy and Enforcement Branch sets the regulations and standards for it — although as noted by McGowan on Wednesday, the two bodies have, to some extent, overlapping mandates.
The commission has yet to hear from GPEB officials — who have law enforcement capabilities unlike BCLC investigators — at the times in question. However two former GPEB investigators and investigations manager Ken Ackles are scheduled to appear before Cullen next week.
The inquiry is looking at several aspects of money laundering, including how cash may have flowed from drug dealers and underground money service businesses connected to China, then into casinos, and finally tangible assets such as luxury vehicles and Vancouver real estate, particularly between 2005 and 2017.
