Money laundering investigation calls for sweeping changes to tackle dirty money in British Columbia

British Columbia’s money laundering public inquiry commissioner has said the federal anti-money laundering regime is not effective and the province must go its own way if it hopes to s tackling the problem of dirty money running through its economy.

In a final report released Wednesday, Supreme Court Justice Austin Cullen said the province should create a provincial money laundering intelligence and investigation unit and appoint a commissioner to oversee the government’s approach to money laundering. problem.

Speaking to reporters immediately after his report was released, Cullen said the public was right to be suspicious of the lack of response to what appeared to be a huge amount of dirty money circulating in British Columbia.

“For too long, money laundering has been kept out of the way,” he said. “It’s time for that to change.”

Cullen said the agency tasked by the federal government with identifying money laundering threats – the Financial Transactions and Reports Analysis Center, or FINTRAC – is “ineffective” and that British Columbia must to fend for themselves to progress.

“If the province is to succeed in the fight against money laundering, it must develop its own intelligence capacity to better identify money laundering threats,” Cullen said in his more than 1,800 page report.

Cullen’s report contains a total of 101 recommendations covering areas ranging from law enforcement to real estate and banking regulations.

The proposed Anti-Money Laundering Commissioner would be a new provincial body tasked with monitoring the implementation of Cullen’s recommendations.

‘Staggering’ amounts of money laundered in British Columbia: report

Cullen was named to lead the money laundering investigation in 2019 after reports of illicit funds circulating in the province’s casinos, lodging and luxury car markets.

The commission’s final report follows testimony from nearly 200 witnesses, including former politicians, law enforcement officials and academics.

Surveillance video uncovered in 2019 showed wads of $20 bills thrown into a B.C. casino in an apparent example of money laundering. (Ministry of the Attorney General of British Columbia)

While Cullen said it was impossible to find an exact dollar figure for money laundered in British Columbia, he put the figure in the billions – calling money laundering a “significant problem requiring firm and serious action.” decisive”.

“Sophisticated professional money launderers operating in British Columbia are laundering staggering amounts of illicit funds,” the report states.

Cullen said “an unprecedented amount of money was laundered through BC casinos” during the period he studied from 2006 to 2016. He found that the agencies responsible for the stoppage of the problem were aware of the problem, but “failed to intervene effectively”.

‘No evidence’ politicians were corrupt, commissioner says

The commissioner also said he found no evidence of corruption among elected officials overseeing the various anti-money laundering departments as dirty money flowed into casinos.

“Although some could have done more, there is no evidence that any of the failures were motivated by corruption,” he concluded.

Cullen’s report makes a series of sweeping recommendations, including a more vigorous approach to asset seizures and the introduction of unexplained wealth orders to “deter corrupt foreign officials and others from transferring their illicit wealth in British Columbia through the purchase of real estate and other valuable assets. .”

In blaming FINTRAC, Cullen said the federal anti-money laundering regime has encouraged “defensive reporting” – whereby entities tasked with reporting potential suspicious activity err on the side of caution by making a statement at the slightest sign of uncertainty.

He said this has led to high-volume, low-value intelligence gathering. From 2019 to 2020, the agency received 31 million individual reports but only sent just over 2,000 intelligence packages to law enforcement, including 355 to BC police.

He said FINTRAC’s results compare poorly to other countries with comparable systems.

As for who would serve as BC’s anti-money laundering commissioner, should the province create the position, Cullen stressed that he wouldn’t be the only one to take on the role — despite the time he has. passed to look into the problem.

In 2008, CBC reporters took $24,000 in cash to BC casinos to see how easy money laundering would be. Turns out it wasn’t hard at all:

CBC Money Laundering Investigation 2008

Investigation hailed in last week’s Peter German report on BC casinos

Money laundering does not make housing unaffordable

While acknowledging the work the province has already done to track real estate ownership and crack down on dirty money circulating in B.C.’s hot real estate market, Cullen said the area is still highly vulnerable to money laundering. ‘silver.

“Money laundering in the real estate industry often involves the use of loans, mortgages and, in some cases, trust accounts from lawyers and the court system,” he said.

He said the body that regulates real estate in British Columbia needs a clear mandate to fight money laundering. He also blamed the estate agents themselves for their “poor record on anti-money laundering reporting and compliance”.

Cullen’s final report says the province also needs more effective regulation of the mortgage industry and suggests, among other measures, that the province establish a transparent registry of corporate beneficial owners.

He also said BC should create a regime to report transactions over $10,000.

While many of Cullen’s recommendations focus on the real estate market and the role of lawyers and real estate agents in deals that have seen housing prices rise dramatically in the province in recent years, he pointed out that money laundering money is not the source of housing unaffordability.

“I am unable to conclude that money laundering is a significant cause of housing unaffordability in the residential real estate market,” Cullen said.

“Money laundering must be addressed, of course, but measures taken to combat money laundering should not be seen as a solution to housing unaffordability.”