BC gaming industry says it’s ready for money laundering crackdown

By Drew Penner

If you talk to the guys behind gambling and scratch tickets in British Columbia they’ll proudly point out they pad the provincial government with more revenue than the gas tax, forestry or natural gas does. But they’re all too aware that that sector has been maligned recently as reports of millions of dollars of illicit money has been flooding in from China and other places (revealed in recent reports, including one that was shelved by the Christy Clark government).

Recently BC Attorney General David Eby announced it was time to crack down on money laundering in gaming and fancy car markets, and he even went to Ottawa to meet with lawmakers to build up support for his project.

A recent evaluation by HLT Advisory Inc., meant to forecast gaming revenues for the 2018 budget, suggested a provincial crackdown on money laundering in casinos could cost B.C. $87.7 million, so it’s not small potatoes.

In light of recent provincial moving and shakings we decided it was high time to get the feedback of the industry itself, and reached out to Peter Goudron, executive director of the BC Gaming Industry Association. He helped us get a handle on how crucial this sector has become to balancing the budget and let us in on just how ready its members are to help clean up the detritus that been drawing the ire of average citizens.

How important is the gaming sector to the BC economy?

Private sector gaming operators have invested over $2B to build and upgrade properties all across the province, directly employ more than 10,000 British Columbians and collectively generate more than $1B in net revenue that government uses for important services like healthcare and education each year.

To what extent has the BC Gaming Industry Association been involved, up until now, in the discussion around increased regulation in the sector to prevent money laundering?

The members of the BC gaming industry, along with the Gaming Policy and Enforcement Branch (GPEB), the British Columbia Lottery Corporation (BCLC) and government, have always been active participants in the ongoing development and enhancement of BC’s anti-money laundering regime.

For example, in 2015 in response to concerns about increasing volumes of cash entering casinos, a series of actions were taken that resulted in a 60% reduction in suspicious transactions over the next two years. And, if past experience can be a guide, the anti-money laundering regime will need to continue to adapt and evolve as criminals persist in their search for vulnerabilities they can exploit.

In your opinion, does your industry have a money laundering problem, as suggested by much of the political discussion (including multiple consultant reports)?

It’s important to remember that this isn’t a threat faced solely by the gaming industry nor can we solve it alone.

Other sectors of the BC economy, financial entities like banks and money services businesses, and real estate, are potentially vulnerable to similar threats and all sectors rely on effective investigations and enforcement actions by regulators and the police.

On this note, we share Minister Eby’s concern about the lack of prosecutions and recognize the RCMP’s need to have adequate resources in order to prosecute these crimes.

Do you think it’s fair that your industry has been put under the microscope as the BC NDP government seeks to be seen as doing something to crack down on vast sums of money flooding the BC market from Asia, which many locals perceive as ruining their chances of having a respectable place to raise their families?

Our industry welcomes the scrutiny and has been absolutely supportive of Dr. German’s review since it was first announced by Minister Eby last year.

We want our customers to feel safe and secure in our properties and it was diligent reporting by casinos that identified these concerns in the first place and led to recent police investigations as well as other actions being taken to deter and prevent criminal activity.

We want to see the criminal element dealt with effectively, no matter what their background, without unfairly impacting any legitimate individual.

I have a feeling, perhaps more than most other sectors, the gaming industry has actually had to tackle this beast head on at multiple points in its history, and perhaps, because of this, could be in the best place to offer suggestions to those crafting policy in such an arena. When has this issue arisen before? And what have you found works best to nip this kind of criminality in the bud?

In 2015 casino operators and BCLC responded to increasing amounts of unsourced cash being used in BC casinos by implementing a series of measures that included:

◦ Placing significant restrictions on the use of cash by specific players through interviews and additional scrutiny
◦ Increasing training and education for staff to give them better tools to identify suspicious activities
◦ Encouraging the use of cash alternatives and traceable Player Gaming Fund Accounts.

These changes resulted in a 60% decrease in the number of suspicious transactions over the following two years.

More broadly, it’s crucial that everyone plays their role effectively in Canada’s anti-money laundering regime. Specifically:

◦ All reporting sectors, like casinos, financial entities, and real estate must diligently identify and report large cash and suspicious transactions.
◦ FINTRAC must effectively analyze reporting and provide regulators and law enforcement agencies with actionable information.
◦ Regulators and law enforcement need to investigate and take enforcement actions that lead to prosecutions and real consequences for criminals.

Finally, all levels of government need to take meaningful action and make this a priority across all sectors of the economy. While Minister Eby has shown considerable leadership in this province, BC can’t do this entirely on its own.

The federal government needs to step up and do its part with updated legislation, regulation and ensuring the RCMP are properly resourced to meet today’s challenges.

What has your organization been doing to make its views clear to Attorney General David Eby and others, as the government considers its response to RCMP deputy commissioner Peter German which has 250 pages and 48 recommendations?

Over the last several months, we have worked directly with Dr. German as part of his review. Furthermore, we have provided our support, input, and feedback to GPEB, BCLC and government. The operators of the Lower Mainland’s casinos have drawn on their considerable experience in this, and other jurisdictions, to help inform their recommendations.

What do you hope to see in the BC government’s response to the report?

We are looking for pragmatic and effective recommendations from Dr. German that target any criminal activity without unduly impacting legitimate players. We believe government will likely accept all of the report’s recommendations and, as such, hope to play an active role in quickly and effectively implementing any required reforms.