Gaming unit killed to save cash: Memo
Document points to risk of casinos being used for money-laundering without oversight
B.C.’s illegal gambling task force was shut down in 2009 due to urgent “funding pressure” on the B.C. Lottery Corp., according to a confidential B.C. government memo obtained by Postmedia News.
The March 2016 memo for then finance minister Mike de Jong, is the first known document indicating the illegal gambling task force was disbanded by B.C. officials for financial reasons.
Also, the document suggests, in the aftermath of the unit’s closure, organized crime in B.C. has been able to increase its dangerous reach into both legal and illegal casinos, for the purposes of money laundering.
The document was prepared for de Jong by B.C.’s Gaming Policy Enforcement Branch. It says that from 2003 to 2009, the Integrated Illegal Gaming Enforcement Team (IIGET) investigated crimes surrounding “common gaming” houses, animal fighting, and bookmaking. The unit was not tasked with investigating money laundering in B.C.’s licensed casinos, the document says.
But IIGET managers in January 2009 filed a threat-assessment asking for an expanded role, and warning of the potential influence of organized crime in B.C. Lottery Corp. regulated casinos.
Instead, in April 2009, B.C.’s illegal gambling task force was disbanded.
“IIGET’s budget was cut due to exigent funding pressure on the primary funder, BCLC, and a perceived lack of effectiveness,” the March 2016 internal memo, obtained in a freedom-of-information request, says. “Since this time, investigations and enforcement of illegal gambling activities has been conducted by individual police departments in an ad-hoc manner.”
The memo says that as of March 2016, “there has been a significant increase in the use of illegal gaming houses in the province and the legitimization of proceeds of crime through B.C.’s gaming facilities.”
The memo also indicates that since 2011 in B.C. there have been no charges laid in relation to common gaming houses.
These outcomes mirror the concerns that IIGET warned of in its January 2009 threat report for the B.C. officials that governed it.
That report, obtained by Postmedia News in a freedom of information request, cryptically noted: “A conflict of interest or perception of corruption undermines the integrity of gaming in B.C. and so this is a very important part of the report.”
Information following that particular claim, is redacted.
Another section of the report says Canadian casinos are at high-risk for money laundering, and “the integrity of gaming in B.C. could also be impacted by the presence of influence of organized crime figures at B.C. gaming facilities.”
The 2009 threat report said known gangsters were gambling in B.C. casinos, and that Asian organized crime groups, Italian crime groups, and Hells Angels operate illegal casinos in B.C. Some of these underground operations are linked to crimes including prostitution, extortion, loan sharking and kidnapping, the report says.
“The main issue concerning unlicensed gaming is the protection of the public,” the report says.
The 2009 report made a number of recommendations, including “that IIGET be the central repository for all gaming related criminal information. At the present time gaming related criminal activities are investigated by the police of jurisdiction. This serves to fragment operation knowledge and is not in the best interest of intelligence led policing.”
The report also says that from 2003 to 2009 police agencies in B.C. have received information from Canada’s anti-money laundering agency, Fintrac, pointing to tens of millions in suspicious transactions in casinos. The reports are filed to Fintrac by B.C. Lottery Corp., if B.C. casinos notice suspicious transactions. But various police departments said they don’t have the resources to investigate the transactions, the report said. This suggests that for many years, B.C.’s casino anti-money laundering reporting system has been ineffective.
The 2009 report said that IIGET should take a leadership role to combat organized crime in gambling, similar to the role played by Ontario Provincial Police’s organized gambling unit.
In April 2009, B.C. gaming minister Rich Coleman shut IIGET down.
According to media reports at the time, Coleman has claimed IIGET was inefficient, had a high staff turnover rate, and was redundant.
In an interview Monday, former B.C. finance minister Mike de Jong said he could not comment on the financial decision to close the “old unit” in 2009. However, de Jong pointed to his role in forming B.C.’s new Joint Illegal Gaming Investigation Team in April 2016.