Eby stunned by extent of money laundering
Lax casino regulation contributed to problem, B.C. attorney general suggests
Attorney General David Eby says he was stunned by internal briefings about the alleged reach of transnational organized crime groups into B.C. casinos.
In a speech Friday at an anticorruption conference in Vancouver, Eby said he could not reveal details of his concerns because of the continuing police investigations. But he gave new indications of how serious he believes the situation is.
Eby also announced that the first recommendations by Peter German, Eby’s independent reviewer into allegations of money laundering in B.C. casinos, will be released on Tuesday.
In his speech, Eby said he will never forget the first briefing he received from members of B.C.’s gaming enforcement branch when he became attorney general last summer.
“One of the members of the public service said, ‘Get ready. I think we are going to blow your mind.’ While I cannot share all of the details, I can advise you that the briefing outlined for me allegations of serious, large-scale, transnational laundering of the proceeds of crime in British Columbia casinos,” Eby said.
“And I was advised that the particular style of money laundering in B.C. related to B.C. casinos is being called quote, ‘the Vancouver model’ in at least one international intelligence community.”
Eby suggested that a “lax attitude” towards regulation of B.C. casinos, during a period when the previous government had enjoyed “massive increases in provincial gambling revenue,” seems to have contributed to the problems today in B.C.’s gambling system.
Eby pointed specifically to a decision by the B.C. Liberal government to cancel funding of a police unit that tackled illegal gambling, after the unit identified concerns with organized crime influence in B.C. casinos and proposed changes “to improve the ability of the existing policing team in identifying and prosecuting offenders.”
“There were countless red flags from regulators,” in recent years, Eby said. “And it is important to note that this same period was a period of exceptional growth in the province’s gaming revenues.”
Eby also noted that The Vancouver Sun has obtained internal documents regarding investigations in B.C. casinos, and his government believes that whistleblowers who share such information must be protected. New legislation to protect whistleblowers will be introduced in 2018, he said.
“The public is no longer in the dark about what is going on,” Eby said. “And they shouldn’t be. And there is more to come.”
Eby added that allegations of transnational money laundering linked to casinos go deeper than that: “I have reason to believe that these matters might be linked to other areas of B.C.’s economy.”
Eby also said that he believes B.C.’s property ownership system — in which true owners of property can hide behind opaque legal mechanisms — could be attracting foreign criminals and corrupt officials seeking to hide wealth in the province. Eby said Finance Minister Carole James is working on reforms to pull back legal veils that cover true ownership of property and corporations.
Eby pointed to a 2016 study by Transparency International that showed real estate buyers in B.C. are using shell companies, trusts and nominee buyers to hide their beneficial interest in property.
In examining Vancouver’s 100 most valuable homes, the report found that 46 per cent — amounting to more than $1 billion in assets — have opaque ownership.
Of the 100 properties, 29 are held through shell companies, at least 11 are owned through nominees (listed as students or housewives on land titles), and at least six are disclosed as being held in trust for anonymous beneficiaries, the report said.
Eby said B.C.’s landownership system could be connected to Metro Vancouver’s skyrocketing home prices.
Top economists have “made inescapable arguments that taxable incomes reported to Revenue Canada have no connection to real estate values in Metro Vancouver until you get out to the distant suburbs of Vancouver,” Eby said.
Eby said that James “is doing the policy work required to reform our land and corporate registries to increase transparency.”
In a panel discussion on corruption in Canada, several lawyers discussed Eby’s views on B.C. casinos and real estate.
“I heard something that sounds like a commitment to reform beneficial ownership transparency,” said lawyer Paul Lalonde, a Transparency International board member. “We are very encouraged by what we heard.”
Corruption is a systemic issue, the experts agreed, and it is a problem that, in Canada, has only been studied deeply in Quebec.
A report found that organized crime reached deep into public works contracting in that province. But serious corruption exists across Canada, and concerning indications are growing in B.C., panellists agreed.