NDP sitting on plan to combat dirty money problem

The New Democrats have already drawn up a $20-million plan to fight money laundering with a new financial intelligence agency and a clearing house for sharing regulatory information.

But they put the plan on hold 18 months ago when they launched the public inquiry into money laundering, according to the interim report from commissioner Austin Cullen.

Details of the NDP plan and the reasons for holding off were laid out in a section of the Cullen report that posed the question “is money laundering a problem worth addressing?”

The answer is partly a matter of cost-benefit analysis, at least that seems to be the holdup at the provincial level.

“Given the price tag,” the government would like to have the benefit of the commission's advice before committing to the plan, says B.C. Supreme Court Justice Cullen in the 100-plus-page report released Thursday.

He described how the plan was the product of an anti-money-laundering secretariat and committee of deputy ministers, established in response to two “dirty money” reports the New Democrats commissioned from consultant Peter German.

“The first unit is described as the financial intelligence and investigation unit and would primarily collect and analyze intelligence in aid of criminal investigations,” wrote Cullen.

“It would consist of a blend of federal and provincial police and regulators and would primarily investigate money-laundering related offences.”

The second unit, informally dubbed the fusion centre, would be crafted to support a “collaborative, integrated and coordinated” regulatory response to money laundering.

“Envisaged as a clearing house for sharing regulatory information,” the fusion centre would receive reports on suspicious financial transactions “in sectors vulnerable to money laundering.” Examples: gaming, real estate, luxury goods, financial institutions and money services businesses.

The commissioner suggests the data would be similar to that collected by FINTRAC, the federal watchdog on money laundering. But elsewhere in his report he complains that FINTRAC was less than forthcoming in co-operating with the provincial inquiry.

All information collected by the fusion centre would be available to both provincial investigators and regulators. But not all the details of its operations have been worked out.

“The commission has heard that the work on costing the fusion centre is incomplete,” wrote Cullen, describing his state of knowledge as of the mid-November submission of his report to the government.

The fusion centre proposal emerged within government shortly before the Cullen commission was appointed in May 2019. It and the other unit were then put on hold.

Back in June of this year, deputy solicitor general Mark Sieben testified to the commission about the fate of the provincial plan and the two units.

He told the commission that the provincial government strategy for fighting money laundering was young and needed to “mature,” Ian Mulgrew reported in The Vancouver Sun.

Sieben also said internal analysis by himself and two other provincial bureaucrats concluded that the intelligence agency and the clearing house would be “police-heavy” in terms of staffing and makeup.

While acknowledging that an emphasis on policing as a way of curbing money laundering was “not necessarily a bad thing,” Sieben said additional work was needed to ensure the proposal was integrated with other regulators, all of whom wanted “to up their game.”

Ultimately the response had to be “commensurate” with the amount of money-laundering “we're seeing” in B.C. Hmmm.

Sieben's “estimate of the cost of the proposed units was around $18 million to $20 million for the initial startup costs and an annual budget of $15 million to $20 million,” according to Cullen.

The proposal was “a good one” the deputy solicitor general told the commission. Still, the New Democrats wanted Cullen's advice before deciding whether to go ahead with the two units.

“In effect,” says Cullen, Sieben in particular “advocated a cost-benefit analysis in relation to the proposed enforcement response.”

“This analysis would require an assessment, first, of the magnitude of the money-laundering problem in British Columbia, second, of the likelihood of achieving success in resisting the problem by the proposed approach or by some alternative method,” says the commissioner.

Cullen will tackle both questions in a final report, to be released next year following conclusion of the current round of public hearing in mid-May. The final report will also include Cullen's findings arising out of recent testimony regarding the previous B.C. Liberal government's neglect on the money-laundering file.

Until Cullen reports out, the NDP's anti-money-laundering investigative agency and data collection centre will remain in limbo presumably.

But in terms of a cost-benefit analysis, consider that the two would cost $20 million a year. By comparison, in March 2019 Attorney General David Eby released a report that he himself commissioned which estimated $7.4 billion was laundered through the B.C. economy in 2018.

Eby and the New Democrats have repeatedly characterized money laundering as a multibillion-dollar problem in B.C.

If they believe those estimates, it hardly needs much of a cost-benefit analysis to see the merits of a $20-million outlay on a new investigative agency and a data collection and regulatory centre.

Note, too, that the New Democrats have repeatedly blamed the runaway problem with money laundering on the previous B.C. Liberal government's decision to shut down an illegal gaming enforcement team.

Meanwhile, for 18 months and counting the New Democrats have been sitting on their own far-fromurgent plan to set up two agencies to fight money laundering.