ATM boss rebuffs dirty-money claims
Chris Chandler found himself growing more and more uncomfortable during testimony last week at the B.C. Commission of Inquiry into Money Laundering.
As veteran RCMP expert Melanie Paddon explained how generic ATM cash machines were being used to wash huge amounts of dirty money, Chandler couldn't believe his ears.
By the time the Joint Illegal Gaming Investigation Team member had finished, Chandler, the president of the ATM Industry Association, told commissioner Austin Cullen he needed a moment.
“I'm honestly ... I'm just having a hard time controlling myself. Both the report (Paddon read from) and Ms. Paddon's testimony ... are completely devoid of any evidence that people are actually money laundering through `white-label' ATMs. So I really struggle with this.
“When I look at the estimate provided — $300 million to $1 billion per annum — firstly, that's a report from 2008 … so by my math, in the 13 years since this report was published, there should have been $4 billion to $13 billion laundered through white-label ATMs.
“It seems to me either that number is completely dead wrong or we have a terrible enforcement problem.”
He paused: “I'm really struggling to compose myself, frankly.”
What are known as “white-label” ATMs are cash machines not operated by Canada's banks or credit unions. Across the country, there are about 50,000 such machines, which began to spring up in 1996 when the competition bureau ended the banks' monopoly.
Paddon used the 2008 report to support her claim that criminals could stock white-label ATMs with drug money in order to launder it, and that the machines didn't require users to have an official relationship with a bank. They could also be used to skirt financial-system safeguards, she said.
“There's no government oversight in what's going on when the criminal places the money in the system. They're not reporting directly to (the Financial Transactions and Reports Analysis Centre),” Paddon noted.
White-label ATMs are “an ideal method” for laundering significant amounts of money for Hells Angels and other drug-trafficking organizations, she maintained.
“Investigations and intelligence files indicate individuals associated with organized crime groups currently control approximately five per cent of white-label ATMs in Canada. If other information is substantiated, the number of white-label ATMs used or controlled by organized crime to launder proceeds of crime could reach 20 per cent of all the ATMs.”
Chandler choked on those figures.
“In 10 years of lobbying for this industry, that (2008 report) has been kept from me,” he told Cullen. “No one has provided it to me until now, and I would put to you the reason for that is because it is completely devoid of context and it's completely devoid of evidence that people are doing this in large dollars.”
The commission has heard plenty of hyperbole about money laundering in casinos, about professionals such as accountants aiding and abetting criminals, and the incredible risk posed by lawyers' trust accounts and their pesky privileged solicitor-client relationships.
But, as Chandler complained, the evidence is Jell-O and convictions a will-o'-the-wisp.
Was Paddon aware of any investigations or prosecutions that show this occurring and support the catastrophic sounding numbers?
“No, I am not,” she conceded. “Um, I had an investigation I recently worked on, I can't give you details, and I can't tell you exactly how much money was pushed through these ATMs.” Chandler was incredulous. “I haven't figured out what caused that leap of the imagination,” he fumed.
“If the 2008 report (numbers) are correct, it would imply that $4 billion to $13 billion (has been laundered). But there has only been one charge, in 2014 (in Winnipeg), involving six ATMs (and a total of $100,000). It's just beyond comprehension.”
Chandler noted that owners of white-label ATMs are subject to criminal checks as well as the “know your client” bank processes and documentation. Each ATM must settle up with a single bank account that's subject to all financial regulations.
He said that using a night deposit box, a bank ATM or a teller was no different than using the white-label ATM.
“It's impossible for a merchant to keep a second set of books,” he emphasized. “For me to then see a 2008 report from the RCMP with all this conjecture and innuendo and implication about billions of dollars, there is just some giant disconnect somewhere.”
The federal and provincial governments have established one of the most extensive and expensive data collection systems in the world, demanding large volumes of reporting, mostly to Fintrac — which receives almost 10 million more reports a year than its U.S. counterpart.
Yet there are no reliable estimates for the cost of compliance with the money-laundering regime or its cost-effectiveness. No one knows whether the system is working or not.
Still, the `sky is falling' rhetoric dominates and police insist they need more tools and powers to infringe even further on privacy and civil rights.
Asked what would happen if ATM owners were forced to have armoured-car companies deliver the cash to restock machines, Chandler warned: “A merchant who may be generating $100, $200, $300 a month (from an ATM) for his store, restaurant or bar may suddenly be making $20 or $30 a month and no longer feel that's an appropriate use of the space, and he could generate more money selling potato chips or whatever. I think the impact would be really felt mostly by the Canadian consumer, who would suddenly find 40 per cent fewer places for people to get their cash.”
The money-laundering hearings continue online.