Loan sharks, not money launderers, worried casinos
The role of casinos in B.C. money laundering became muddier on Monday as the Cullen Commission lurched back to life after breaking for the provincial election.
Steve Beeksma, a B.C. Lottery Corp. (BCLC) anti-money-laundering specialist, told the one-man inquiry that the biggest problem facing casinos for most of the past century was the cash players required to play and the loan sharks that drew.
The former Great Canadian Gaming Corp. surveillance shift manager said cash buy-ins in the early years were regularly $30,000 to $40,000, ranging upward of $200,000.
Keeping track of the predators wasn't that big a problem in the 2000s, as he suggested there initially were only a few and they were quickly identified and known.
Banning them only brought in new ones immediately.
Then the gaming business exploded.
In 2010, the worrying rise in large cash buy-ins was highlighted by a regular patron at the River Rock Casino who arrived with $460,000 — bricks of $20 bills wrapped in elastic bands.
The casino did not think it was suspicious, but a BCLC investigator disagreed and insisted “in future, this kind of buy-in should be reported as suspicious activity.”
Beeksma said such buyins continued to increase — $400,000 to $800,000 happened with regularity as the gambling increased.
“Usually in a shopping bag, a small piece of luggage, or a backpack,” he added. “We had concerns about the cash's origin for sure … the concern was, was it proceeds of crime? But with limited information available to us, it was more of an assumption at that point.”
He acknowledged it wasn't his job to investigate and he did not know how law enforcement or other regulating agencies followed up the reports and information provided by BCLC.
Although the sums seem astounding to an ordinary person, Beeksma pointed out that a player in a private room could bet $100,000 per hand in baccarat.
“A hand can be dealt and concluded in a matter of 10 seconds,” he said, noting there were spaces in each room for nine players.
Beeksma said he experienced some pushback for harassing high rollers.
He described being escorted in April 2012 from a meeting to the office of Terry Towns, vice-president of corporate security and compliance for B.C. Lottery Corp. from 2000-13.
He and two of his colleagues were read the riot act.
In February 2012, he said, investigators saw a woman at the River Rock initially buy in with $10,000, lose it and go to a washroom to receive $50,000 in hundreds from a woman previously banned for being a loan shark.
Later, the player left the casino, but was captured on surveillance returning being dropped back off by the general manager of the casino.
She had been to dinner with him and other VIPs and there had been an exchange of gifts — “chocolates, roses and the like,” the commission was told.
Returning to the casino, she again entered the women's washroom and received another $50,000 in $20 bills and continued gambling.
“It was definitely out of the ordinary for me,” Beeksma testified.
“Obviously, it prompted me to attend his office and ask him about it. ... It wasn't unusual to me for a general manager to go out for a fancy dinner with some VIP players. I think that was a kind of common occurrence for them to sort of wine and dine ... the valuable customers.
“But the integration of an unusual transaction and his vehicle being seen. ... He likely had no idea what was about to happen, but he put himself in a precarious position by doing that.”
In 2013, Beeksma said investigators also watched as the River Rock accepted $640,000 in cash, again, much of it in $20s wrapped in elastic bands.
Still, while colourful, far from being examples of regulatory wilful blindness, Beeksma said the cash-in-bags videos and the information provided by the casinos spurred BCLC and law-enforcement investigations.
The reports, for example, led to the banning in September 2012 of Paul King Jin, the notorious alleged money launderer recently shot in Vancouver, and his associates.
By August 2015, there was a program forcing players suspected of using proceeds of crime to show they had received their buy-in cash from a legitimate financial institution.
That list started with 10 players on it, Beeksma said, but has since grown.
He dismissed reports that someone could deposit a large amount of cash, pretend to gamble, and then cash out with a casino cheque.
A cheque was only issued for winnings, he explained, and most of the individuals conducted legitimate gambling with their large cash-buy ins and lost it.
He emphasized the difference between 2010 and 2020 was “night and day” as a result of measures and changes that have been implemented.
To lessen the risk of the transmission of COVID-19, Cullen is conducting the hearings online via video conferencing.
Cullen also is examining regulatory authorities and barriers to effective law enforcement of money-laundering activities.