Dirty money reports have plenty of critics
Consultant Peter German finished two days of online testimony on Tuesday at the B.C. inquiry into money laundering sure of one thing: everyone's a critic.
Under interrogation by lawyers representing casinos, gaming executives and others, the former senior Mountie was forced to defend his opinions in two “dirty money” reports he authored for the provincial government.
“I'm not a casino professional, and I'm first to admit that this was all new to me,” he said when his credentials were questioned.
“I did a lot of research. There is a wealth of literature on casino management. So I had seen the B.C. situation. I looked at Ontario and I looked in Nevada. I was doing two things: I was trying to figure out what happened in B.C. and trying to find out what we could do differently. It was as simple as that.”
He explained it was his first in-depth involvement with the industry — although in 2016 he provided a legal opinion to the Gaming Policy and Enforcement Branch and the B.C. Lottery Corp.
In a 30-plus-year career in the RCMP, German rose to deputy commissioner before retiring in 2012. He is also a lawyer (a member of the Ontario and B.C. bars) and an academic expert on money laundering and proceeds of crime.
B.C. Attorney General David Eby hired him in 2017 to produce two reports — the first on money laundering in casinos, and the second on the risks to other sectors of the economy.
German said his research included interviewing 160 individuals and reviewing more than 900 documents that filled seven volumes.
He made 48 recommendations and the government has created a secretariat to implement them. It says, in some way, 38 have already been addressed.
In particular, German called for the establishment of a dedicated police force to combat financial crime and for casinos to focus their due diligence and compliance strategies on risk assessment and a player's source of funds, not arbitrary prescriptive measures.
He opposed a cash cap on players to stop buy-ins with bags of currency in favour of determining whether the money came from a legitimate source — “the crux of the issue.”
“Some people have a lot of money, and if you can establish the source of funds, why can't they gamble with it?” German asked.
It was pointed out that BCLC had focused on sourcing a player's wealth for years before his first report.
Starting in 2015, high-stakes players were questioned about the origin of suspicious large buy-ins and, if they couldn't provide a legitimate source, the money was refused.
More than 100 were banned under the program.
“I'm not denying people were looking for solutions,” German
stressed. “The problem is not so much as banning the individual as stopping the cash from coming in. … You ban a person and next thing, someone else comes in. ... I'm not disputing that BCLC in 2015 was trying to do something about this problem. There is no disputing that.”
In his opinion, though, the casinos could have done a better job of scrutiny.
Still, German acknowledged the lack of law enforcement was the real issue — RCMP failed to find a predicate crime or the source of the money being used in the casinos in an investigation from 2010 to 2012.
From then until 2015, he said there was no policing in the casinos.
By 2015, when the Mounties got back into the game — the suspicious transactions began to decline.
German was pressed on how much money was laundered through casinos, where it came from, how it was moved ...
“Clearly, money was coming over from China and it was being brokered through underground bankers,” he claimed. “We know that — that was information provided by the RCMP. They were very clear on that. They actually refer to China specifically.
“I'm not suggesting that the gamblers were necessarily involved in organized crime, but you have this international organized crime linkage. … What is the predicate crime? What is taking place here? I think there are a lot of unanswered questions, which I think we were hoping to have answered by the E-Pirate and E-Nationalize investigations.
“We know E-Pirate collapsed and E-Nationalize is still at the charge-approval stage. … We have lots of unanswered questions: Where the money flowed, how it gets back to North America in terms of commodities, but China is pretty central to all this.”
He agreed any evidence had not been tested in court.
“Casinos are one aspect of this, and right now the question is, where is the money going that was going into the casinos a few years ago?” German said.
“Because as previous counsel have highlighted, there has been a steady decline since light was shone on this matter by various sources in 2015.
“Organized crime has not gone away. When we look at the opioid crisis on our streets and knowing that it is fuelled by drug trafficking, that money is going somewhere.”
Inquiry commissioner Austin Cullen thanked him for his insight.
“I'm quite sure when you were commissioned by the attorney general to do your reviews, you never expected to be testifying before this commission.
“That may fall under the heading of no good deed goes unpunished.”
The inquiry continues.