How sleepy Vancouver became a money laundering hot spot
Published Wednesday, June 27, 2018 4:19PM PDT
Last Updated Wednesday, June 27, 2018 6:43PM PDT
The independent money laundering report released to the public Wednesday confirms what the B.C. government has known for years: that vast sums of dirty money are being laundered in the Lower Mainland, particularly in casinos.
But how did Vancouver, this sleepy city by the sea, become such a hub for organized crime?
Former RCMP deputy commissioner Peter German, who authored the report, lays much of the blame on system failure. An RCMP unit that was dedicated to combatting money laundering was closed in 2009, and years of spotty enforcement allowed crime to flourish.
Experts believe geography likely played a role as well. Christine Duhaime, a lawyer specializing in financial crime, said the same thing that draws many visitors to Vancouver – its scenic coastal location – also makes it a natural magnet for money laundering.
"It just comes with the territory," Duhaime said. "Being on the Pacific, being close to Asia, being less close to financial institutions in Toronto, being a lot further away from Ottawa … we have a lot of organized criminal activity here, and a lot of movement of money."
The problem goes beyond casinos. Duhaime said money is often laundered through banks, luxury car purchases, and even construction sites that pay workers under the table.
"Construction is a well-known area of money laundering because there's a lot of tax evasion that takes place," she said.
And the impacts of that criminal activity have been felt in very different ways. According to Attorney General David Eby, some of the dirty money flowing through the region's casinos is tied to B.C.'s overheated real estate market, as well as the deadly opioid crisis.
Crime groups that are primarily Asia-based cleaned up cash from the drug trade and invested it into real estate, contributing to both the province's overdose count and skyrocketing housing prices.
Financial crime expert Garry Clement said criminals moved to the West Coast from places like Hong Kong and Macau, attracted by the climate, the lax legal system, and the fact that local authorities don't speak Chinese.
"They look at us as being naïve, and they take advantage of that," Clement said.
The suspicious cash being funneled through casinos reached a high point in 2015, when over $13 million in cash was accepted at Richmond's River Rock casino in a single month, but has declined in recent years thanks to increased attention from police and the gambling industry.
But German warns against complicity. His report makes 48 recommendations to further combat money laundering, including a new provincial regulator with a dedicated police force.
"There cannot be a weak link, or history will repeat itself," German said.
The B.C. government said it has already implemented some of the recommendations, and has committed to following through with the rest.
To read the full independent report, Dirty Money, click here.
With files from CTV Vancouver's St. John Alexander, Jon Woodward, and The Canadian Press