Casino Money Laundering Canada
In a 2009 report, the IIGET alleged that the B.C. Lottery Corporation casinos had been used as a circuit for drug dealing and money laundering, reported Global News. But three months after the. Casino workers may be “desensitized” to the anti-money laundering regime and communication between managers and VIP hosts, who handle the large cash transactions, was found to be problematic. MNP found 36 “high risk” players identified by law enforcement as also being on the Top 100 list of players by cash volume. Investigators into money laundering in British Columbia said they went looking for a minnow but found a whale—or a whole group of whales, allegedly including casino high rollers. But gaming industry officials say the casinos reported the incidents as required to law.
Casinos have historically been at risk of exploitation by those seeking to launder criminal property. We look at five things you need to know about the problem, rules and changes to sector guidance.
1. Why is this important?
The nature of services and products offered by the gambling industry can make it attractive to criminals seeking to launder or disguise the origins of criminally derived funds. Significant risk factors in this industry include the prevalence of cash transactions, accessibility to multiple premises and anonymity on the part of the customer.
2. Who is covered by the rules?
New anti-money laundering provisions relating to casinos were brought in by the Money Laundering Regulations 2017 (MLR 2017) on 26 June 2017. A key change is that all casino operators, both remote and non-remote, are now caught by MLR 2017, rather than simply holders of a casino operating licence. A remote casino operator will be caught by the MLR 2017 if they have at least one piece of remote gambling equipment situated in the UK or if the gambling facilities provided by the remote casino are used in the UK.
This means that non-casino gambling providers, such as betting shops, are not covered by the MLR 2017.
3. What are the rules?
Under the MLR 2017, casino operators have a legal obligation to do the following:
- Risk assessment: conduct a written risk assessment in respect of money laundering risks faced by the business and ensure that there are adequate procedures in place to deal with those risks.
- Customer due diligence: conduct risk based customer due diligence (CDD) when they:< >establish a business relationshipsuspect money laundering or terrorist financingdoubt the veracity or adequacy of documents or information previously obtained for the purposes of identification or verification.Nominated officer: appoint a member of the firm as their nominated officer (i.e. outsourcing is no longer possible) as well as a member of the board of directors (or equivalent) as the officer responsible for compliance.
- Reliance on third parties: accept ultimate responsibility for compliance with MLR 2017, even where they are entitled to rely on CDD carried out by third parties.
In July 2010, the Gambling Commission, which oversees the casino industry’s compliance with their anti-money laundering obligations, published a guidance note entitled “Money laundering: the prevention of money laundering and combating the financing of terrorism: Guidance for remote and non-remote casinos” (PDF). This guidance was updated in 2011 and 2016 following changes in the law.
4. How are the rules/guidance changing?
In light of the changes brought about by the MLR 2017, and also the Criminal Finances Act 2017, the Gambling Commission’s guidance note has been revised to a new fourth edition to assist casino operators in complying with the latest requirements. The updated guidance went out to consultation in July 2017. Responses are sought by 8 September 2017.
The consultation document invites feedback on the above amendments and, in addition, asks for views on whether or not the Gambling Commission should remain the sole supervisory authority for money service business activities provided by non-remote casinos.
5. What can casino operators do to comply with the amended regulations?
Casino operators can ensure they have effective anti-money-laundering and counter-terrorist financing measures in place by taking the following steps:
- Risk assessment: review and revise the risk assessment, covering issues such as customer profile, premises and remote sites and incidents of actual or suspected attempted money laundering.
- Policies and procedures: review and revise policies and procedures in light of the identified risks. Ensure that the policies and procedures are properly disseminated and appropriate training is provided on them to front line staff.
- Senior management commitment: senior management must be fully engaged in developing and maintaining procedures and controls which are necessary to manage the risks identified in the casino operator’s risk assessment.
- Record keeping: keep records of all anti-money-laundering policies, procedures and controls and all ongoing transactions with customers. Records of CDD identification and verification must be maintained for at least 5 years.
- Suspicious activity reports: providing appropriate training to all relevant employees to enable them to make a report where they know, suspect (or have reasonable grounds to know or suspect) that a person is engaged in actual or attempted money laundering or terrorist financing.
VANCOUVER — A former RCMP officer 'ruffled some feathers' at the Great Canadian Casinos following an investigation of a loan shark at British Columbia's largest casino, an inquiry into money laundering heard Friday.
Tom Robertson, a former investigator with the Gaming Policy and Enforcement Branch, told the inquiry he sent an email in 2005 to one of his supervisors after he investigated a person believed to be a loan shark at the River Rock Casino.
Although there were no charges laid, Robertson testified he came to understand from casino officials that such an investigation in legal gambling venues was not part of the mandate of the enforcement branch.
'My decision appears to have possibly ruffled some feathers with a representative of the Great Canadian Casinos,' said Robertson's email, which was read out to the inquiry.
Kyle McCleery, a B.C. government lawyer, asked Robertson how he came to believe that he had displeased the official.
'I believe when my investigators went to the casino there was some pushback as far as our getting involved,' he said of the investigation into the loan shark.
McCleery asked Robertson if he was told by his supervisor that investigations into money laundering in the legal casinos was not part of the mandate of his branch.
'I don't specifically recall him expressing that, but that's clearly what I said at the time,' he replied.
Robertson said in the email he was told his investigations were to be conducted on illegal gaming venues, not in legal venues such as the River Rock.
He told Ashley Gardner, a government of Canada lawyer, that he believed the gaming enforcement branch did not have the capacity to take on money laundering or investigations of casinos.
'You have an understanding of what some of the complexities of investigating money laundering or proceeds of crime investigations might be?' she asked.
Robertson said they would include identifying the source of the funds and the criminal activity that created them, which would take considerable time and resources.
The inquiry was called by the provincial government after reports outlined how money laundering in the province helped to fuel the real estate, luxury vehicle and gambling sectors.
Earlier Friday, a former RCMP officer told the inquiry into money laundering that there was 'tangible tension' between the two B.C. policing teams working to prevent illegal gaming in the province.
Fred Pinnock, who was in charge of the now-defunct illegal gaming enforcement team, testified that he felt the RCMP needed to have an increased police presence in casinos and racetracks, but the suggestion wasn't 'warmly received.'
Pinnock told the inquiry this week that his team had been working in partnership with the Gaming Policy and Enforcement Branch, but he had to move his staff to a different area of the building because of the rising tensions between the two groups.
He told the inquiry this week his RCMP superiors' expectations in working with the branch were to 'play nicely, get along,' because they didn't expect big things from his team.
Laundering Money Definition
Pinnock retired from the RCMP in 2008 and the illegal gaming enforcement team was disbanded the following year.
McCleery asked Robertson whether he was told by anyone in government that the presence of RCMP in casinos would present a 'bad image and shake public confidence' in legal gaming in the province.
'I do recall some discussion, but (I'm) not sure who with,' Robertson replied.
Anti Money Laundering Definition
This report by The Canadian Press was first published Nov. 6, 2020.
Hina Alam, The Canadian Press