Canada: Money-laundering laws are inadequate

In the age of debit and credit cards, the Internet and online banking, large quantities of cash are inherently suspicious.

Legitimate businesses avoid cash because it's expensive. It's hard to secure and more difficult to manage than electronic transactions.

Illegitimate enterprises like it for many of the same reasons; it's anonymous, hard to trace and relatively easy to hide from tax collectors. But large quantities of illicit cash still pose a problem for criminals who want to bring it into their legitimate businesses -- they have to be able to show where they got it.

They do that through a process called laundering. And what better place to turn dirty cash into clean assets than a casino?

Police know this, as does the Financial Transactions and Reports Analysis Centre, a federal money-laundering watchdog.

All cash transactions of more than $10,000 at casinos must be reported to Fintrac, but as reports obtained by the CBC reveal, that alone hasn't been enough to stop what police believe is a spike in dirty money being channelled through B.C. casinos. Neither has the further requirement that casinos file suspicious-transaction reports, which should spark more urgent scrutiny, when they have reason to believe that a transaction is related to money laundering or terrorism.

The first problem is that casino security staff do not seem overly curious about why someone would come in with a large quantity of cash. In one example cited by police, someone bought $250,000 in chips with $20 bills and the casino only reported it as a large transaction.

In another case that was reported to Fintrac as a suspicious transaction but not reported to police, in the course of a week, one player paid for large amounts of chips four times with cash, including one purchase with $460,000 in twenties.

It strains credulity to imagine that such large amounts of cash could be accumulated legitimately, or that they could be brought to a casino for any reason other than laundering.

Assume for a moment, however, that someone with a suitcase full of cash is merely eccentric, that he or she doesn't trust banks and has somehow assembled all that cash legally. Why, in that rare case, should a casino be allowed to accept that cash before its providence can be verified?

The central problem here is that casino security are in a conflict of interest when it comes to money laundering. They work for a business that stands to profit from any kind of money, dirty or otherwise, coming through the doors. If they make it more difficult to play with cash, that business may go elsewhere. From a corporate standpoint, their responsibility is profit.

The government responsible for enforcing the law is also in a conflict, since the reason we have allowed casinos in B.C. is to fatten the provincial coffers. But we expect the provincial government to also recognize that it needs to live up to its responsibility to protect public safety through the vigorous pursuit of criminal enterprises.

Rich Coleman, the minister responsible for gaming, has finally stated that Victoria will consult with stakeholders and improve ways of detecting and reporting possible illegal activities. But what we need is action.

The government needs to review the systems in place for identifying money laundering, apprehending those so engaged and seizing their ill-gotten cash rather than letting it pass through and fuel more crime.

This editorial first appeared in the Vancouver Sun

Source: Postmedia News