- »Canadian Casinos Feel Anti-Money Laundering Heat
Canadian Casinos Feel Anti-Money Laundering Heat
Over the past several years, investigations into money laundering through or in Canadian casinos have spurred changes to gaming regulations and general provincial and nationwide laws.
Casinos have struggled to keep up. They consistently report lower revenue and bottom-line financials due to more money spent to adhere to anti-money laundering laws. The required tasks are daunting, and the monetary costs are substantial.
Overview of New Reporting Requirements
Three lawyers of Dickinson Wright – Michael Lipton, Kevin Weber, and Chantal Cipriano – of the Toronto office put together a list of the primary new requirements facing Canadian casinos.
They noted that it started with the draft of the new regulations in June 2018, which were finalized in the year that followed. By July 2019, they were published in the Canada Gazette as the Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
Even the name of the law is complicated.
But the attorneys broke it down into six basic requirements for casino operators:
- Must report transactions of $10K or more, including chip redemption, to the Financial Transactions and Analysis Centre of Canada.
- Must keep records of large cash transactions of $10K or more in cash from a single person or entity in a single transaction.
- Must keep detailed records of every account opened by the casino, including signature card and contact information. Must also keep detailed records of every single transaction in the casino.
- Must verify individuals associated with accounts, specifically authorized persons and anyone who conducts a transaction for those accounts.
- Must categorize all electronic funds transactions from a single person or entity within 24 hours as one transaction, especially if the 24-hour total adds up to $10K or more.
- Must take reasonable steps to determine if a person requesting a disbursement is acting for a third party by obtaining contact information and declaring the relationship of the third party.
More Than Just Casinos
The current investigation into money laundering in British Columbia is in the hands of retired BC Supreme Court Chief Justice and now-Commissioner Austin Cullen. He was appointed in May to conduct the inquiry by Premier John Horgan.
While money laundering through casinos may have instigated the investigation, other areas are also being examined, including financial institutions and the real estate industry.
In addition, industry regulators are being scrutinized with respect to any role they may play in hindering law enforcement.
Cullen’s final report is expected in May 2021, though delays might push that date out. Some businesses and regulators are impeding some aspects of the investigation to protect private and privileged information or to delay the process entirely.
Casinos in the Spotlight
One of the largest money laundering busts happened just last month.
Not only did it involve a well-known Italian mafia-affiliated crime family, but more than $70 million was laundered through Ontario casinos.
The York Regional Police made the announcement in mid-July. An investigation led to people with close ties to the Italian mafia accused to have been laundering more than $70 million through Ontario casinos via nightly transactions.
Many very regular transactions were caught on surveillance cameras. They included total amounts of up to $50K per night. People would gamble with the “dirty” money, incur a minimal loss, and then cash out the rest of the chips to obtain clean money for the majority of the original bills.
It all happened within a matter of years.
But the raid of alleged participants’ properties took only three days. Police seized more than $35 million in assets. This included 27 homes, five Ferrari vehicles, gambling machines, and even more than $1 million in cash.
Further, Canadian law enforcement agencies worked with Italian police to exchange information, which led to at least 12 arrests in Calabria in southern Italia in the same case.
Those arrested in Canada and Italy reportedly used violence and intimidation, committed crimes, and profited to the tune of millions of dollars through loan sharking and operating illegal gambling operations. They then funneled the money through real estate, car dealerships, finance companies, banks, charities, and casino play.
York Regional Police Chief Eric Jolliffe said, “We know that they have laundered tens of millions of dollars through casinos in Ontario.”
There are likely more revelations and arrests to come. In the meantime, officials hope this signifies the fall from power of the Ndrangheta crime family.
As for the Ontario Lottery and Gaming Corporation (OLG), the regulator didn’t comment directly due to the investigation being ongoing, but it did say, “OLG takes money laundering seriously and complies with all federal and provincial requirements, including the reporting of transactions required by Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).”