B.C. Lottery Corp. finally reveals secret behind $700K fine for money laundering fumbles
03 Jul 2020

The B.C. Lottery Corporation has finally given up a decade-long fight to keep a secret.

In 2010, BCLC was hit with a $700,000 fine by FINTRAC, the country’s money laundering watchdog, for undisclosed violations of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

It was the largest penalty ever levelled against a provincial gaming corporation — until FINTRAC eventually withdrew its case after a long and complicated legal battle.

But BCLC still fought to keep the facts of the case from the public.

Now the lottery corporation has voluntarily released documents that detail its past failings, relenting after a nine year freedom of information battle with CBC News.

The move comes after B.C. Attorney General David Eby spoke with BCLC’s new board of directors earlier this year.

“I think the release of these documents…is long overdue,” Eby said in February.

Mike Larsen, president of the B.C. Freedom of Information and Privacy Association, agrees.

“Access delayed is access denied,” says Larsen. “And it is about time that we have this information.”

7 major deficiencies

The documents show FINTRAC found BCLC’s oversight of the province’s casinos to be deficient in seven major “high risk” areas between 2009 and 2010.

FINTRAC required the lottery corporation to report on large and suspicious cash transactions — possible proceeds of crime being laundered through casinos.

But after a major audit, it found casino staff were conducting “little to no verification” of high risk client betting, that BCLC had failed to adequately report large cash transactions over $10,000, and that casinos were allowing high rollers to simply identify themselves as “self-employed” or “business owners.”

Recent investigations have shown criminals were able to launder up to $1 billion in dirty money through the province’s casinos for over a decade — often bringing in bags and suitcases packed with bundles of $20 bills, the currency of street drugs.

The CBC reported extensively on the flow of suspected “dirty money” as far back as 2008.

BCLC insisted it was making changes

Internal letters between BCLC and FINTRAC reveal the lottery corporation insisted it was making changes to its “high risk measures,” and blamed some of the deficiencies on technical glitches and human error.

The lottery corporation begged FINTRAC to drop the $700,000 fine and keep its deficiencies secret from the public— arguing disclosure of its failings would tip off money launderers to its weaknesses.

“Publication … would indicate to the patrons of casinos that it is possible to avoid the necessary identification, recording and reporting [of large and suspicious cash transactions], which is a message BCLC does not wish to have made,” wrote former BCLC president and CEO Michael Graydon in a fax to FINTRAC dated June 30, 2010.

“The public notice will detract from the very considerable efforts BCLC is making to appropriately comply,” insisted Graydon. “It will encourage inappropriate behaviour.”

But Larsen says that argument never made any sense.

“There were no trade secrets about how to money launder that could have really been gleaned from the information that has been finally released,” says the freedom of information advocate.

“So I find that argument hard to believe.”

By Eric Rankin, CBC News, 1 July 2020

Read more at CBC News

RiskScreen: Eliminating Financial Crime with Smart Technology

Advance your CPD minutes for this content, by signing up and using the CPD Wallet