British Columbia’s biggest casino, River Rock, regularly underreported suspicious transactions in violation of anti-money laundering (AML) rules, an investigative inquiry into money laundering has found. Moreover, the province’s gambling regulator, BC Lottery Corp (BCLC), knew about the transgressions, but did nothing, according to emails uncovered from 2011.
The Cullen Commission is examining the money-laundering scandal that has tarnished the province in recent years. It must decide whether regulator BC Lottery Corp and the casino were in cahoots to maximize revenues for operator Great Canadian Gaming Corp and the provincial government.
Between 2010 and 2015, River Rock was a hotbed of money laundering, according to various reports. At least one underground bank with links to the drugs trade is believed to have washed hundreds of millions through the casino’s VIP segment.
As reported by Canada’s Global News, the commission has been examining email exchanges between former Lottery Corp. investigator Ross Alderson and his boss, Gord Friesen.
An email sent by Alderson in September 2011 warns that River Rock staff were only reporting cash transactions of $50,000 and over, as opposed to the $10,000 threshold demanded by federal AML regulations.
What’s more, Alderson said staff were advising high rollers to make transactions that were just below $50,000 so they wouldn’t have to report them at all. This was a “cynical attempt by the site to avoid reporting buy-ins as suspicious,” according to Alderson.
“I know a $50,000 buy-in limit was agreed upon,” Alderson’s email said, according to Latimer. “The standard response has always been it is the service provider staff-resourcing issue in surveillance, and that B.C. Lottery Corp. management have agreed to the thresholds.”
Commission lawyer Allison Latimer on Thursday questioned Latimer about whether BCLC had allowed the casino to set its own $50,000 threshold.
“No. Certainly not from myself, or Mr. Friesen,” Karlovcec answered. “For whatever reason, at the River Rock, they had it in their mind (that) unless the buy-in amount was $50,000 or over, they weren’t required to report that.”
$1.8 Million in Small Notes
On Friday, Karlovcec agreed when questioned that River Rock had failed to report two cash transactions of $450,000, one of which was made entirely in $20 bills.
He also agreed that one player had bought $1.8 million in chips in a week, paying largely in small denomination notes, and that this should have raised red flags. But he said he did not believe underreporting was systemic.
He acknowledged, however, that River Rock and other casinos may have ignored AML measures to avoid offending valuable VIP customers.
Earlier in the week, the commission heard from former BCLC investigator Steven Beeksma. He said he had been told to “cut that sh*t out” by Lottery Corp. vice-president Terry Towns after questioning high rollers at River Rock about the source of their funds.
Beeksma recalled that large amounts of cash began flowing into British Columbia’s casinos around 2010, often arriving stuffed in sports bags and organized into stacks of $10,000 in $20 bills.