The question why the gaming regulator in British Columbia, the BC Lottery Commission (BCLC), was fined CAD$700,000 by Canadian money laundering watchdog FINTRAC in 2010 finallygot its answer, as the BCLC released details regarding its failings that led to the sanction.
Persistence is the key to success and nobody knows it better than the Canadian media outlet CBC News, which after 9 years of consistent efforts to get hold of public sensitive information regarding money laundering prevention and controls finally achieved what it wanted: transparency.
Insufficient Oversight of Casinos
The BCLC that was back then found in violations of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, has finally given up its decade-long fight to keep the details surrounding the largest penalty ever imposed to a provincial gaming corporation a secret. The BC Lottery Commission, after efforts from BC Attorney General David Eby who spoke with BCLC’s new board of directors earlier this year, has released documents that detailed its past failings.
The money laundering watchdog in Canada reviewed the lottery commission’s practices for the period of 2009-2010 and found the commission was failing in seven major risk areas regarding oversight of provincial casinos.
Despite FINTRAC’s requirement for reporting of large and suspicious transactions in cash that could possibly be money laundering attempts for proceeds of crime, the major audit found out casinos’ staff were negligent on verification of high risk clients that were allowed to identify themselves as “self-employed” and “ business owner” and that the BCLC failed to report transactions over CAD$10,000.
Efforts to Keep Details Under Wraps
Internal correspondence between the BCLC and FINTRAC showed the lottery commission was desperate to keep its failing under wraps, begging the AML watchdog to drop the fine and keep its details away from the public as disclosure would reveal BCLC’s weak spots for others to exploit. The BCLC blamed its deficiencies on technical glitches and human error, insisting it was already implementing changes to address the high risk areas failures identified by the auditors.
Despite the notice of violation being leaked to the public only a month later, in August 2010, the lottery commission continued its fight against public disclosure in court and before the BC’s information and privacy commission. The CAD$700,000 fine was appealed and the Federal Court issued confidentiality orders barring the release of the records, but the penalty was not set aside by court until 2017, when FINTRAC withdrew its case.
In 2018, following another request to BCLC and the Ministry of the Attorney General by the CBC, the ministry released some documents with key information in them being redacted.
The issue of money laundering in British Columbia is still very much on the agenda, as the government in the Canadian province, in February 2020, launched an investigation of its own. Casinos were identified as one of the three risk industries that reportedly led to an estimated CAD$5 billion being laundered for 2018 alone.