B.C. moving slowly on money laundering recommendations, Canada even more slowly

By: Gordon Hoekstra

The B.C. government is slowly implementing changes to combat money laundering and the federal government is moving even more slowly.

Money laundering has been a hot-button issue in B.C., with far-reaching implications for the economy and trust in institutions, but has also gained attention nationally.

By next spring, the B.C. government expects to have in place a beneficial property ownership registry with public access, a key component of planned changes. A new law requires corporations, trusts and partnership that own property to disclose their beneficial, or true, owners. If they do not, they face heavy penalties — up to $100,000 or 15 per cent of the property’s assessed value.

Next year, measures to increase the transparency of corporate ownership, more generally, will also kick in. It will require companies to keep records of true owners and those with direct or indirect control. That information will not be made public but will be available to law enforcement agencies.

The province will also introduce a new gambling regulator, a key recommendations of a B.C. government-commissioned report on money laundering in casinos delivered 21 months ago. In an announcement this month, the province said it expects to introduce legislation in 2021 to set up the new independent gambling control office.

A Postmedia database that is being updated periodically to track the B.C. and Canadian government’s progress on implementing more than 120 anti-money laundering recommendations shows that just 22 have been completed.

The searchable database compiled recommendations from three independent B.C. reports and a federal parliamentary report, delivered between June 2018 and May 2019.

In B.C., 17 of 70 recommendations the province is responsible for have been completed. Work is underway on 29 others. With the planned changes next year and the year after, several more will be added to the completed list.

“There is a real significant set of pieces that are coming into place in the next six months or so,” B.C. Attorney General David Eby told Postmedia.

Changes that B.C. has already made include beefing up gambling oversight, extending funding for an integrated policing team and creating a team to review suspicious transactions at casinos. Among the changes: Gambling regulation officers now have a 24/7 presence in major Lower Mainland casinos.

Eby says the federal government has not stepped up enough to combat money laundering. In particular, it has not delivered beefed-up policing promised in the federal budget last March, he said.

Postmedia’s database shows only five of 49 recommendations with federal responsibility have been completed, although work is underway on nine others. The remainder are being reviewed.

Last spring, the Trudeau-government pledged $70 million over five years to create a money-laundering task force, increase expertise in trade-based money laundering, and support financial intelligence gathering. Another $68.9 million over the next five years was earmarked to strengthen RCMP capacity. The funding was meant to help implement recommendations from a federal finance committee review of the country’s anti-money-laundering regime.

Eby said he recently reiterated his concerns to the federal government, speaking with Justice Minister David Lametti.

In response to Postmedia questions, federal Public Safety Ministry officials said a promised task force to combat money laundering, called the action co-ordination and enforcement team, is in the design phase. A team of eight people has been seconded from various federal agencies including the Canada Revenue Agency, the RCMP, the Office of the Superintendent of Financial Institutions and Fintrac, Canada’s financial intelligence-gathering agency.

The team is meant to set up a policy framework that will drive co-ordination and support of money laundering investigations and prosecutions across the country in the operational phase, Public Safety spokesman Tim Warmington said in an email.

The headquarters for the team is in Ottawa.

Postmedia asked the RCMP on whether any additional police officers have been hired and whether priorities have been decided, but received no response.

Fintrac said it has begun to expand its capacity, and is receiving registration information on virtual currency dealers that will have to begin reporting on financial transactions in 2021. They are making progress on other measures, including the money laundering task force, said Fintrac spokeswoman Renee Bercier.

The Canada Border Services Agency, which is taking the lead on trade-based money laundering, said it is also in the design and planning stages. A centre of expertise with staff in Ottawa and regional offices is expected to launch in the 2020-21 fiscal year, said CBSA spokeswoman Rebecca Purdy.

Postmedia investigations have put a spotlight on money laundering.

Between 2017 and 2019 its investigations revealed that millions of dollars were being laundered through Lower Mainland casinos, that money-laundering prosecutions are rare and difficult in B.C. and criminals have used shell companies to launder tens of millions of dollars.

Another Postmedia investigation found at least $43 million in properties were tied to B.C.’s largest money-laundering case, which failed to lead to a successful criminal prosecution. A recent Postmedia analysis of 12 money laundering cases dating back nearly three decades, found money is laundered in real estate using a number of mechanisms, often with the help of shell companies and involving multiple countries and banks.

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