Former B.C. Supreme Court justice Austin Cullen listens to a question while meeting with reporters after releasing his report in Vancouver, B.C., on June 15.Rich Lam/The Canadian Press
A three-year-long public inquiry in British Columbia delivered a sweeping rebuke of Ottawa’s anti-money-laundering regime, finding billions of dollars of criminal funds flowed annually through casinos, real estate and luxury goods in the absence of effective federal law enforcement.
The final report of the Cullen Commission, released on Wednesday, called on the provincial government to create its own intelligence and investigation police unit to tackle large-scale money laundering, with an independent officer of the legislature to provide oversight.
“The RCMP’s lack of attention to money laundering has allowed for the unchecked growth of money laundering since at least 2012,” states the 1,800-page report of former B.C. Supreme Court justice Austin Cullen. The commission found there was no sustained effort to investigate money-laundering activity, with just a handful of major money-laundering investigations that progressed to the charge-approval stage. “The primary cause of the poor law enforcement results in this province is a lack of resources.”
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Canada’s financial intelligence unit, the Financial Transactions and Reports Analysis Centre of Canada, also drew the commission’s criticism. “Law enforcement bodies in British Columbia cannot rely on FinTRAC to produce timely, useful intelligence about money laundering activity that they can put into action,” Mr. Cullen wrote.
FinTRAC is the agency responsible for receiving and analyzing information about money-laundering threats and communicating this information and analysis to law enforcement. “FinTRAC receives an enormous volume of reports from public- and private-sector reporting entities, but it produces only a modest number of intelligence packages that go to law enforcement,” Mr. Cullen wrote.
In the fiscal year 2019-20, FinTRAC received more than 31 million individual reports, but passed on only 2,057 intelligence reports to law enforcement across Canada – and only 355 to law-enforcement agencies in British Columbia.
“Given the state of the federal regime, if the province is to achieve success in the fight against money laundering, it must develop its own intelligence capacity in order to better identify money-laundering threats,” Mr. Cullen wrote.
The former BC Liberal government oversaw the expansion of gambling in 2004, when the province’s first Las Vegas-style casino opened in Richmond. That year, the RCMP launched an integrated team to investigate gambling-related crimes. But the unit was disbanded by 2009, at the same time that B.C. was gaining an international reputation for being a soft target for money laundering.
B.C. Attorney General David Eby prepares to speak to reporters in Vancouver on June 15. Mr. Eby welcomed the Cullen Commission’s report, saying it confirms that the federal government did not make money laundering in B.C. a priority.Rich Lam/The Canadian Press
Additional cuts to federal police enforcement in 2012 left a glaring enforcement gap, Mr. Cullen said. “After 2012, despite repeated requests, there was no enforcement body available to address the casino problem, and the volume of suspicious cash entering B.C. casinos rose to unprecedented levels,” the report states.
When the NDP came to power in 2017, the new Attorney-General, David Eby, seized on the issue of money laundering, releasing video surveillance clips showing casino patrons trading in bags of bundled cash for gambling chips. Mr. Eby commissioned several reports that indicated “dirty money” linked to organized crime and the drug trade was being laundered through real estate, luxury cars and gambling.
On Wednesday, Mr. Eby welcomed the Cullen Commission’s report, saying it confirms that the federal government did not make money laundering in B.C. a priority. He told reporters that he hopes Ottawa will now work with the province to crack down.
“The report, frankly, is an indictment of failures around the federal anti-money-laundering regime and a call for reform,” Mr. Eby said during a news conference. “The province will do everything we can, including taking areas of responsibility that are clearly the federal government’s, to get this done. But we can do a much better job if we work together.”
Marco Mendicino, federal Minister of Public Safety, received the report on Wednesday and did not respond to a request for an interview. In a statement, the federal government said it is conducting a comprehensive review of its anti-money-laundering regime, “which will be informed in part by the Cullen Commission’s final report.” It also noted that it has boosted funding for FinTRAC in its 2022 budget.
When he launched the public inquiry, Mr. Eby said he was looking for political accountability, suggesting that the former Liberal government knowingly overlooked criminal activity because the expansion of gambling was a lucrative source of income for the province’s coffers.
He did not get that satisfaction, however.
The report also noted that B.C.’s real estate sector is highly vulnerable to money laundering and that realtors are frustrated by the lack of guidance on how to comply with federal anti-money-laundering obligations.DARRYL DYCK/The Canadian Press
Mr. Cullen, during a separate news conference, said he looked for evidence of political corruption but did not find it. “I think there was a failure of will to deal with it,” he told reporters. “I don’t think that equates to a deliberate … failure to deal with it.”
Under Mr. Eby’s term, B.C. imposed a requirement that casino patrons present proof that funds used in cash transactions of $10,000 or more were from legitimate sources. The result, Mr. Cullen said, is that the value of suspicious transactions reported to FinTRAC by BCLC declined by nearly 90 per cent.
The commission heard testimony from 199 witnesses over 133 days of hearings. It makes 101 recommendations, most of them directed at the provincial government.
The report also noted that the province’s real estate sector is highly vulnerable to money laundering and that realtors are frustrated by the lack of guidance on how to comply with federal anti-money-laundering obligations.
“There is a need for clear, simple guidance from FinTRAC about when transactions must be reported,” the report said.
However, the Cullen Commission said it is not clear that money laundering is the cause of housing unaffordability. “The public discussion about, and interest in, money laundering has been fuelled, in part, by rising real estate prices,” Mr. Cullen wrote. But he said it would take more study to determine if that is in fact the case.
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Justine Hunter