Audit: BC casinos allow Chinese VIPs to ‘refine’ dirty money


bclc-river-rock-casino-money-launderingBritish Columbia casinos are facing fresh allegations of enabling suspected money laundering by Chinese VIP gamblers.

Last month, BC’s attorney general released a 2016 report that was buried by the province’s former Liberal government suggesting rampant money laundering at BC casinos, particularly the River Rock Casino Resort in suburban Vancouver. The allegations had gone largely unaddressed by the British Columbia Lottery Corporation (BCLC), which has responsibility for the province’s casino operations.

On Monday, the Vancouver Sun posted a follow-up report based on a 2016 audit by the province’s Gaming Policy Enforcement Branch (GPEB) that Postmedia obtained via a freedom of information request. The audit unveils still more unflattering details of the provincial regulator’s tepid response to evidence of financial shenanigans involving Chinese VIPs.

Among the new revelations is that three BC casinos knowingly allowed gamblers to buy C$6.7m (US $5.35m) worth of chips in 2015 using money from BC-based private lenders that were under BCLC anti-money-laundering restrictions for, among other things, suspected links to drug trafficking operations. River Rock accepted 79% of these questionable funds, while the Starlight Casino in New Westminster and the now-shuttered Edgewater Casino in Vancouver handled the rest.

The audit notes that these casinos “knowingly accepted cash that they acknowledged was obtained from questionable sources” and that “industry indicators of suspicious activity” were present in all these transactions.

Furthermore, the audit examined 47 VIP gamblers who were under BCLC restrictions barring them from buying chips with cash unless they could verify the funds’ origin. While the casinos managed to stop most of these gamblers’ attempts to play with suspect cash, 14 of these gamblers were able to wager with chips “either brought into the casino or received from players while inside the casino.”

Banned gamblers also employed ‘proxies’ to buy chips or make verbal bets on their behalf. So-called proxy betting, in which an off-site gambler communicates real-time wagering information over the phone to a trusted proxy seated at the gaming table, is popular in many Asian casinos, although Macau regulators have taken steps to eliminate the practice.

The audit also addresses the issue of ‘refining’ and its central role in the money laundering allegations. River Rock was found to have accepted $13.5m in $20 bills in a single month in the summer of 2015, but the audit indicates that many gamblers asked to be paid out in crisp stacks of $100 bills and that the casino most often obliged these requests.

The audit claims that BCLC advises its casino operators to “pay out patrons in the same denomination they bought in at,” although the Postmedia report notes that this ‘rule’ isn’t actually stated in BCLC’s official policy documents.

Using internal River Rock documents, the auditors found that 99% of the $40m in grubby $20 bills deposited by VIP gamblers were transferred to the casino vaults, while $50m worth of deposited $100 bills remained in the VIP gaming area.

A further $90m worth of $100 bills was transferred from the vault to the high-limit cashiers, leading the auditors to state that “it is reasonable to conclude that refining is occurring” through River Rock’s high-limit cages and that “the controls in place to prevent a patron from refining may not be functioning as intended.”

BCLC oversees gaming activity in the province but contracts out day-to-day casino management to private operators. River Rock is managed by Great Canadian Gaming Corp, which referred all questions regarding the audit to BCLC, whose spokesperson said the Crown corporation would be “undertaking a review of this matter to determine if further direction is required.”

BCLC has a history of falling afoul of federal financial watchdogs like FINTRAC, which recently announced it was reviewing the allegations currently swirling around BCLC’s gaming operations.

BCLC, like the other provincial gaming monopolies, has an inherently contradictory dual mandate as both gaming operator and regulator. This puts BCLC in the unviable position of deciding whether to take actions that could limit its revenue-generating potential, and BCLC is among the largest contributors to the provincial government’s annual budget.