Probe into loan shark 'ruffled' casino bosses, money laundering inquiry hears 2020-11-07 Champagne hints at progress in case of detained Canadians, but mum on Meng Wanzhou deal. Gambling activities that are authorized in Canada are regulated, including provincially operated gambling websites. Casinos, similar to banks and other areas of the Canadian economy traditionally viewed as vulnerable to money launderers, are closely regulated with respect to money laundering and terrorist financing risks. The Canadian province of Quebec will launch an independent audit to gather information about possible money laundering and criminal activities in publicly owned casinos, the province's finance.

Casino Money Laundering Methods
Laundering Money Definition
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Money Laundering Examples

British Columbia is going to crack down on large-scale transnational money laundering in its casinos that is tied to the opioid trade.

From BC Govenment“Money laundering isn’t a victimless crime,” said Attorney General David Eby on Wednesday. “It’s linked to the opioid crisis, and deaths on our streets.”

The announcement came after an independent report from Peter German, a former Canadian Mounted Police Commissioner, showed the extent to which casinos are being used to launder drug money.

At a news conference on Wednesday, German said it is hard to put a number on how much has been laundered in the past years but suggested a minimum of CA$100 million (US$75 million), and added it could be much higher.

The laundering scheme is based on the “Vancouver Model,” where money is relocated to Canada from China by loaning dirty money to gamblers who pay it back after they cash out, sometimes using offshore accounts.

German found that criminal organizations from China, Colombia, Mexico and elsewhere were using this scheme to launder drug money.

Usually, the money is laundered in three stages.

The crime groups loan money to high rollers and hire low-level members to gamble with small amounts. Those convert the cash into casino chips, gamble with parts of it for a while and then cash them out in form of legal checks or cash with a receipt proving they won the amount.

Casino Money Laundering Methods

Video surveillance showing suspects carrying large bags stuffed with cash illustrates how this is when the launderers are most vulnerable.

The launderers walk out of the casinos with legitimatized money ready for the second stage called “layering.” The money they ‘won’ gambling is used to purchase cars or precious metals, invest in bonds or acquire near-bankrupt companies. Another way to layer or further disguise the money's origins is to place it in offshore accounts, shell companies and trusts.

In the third phase, the money goes back to its original owners, who spend it on real estate, cars, boats and the like. This can happen through simple wire transfers or can involve “sham companies, fraudulent accounting practices, and loan-back schemes.”

Loan sharks play a major role in the first phase and have historically been a part of the BC casinos, hanging around tables waiting for someone to run out of their personal funds and then offering them cash at exorbitant rates. The cash they carry with them mostly comes from illegal sources such as the drug trade.

Laundering Money Definition

While loan sharks initially operated on the game floor, casinos pushed their operations to the bathrooms and eventually outside the casinos.

“They began to arrange offsite cash transfers with patrons in nearby parking lots,” German's report said.

The former Mountie warned that a crackdown on casinos would send criminals to move cash through luxury goods, real estate, counterfeit products and horse racing and called for more investigations into these vulnerable sectors.

The Attorney General said that they have started implementing the 48 recommendations German put forth in his report.

When German talked to Vancouver Police, they said that while there is “significant money laundering in the legal casinos,” this is only “a drop in the bucket” of all the other ways money is being laundered throughout the region.

In response to the report, the British Columbia Lottery Corporation said it “will work in collaboration with service providers, law enforcement and regulators to keep dirty money out of B.C. casinos.”

There are several key methods that criminals deploy when money laundering. Many groups rely on breaking up the deposits into small tranches to avoid flagging in a practice known as structuring. Others simply buy chips with cash, spend some time on the casino floor and attempt to cash them out as winnings. There are many methods that involve the use of shell companies to conceal transactions, bank accounts and individuals involved. It is an incredibly complex area of finance and one that the authorities are fighting tirelessly to stamp out in all forms.

What Makes Casinos the Perfect Target?

Casino gambling is a brilliant way to make money disappear, and reappear in separate bank accounts. Obviously, the casino industry takes measures to make this difficult which we will explain in more detail down the page. The casino does not necessarily need to be complicit in the money laundering activities for criminals to be successful, but many have known to be in the past. With so many underground markets operating throughout Asia, Europe and America – criminals have plenty of casinos and sports betting operators they can exploit to launder their dirty cash.

Without the compliance of the regulated casino industry, this is an uphill battle that the authorities cannot fight alone. There are many motivated, and well-funded criminal gangs that are persistent in their efforts to use casinos to launder money. Within the casinos, themselves exist many vulnerabilities that can be easily exploited. The staff in casinos represent one of the biggest risk factors for money laundering, as they are often low-paid administrative staff that can be easily bribed or threatened to assist the criminals laundering their money.

But what makes the casino money laundering so appealing rather than off-shore shell companies or other such methods.

The three biggest reasons for money laundering at casinos are:

Casinos and sports betting operators have enormous cash flows that make it easy to bets intended for money laundering within the sea of transactions flowing in and out.
It doesn’t matter who you are, whether you’ve been convicted of financial crimes or where your money comes from. The majority of casinos around the world are happy to accept wagers from anyone with hard cash to gamble.
High-rollers are a major source of profit for many casinos – in order to maintain a strong a favorable relationship with the client, staff may ignore or turn a blind eye to any suspicious transaction.

As you can imagine from the above statements, revenue and profit are huge motivating factors for the casinos. It is difficult to deny that casinos are powerless to stop this activity, and certainly more needs to be done from industry regulators to enforce systematic checks on customers that set-off red flags with suspicious depositing activity.

Industry regulators certainly have a part to play, by scrutinizing large casino companies around the world they regularly audit and analyze financial statements looking for irregularities. The biggest operators make enough money from legal transactions, and it tends to be smaller casinos in less stringent jurisdictions that are complicit with money launderers. In Asia, there has been a long-term problem with this illegal activity – and a thriving underground gambling industry.

Things are a little different online, especially if you are gambling in the UK or another strictly regulated market. If you are worried about what might be going on at your favorite casino site, have a look at our guide to casino safety to see what reputable sites are doing to keep everything above board.

Fighting Against Money Laundering with Regulation

Within tightly regulated industries such as Europe and North America casino money laundering is a very low threat to operations. The regulators in these territories are very diligent, using a mixture of law enfor

Casino Money Laundering Canada