Tuesday, October 27, 2020

More than 120 recommendations delivered to tackle money laundering in B.C., Canada


Recommendations on how to combat money laundering in British Columbia and Canada have stacked up in the past year.

There are 122 recommendations generated by three independent reports. The recommendations are meant to eliminate regulatory gaps, bring transparency to property ownership, improve co-operation among agencies and enhance criminal investigations and prosecutions.

Postmedia created a searchable database that will be updated periodically to track both governments’ progress on implementing the recommendations.

Many of these issues were raised in a series of Postmedia investigations since 2017 that found potentially millions of dollars were being laundered through Lower Mainland casinos and though real estate — and criminal prosecutions were rare and difficult.

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The B.C. NDP government, led by Premier John Horgan, has largely endorsed the wide-ranging recommendations, while Prime Minister Justin Trudeau’s Liberal government has endorsed some key recommendations and pledged tens of millions of dollars in the next five years to tackle money laundering.

The recommendations include everything from a new regulatory regime in B.C. to oversee gambling to changes to get more effective use of Canada’s financial intelligence gathering agency, the Financial Transactions and Reports Analysis Centre (Fintrac).

To date, just 12 of the 122 recommendations are complete, according to a Postmedia tabulation based on information from the B.C. and federal governments.

Recommendations that gamblers at B.C. casinos must prove the source of cash greater than $10,000 and that the federal government establish information sharing between Fintrac and provincial gaming authorities to ensure more accurate and timely reporting have been implemented.

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Work is underway on 50 recommendations and another 58 are under review. Two are not under consideration.

None have a timeline and there is almost no costing to any of the recommendations.

“We do need implementation across different fields. There is no silver bullet,” said James Cohen, executive director of Transparency International’s Canadian division, on the difficulty of implementing the recommendations.

The B.C. government is responsible for 59 recommendations, many of those targeted at casinos and the real estate sector. Ottawa is responsible for 49, including a criminal law amendment intended to make it easier to successfully prosecute money launderers. Other provinces, B.C. Lotteries Corp. and casinos in B.C. are responsible for the remainder.

Of the recommendations, 16 require the B.C. government to petition Ottawa or other provinces to make changes, including creating beneficial ownership registries to increase transparency of property ownership.

“We are working our way systematically through the reports,” B.C. Attorney General David Eby said this week when the province announced it was telling colleges and universities to crack down on cash payments from students.

“It will take some time. There are multiple ministries involved, there’s multiple different components to this problem, multiple different sectors to our economy,” said Eby.

The recommendations in the database were gleaned from three reports from the B.C. government: two from former deputy RCMP commissioner Peter German on money laundering in casinos and in the real estate, luxury vehicle and horse racing sectors; and an expert panel report led by Simon Fraser University professor Maureen Maloney. The expert panel estimated money laundering at $47 billion across Canada and $7.4 billion in B.C., where the panel said it has affected housing prices.

The database also includes recommendations from a federal all-party finance parliamentary committee, which was fulfilling a requirement for a five-year review of Canada’s money laundering and terrorist financing act.

The first German report, the expert panel report and the parliamentary report listed specific recommendations. The second German report did not have recommendations, but Postmedia culled recommendations from the report’s findings.

Many recommendations will require amendments to existing laws, at least 23, Postmedia’s analysis shows. Another 33 involve changing existing administrative structure or policy models.

For example, three of the reports — including from the parliamentary committee — recommend requiring lawyers to report suspicious transactions, at minimum, to their law societies. Lawyers are currently exempt from reporting to Fintrac, under a 2015 Supreme Court of Canada ruling.

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The second report from German, the former RCMP deputy commissioner, concluded: “Lawyers are the black hole of real estate and of money movement generally. With no visibility by law enforcement on what enters and leaves a lawyer’s trust account, many investigations are stymied.”

In a recent interview with Postmedia, Bill Blair, the federal organized crime minister responsible for the money-laundering file, said there are discussions between the federal, provincial and territorial attorneys general, as well as the legal community, about the reporting gap for lawyers.

“We know there are improvements that can be made. That work is ongoing,” said Blair.

Creating a beneficial ownership registry is another weighty recommendation from the expert panel on real estate in B.C. and from the parliamentary committee.

The parliamentary committee recommended a pan-Canadian registry not be public, while B.C. is creating a public registry similar to that which exists in the United Kingdom.

Transparency International is an advocate of a public registry.

Cohen said Ottawa needs to show more leadership notwithstanding the funding it has pledged to combat money laundering.

Earlier this year, the Liberal government promised nearly $70 million over five years, including funds to create a money-laundering task force, for which little detail has been revealed.

Another $68.9 million was also pledged over the next five years to strengthen federal policing capacity, some of which is meant to go toward money-laundering investigations.

Said Cohen: “Funding has to be reinforced with changes to legislation that can close the gaps that money launderers are exploiting.”


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