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Province to target criminal money in real estate after gaming reforms

“It’s like whack-a-mole” – wherever people can pay with cash, money laundering follows, says Attorney-General
David Eby

Following sweeping regulatory reforms to tackle money laundering in casinos, there will be a “second phase” to prevent the potential “whack-a-mole” effect of more criminal money popping up in B.C. real estate, B.C.’s Attorney-General said June 27.

In his announcement about implementing significant reforms to B.C.’s billion-dollar gaming industry, David Eby said, “Money laundering in casinos is linked to the real estate market, and housing prices that have made life here unaffordable.”

The 48 gaming reform recommendations that are already being implemented or planned for implementation by the province come from an extensive review by independent consultant Dr Peter German, delivered to the province earlier this year and released June 27.

At the announcement in Vancouver, Dr German said, “We know the same people who arrange for money to be laundered in casinos are buying [B.C.] real estate and advising others on how to conduct real estate transactions. We know that real estate is being used for large, illegal gaming houses... The impact of homegrown and international crime on our real estate industy is of considerable importance.”

Dr German described the possible knock-on effect of the gaming reforms as “like whack-a-mole – you deal with the casinos, and those people could then go to another sector of the economy. So you want to then look at those areas that have traditionally been of interest to organized crime. Any sector of the economy, be it real estate or high-end luxury goods, where people can purchase with large amounts of cash, you want to take a closer look at that industry.”

Minister Eby said, “There were connections that Dr German identified in terms of real estate, including the correlation between people’s listed occupations when completing source-of-funds documentation for FINTRAC, that indicated they were involved in the real estate sector and also bringing in large amounts of cash. That is why I asked Dr German to examine other areas of the economy [than the gaming industry].”

Eby offered another visual analogy for the potential gaming reform ripple effect. “It’s like a water bed, when you crack down on one area, when you push on it, it moves to another area of the economy. So we’ve got to follow that weight, and see where it goes, and we have to be aggressive about it. There are very clear indications that we need to be looking at real estate, luxury automobiles and horse racing.”

Number 45 of Dr German’s 48 gaming recommendations suggests, “That the Province undertake research into allegations of organized crime penetration of the real estate industry.” The Attorney-General confirmed there would be a “second phase” of analysis and potential reform to target money laundering in the real estate market and other sectors. Eby did not offer a timeline for this research.

Eby added, “One of the troubling things is finding out about issues about money laundering [in casinos and real estate] through investigative journalism. That dynamic has got to change. Government has to be able to detect, prevent and prosecute activities like money laundering.”

Dr German made it clear that the dirty money being laundered was not exclusively from Asia. “These days, organized crime is very much a moving target. There are loose alliances between organizations, internationally and at street level. And where it becomes very complicated is where organizations are involved in both legal and illegal enterprises. Definitely there’s an Asian organized crime component, but it’s not exclusively Asian. And if we’re talking about drug trafficking proceeds being laundered, those drugs are being bought by people in this province. It’s easy to point the finger abroad and elsewhere, but those deals are being done right here, and the money is laundered right here.”