Quebec casinos, gaming halls still vulnerable to money laundering by organized crime, experts say


Quebec casinos and gaming halls are still simple targets for organized crime, with thousands and thousands of {dollars} in soiled money probably being funnelled by the government-run venues, experts warn.

According to Loto-Québec information obtained by CBC/Radio-Canada, the provincially owned company reported practically $420 million in massive money transactions to Canada’s anti-money laundering watchdog over the previous six years.

Criminals usually use casinos as their playground, each as a spot of leisure and as a “place [where] they launder their money,” mentioned Matt McGuire, an internationally acknowledged money-laundering skilled.

Although it is inconceivable to know the ratio of authentic transactions to illegal ones, McGuire mentioned it is a “digital certainty” a portion of the money utilized in casinos is linked to organized crime networks, which revenue from unlawful actions reminiscent of drug and human trafficking.

“The common particular person carries little or no money, so you recognize, an extra of money is a warning sign,” mentioned McGuire.

By legislation, Canadian casinos have to report each suspicious money transactions and enormous money transactions totalling $10,000 or extra to the Financial Transactions and Reports Analysis Centre (FINTRAC). FINTRAC’s mandate is to determine money-laundering threats and go on the data to legislation enforcement.

If a on line casino fails to comply with the foundations, it faces hefty fines.

More suspicious transactions flagged

CBC News has fought to get hold of entry to the transaction experiences Loto-Québec sends to FINTRAC since October 2017. These experiences can embrace particulars a couple of on line casino patron’s occupation, how the money was introduced in or the grounds for suspicion.

Loto-Québec supplied CBC/Radio-Canada with the variety of suspicious and enormous money transactions it submitted to FINTRAC every quarter, between January 2015 and March 2021. The financial worth of the suspicious transactions and different particulars weren’t accessible.

Between the 2015-2016 and the 2019-2020 fiscal years, Loto-Québec reported a median of $77 million a 12 months in massive money transactions to FINTRAC, amounting to about 5,000 transactions a 12 months — or 14 per day. That quantity has remained comparatively fixed.

Matt McGuire, an internationally acknowledged money-laundering skilled, mentioned organized crime networks use casinos to launder their money. (Submitted by Matt McGuire)

The variety of suspicious transactions, nevertheless, grew from 254 in 2015-2016 to 395 in 2019-2020.

McGuire mentioned he is not shocked Loto-Québec is reporting extra suspicious transactions now, as it’s probably being extra cautious following an administrative penalty it obtained for failures in compliance just a few years in the past.

In February 2020, Loto-Québec was fined $147,000 for 3 violations relationship again to a 2012 compliance evaluation on the Montreal on line casino.

FINTRAC accused Loto-Québec of failing to submit suspicious transaction experiences and never offering particular particulars a couple of shopper’s occupation in sure massive money transactions over $10,000.

As first reported by the Journal de Montréal, Loto-Québec refused to pay the preliminary superb and spent $260,000 in authorized charges to problem the penalty in courtroom.

Independent audit

In November 2020, Loto-Québec’s practices had been known as into query following an investigation by TVA. The French-language media outlet alleged distinguished organized crime members had loved perks reminiscent of free resort rooms, meals and exhibits on the Casino de Montréal.

Following the experiences, Quebec Finance Minister Eric Girard, who oversees Loto-Québec, introduced an impartial audit to look into how the casinos function, particularly when it comes to loyalty packages.

Documents present the federal government paid the administration consulting agency Deloitte practically $300,000 to conduct the investigation. The outcomes of the audit, launched in the summertime of 2021, concluded there have been no gaps in Loto-Québec’s procedures.

However, Deloitte made 39 suggestions, together with:

  • Giving Loto-Québec extra powers to ban criminals.
  • Conducting stricter checks on the id of gamers and their supply of funds.
  • Improving information-sharing between police and Loto-Québec.
  • Cancelling loyalty program memberships linked to organized crime members.

Following the audit, individuals with ties to organized crime had been expelled from Loto-Québec’s reward program, and so they not obtain customized presents.

A spokesperson for the Finance Ministry instructed CBC a few of Deloitte’s suggestions require legislative adjustments, that are still being studied with enter from Loto-Québec.

A cashier counts money at a B.C. government-owned on line casino. In early 2018, the BC Lottery Corporation adopted a ‘supply of funds’ directive for money transactions bigger than $10,000, after an investigation confirmed what B.C. Attorney General David Eby known as a ‘woefully poor’ system to cease money laundering. (B.C. Ministry of Attorney General)

Loto-Québec declined CBC’s request to interview the company’s president, Jean-François Bergeron, however final fall, Bergeron instructed TVA News one of many methods it desires to combat money-laundering is by limiting using money at its gaming institutions.

To do that, all bets and winnings would undergo a single card supplied to every participant. A pilot challenge was supposed to be launched this fall.

McGuire mentioned the single-card initiative would make it simpler for the company to detect suspicious transactions.

“It makes each single one in every of their transactions trackable and traceable,” mentioned McGuire. “It’s a forensic accountant’s dream.”

Why the wait?

Some individuals query why it is taking the province so lengthy to implement Deloitte’s suggestions.

Shortly after British Columbia ordered an investigation into money laundering at its casinos in late 2017, the BC Lottery Corporation adopted a supply of funds directive for money transactions bigger than $10,000.

Before a participant can trade money for chips, that participant wants to present the on line casino with a same-day receipt that exhibits which monetary establishment the money was withdrawn from and the account and transaction quantity.

This resulted in a dramatic discount within the quantity of illicit funds coming by the on line casino.

In Quebec, the lottery company now checks a shopper’s id and supply of funds for any transaction greater than $3,000. The threshold was beforehand $10,000.

When CBC requested Loto-Québec for extra details about how this coverage works in follow, together with if it additionally requires shoppers to present a receipt, a spokesperson mentioned CBC would want to make an entry to data request.

A balding man with a beard is seated with a blurred image of a newsroom behind him.
Pat Poitevin, government director of the Canadian Centre of Excellence for Anti-Corruption, mentioned as a state-owned enterprise, Loto-Québec ‘wants to have the next stage of rigour’ when it comes to reporting suspected money laundering and fraud, (CBC)

That lack of transparency issues Pat Poitevin, the chief director of the Canadian Centre of Excellence for Anti-Corruption, a not-for-profit company primarily based in Ottawa.

“I believe as a state-owned enterprise, it wants to have the next stage of rigour when it comes to their compliance measures to take care of money laundering and fraud,” mentioned Poitevin. “They’re setting the tone for personal business.”

While Poitevin mentioned he thinks it is a good suggestion that Loto-Québec lowered the brink for id checks to $3,000, if shoppers solely want to clarify verbally the place they acquired their money — for instance, from an inheritance — it’s “meaningless,” he mentioned.

“It’s one factor to have the controls in place, however should you do not talk what you’ve got, then there’s an assumption that [a state-owned casino] is still a straightforward prey to make the most of and reap the benefits of,” mentioned Poitevin.

He mentioned Loto-Québec wants to inform taxpayers what it is doing to detect, stop and cut back potential threats. This would enhance public confidence and act as a deterrent to organized crime.

“Organized crime teams are superb at discovering loopholes,” mentioned Poitevin. “When they discover loopholes, they’ll reap the benefits of it. It’s essential to not simply have insurance policies on paper however to guarantee that they’re at all times examined frequently.”


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