BC Government Calls Public Inquiry into Money Laundering that has National Implications

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BC Government Calls Public Inquiry into Money Laundering that has National Implications

BC Premier John Horgan today called a public inquiry into money laundering in the province that has national implications. The BC Liberals failed to deal with the problem during their 16 years in power as housing prices climbed into the stratosphere often illegally with offshore money, luxury cars costing up to $500,000 grew exponentially in numbers, and hundreds of thousands in athletic bags were whited washed in casinos. 

No doubt that failure to deal with money laundering has also contributed to the exponential growth in real estate prices in Toronto and Montreal, which has squeezed much of the middle class out of home purchase in Canada's three largest cities. 

The federal Liberal and Conservative governments have failed to deal with the money laundering issue that has helped drive housing prices so high. This primarily rests the federal governments during this period since they have jurisdiction over criminal law and the monitoring of money flows. It was only NDP BC Justice Minister David Eby's two report on the situation that has forced Trudeau to admit that something (what?) needs to be done about it. But without the power to subpoena these reports could only go so far.


Some $7.4 billion overall was laundered in B.C. in 2018, out of an estimated total of $47 billion in Canada, concluded the report by an expert panel led by former B.C. deputy attorney general Maureen Maloney.


One of those reports that money laundering was responsible for raising house prices across the province by 5% and 20% in Vancouver alone. 

However, this problem is not restricted to BC. As noted above, BC had $7.4 billion in money laundering in 2018 out of a total of $47 billion. Ontario, Quebec and Alberta all had larger amounts of money laundering. 


Here are more details on what is involved in the public inquiry into money laundering: 

British Columbia will hold a public inquiry into money laundering, sparked by a set of explosive reports showing widescale laundering in the province's real estate, gambling and luxury car sectors.

B.C. Premier John Horgan announced the decision, flanked by Attorney General David Eby and Finance Minister Carole James after a cabinet meeting Wednesday morning. "It became abundantly clear to us that the depth and the magnitude of money laundering in British Columbia was far worse than we imagined when we were first sworn in, and that's why we established the public inquiry today," Horgan said.

B.C. Supreme Court Justice Austin F. Cullen has been appointed to head the inquiry, which will look into real estate, gaming, financial institutions and the corporate and professional sectors.

Calls for a public inquiry have grown after two reports released by the provincial government last week revealed more than $7 billion was laundered in B.C. in 2018, including an estimated $5.3 billion through the real estate market. The reports were written by Peter German, a former RCMP deputy commissioner, and law professor Maureen Maloney, the chair of B.C.'s expert panel on money laundering in real estate. Earlier this month, German released findings on money laundering in the luxury vehicle sector. Last year, he had released another report which detailed extensive links between money laundering and B.C. casinos. ...

Eby said the German reports formed the basis of the decision to call the inquiry, and alluded to the fact some individuals had refused to participate in the reviews voluntarily. "We are done with asking nicely," he said. "Today, our government has given Justice Cullen the authority to do more than ask for voluntary participation." Eby said Cullen has been granted "significant" powers under the Public Inquiry Act to compel witnesses, testimony, gather evidence and the opportunity to search and seize records with a warrant. ...

Eby added he had reached out to his federal counterpart, Organized Crime Reduction Minister Bill Blair, and was assured the federal government will co-operate with the inquiry. ...

When asked whether any B.C. Liberals will be compelled to testify on political decisions made around money laundering, Horgan said it will be completely up to Cullen. "If there is testimony that the commissioner needs to get to the bottom of this, he will compel that testimony," the premier said. "We're not constraining the commissioner in any way."

The final report by the inquiry will be delivered by May 2021, and an interim report within the next 18 months.



Below is some information on the public inquiry into money laundering commissioner and the terms of reference of the inquiry:

Eby said Cullen will not be constrained by the two-year timeline if he needs more time and resources to conduct the job. Cullen can also ask government to amend his terms of reference and scope if he wishes, said Eby.

Cullen worked as a Crown prosecutor in B.C. from 1976 to 1980, and again in 1984 to 1999 before he became assistant deputy attorney general for the criminal justice branch. Eby said that branch is politically independent and Cullen is still appropriate to investigate government activity during that time. He was appointed to the B.C. Supreme Court in 2001.

Finance Minister Carole James said although the government is moving forward with recent recommendations, but an inquiry will shed more light. “Alongside action we also need answers,” said James. ...

The terms of reference for the inquiry include “the extent, growth, evolution and methods of money laundering in the following sectors” which include gambling and horse racing, real estate, luxury goods, legal and account services, financial institutions, and any other agencies.

It also instructed recommendations into regulating any sectors affected by money laundering, as well as barriers to enforcement and any powers or duties needed to crack down on the problem.

It also requires Cullen to forward any information to the appropriate agencies if he believes that any evidence points to Criminal Code infractions, while specifying that the inquiry is not to jeopardize any continuing criminal investigation.



"B.C. announces public inquiry into dirty money — what’s the rest of Canada doing?" is an article that raises the question of why haven't other governments tackled this problem.

British Columbia is moving forward with a public inquiry on money laundering in the province, but several explosive reports show the problem of dirty money is widespread across the country. ...

Reports from Peter German, a former RCMP deputy commissioner, and law professor Maureen Maloney, the chair of B.C.’s expert panel on money laundering, showed that almost $47 billion worth of dirty money was washed through the Canadian economy last year. Other estimates noted in the report show that number could be as high as $150 billion. ...

The decision to move forward with a public inquiry follows a Global News investigation last November that showed how crime networks are laundering billions through high-end Vancouver real estate and fuelling the opioid crisis. A series of reports from Global News last week revealed new allegations that show how organized crime groups have laundered money in B.C. casinos as far back as the 1990s. ...

Maloney’s investigation found that Ontario, Alberta and the Prairies had an even bigger problem.

“Money laundering is a national issue requiring a combined federal and provincial response that involves all of the provinces across the whole country,” the Maloney report said.

Here’s how other provinces are responding to the reports on money laundering.


The Maloney report estimated Alberta had the greatest amount of dirty money sloshing around in its economy to the tune of roughly $10 billion in 2015. The report used what is called the “gravity model” to estimate how much money is being laundered across the country and how much moves between Canada and other countries. The model is currently used by the Netherlands, and this is the first time it’s been applied in Canada. 

Doug Schweitzer, Alberta’s minister of justice, criticized the findings and said the conclusions are based on questionable data. “The authors of this report note that they have a lack of reliable data,” Schweitzer said in a statement. ...

The Prairies

Saskatchewan and Manitoba had a combined $6.3 billion in dirty money floating around in their provincial economies in 2015, according to the Maloney report.

The authors said the findings show the money-laundering problem is even worse in the Prairies than B.C. and may be surprising to some. “If money laundering in Alberta and the Prairies have been overestimated by the model, that implies that money laundering in B.C., Ontario and Quebec have likely been underestimated,” the Maloney report said. ...

A spokesperson for the Saskatchewan government said the province is participating in measures to combat money laundering through the Federal-Provincial-Territorial Working Group.

A spokesperson for the Manitoba government directed questions to the RCMP. ...


The staggering amount of money being laundered through Toronto’s real-estate market has been highlighted in the past, including a report from Transparency Canada that found up to $28 billion may have been washed through housing in the Greater Toronto Area since 2008. The Maloney report found that in 2015 alone, Ontario saw roughly $8 billion of illicit money being washed through the province. ...

A spokesperson for Ontario Finance Minister Vic Fedeli said the idea of a real estate registry was discussed at the last meeting of provincial finance ministers, but they did not commit to any concrete action.


Prime Minister Justin Trudeau says the B.C. reports on money laundering were “extremely alarming” and show that everyday Canadians are being hurt. “This is a real and pressing problem for Canadians, and it’s a problem around the world that Canada is going to continue to lead in the fight against,” Trudeau said last week.



Rob Smyth is a right-wing columnist with the Vancouver Province but even he admits the BC Liberals have a lot to answer for and are deeply worried about what the money laundering inquiry will reveal about themselves. 

The Liberals put on a brave face Wednesday as NDP Premier John Horgan launched his public inquiry into criminal money-laundering in B.C. “I’m quite happy with an inquiry,” said Liberal MLA Rich Coleman, who oversaw casino gambling and law enforcement with the previous government. ...

But don’t kid yourself: The Libs are nervous as hell about this thing and the political damage it could cause them in the run-up to the next election. The Liberals were in power for 16 years, including those latter years when Metro Vancouver housing prices soared beyond the reach of non-millionaires.

Horgan’s New Democrats released a series of bombshell reports showing dirty money from drug-dealing and other crimes potentially drove up home prices. What did the Liberals do about it? When prices first began to skyrocket, they didn’t want to intervene in the real estate market — something Horgan seized on Wednesday.

“The former government appeared to be indifferent,” Horgan said, noting the Liberals later refused to waive secrecy laws and release sealed cabinet documents on the crisis. Now Horgan wants Liberal Leader Andrew Wilkinson to co-operate with the public inquiry and release those secret cabinet records to Austin Cullen, the inquiry head. “Commissioner Cullen should have access to that information,” Horgan said. “I would hope that Mr. Wilkinson will revisit that question.” ...

Make no mistake: This money-laundering mess has been a powerful political weapon for the NDP. Now they hope a public inquiry will continue to inflict maximum damage on the Liberals. The Libs will point out it was the NDP government of the 1990s that first started jacking up betting limits in the casinos, the possible genesis of the money-laundering beast. I asked Horgan if he would be willing to produce any sealed cabinet records from those days. “Absolutely,” Horgan said. “We’re not afraid of that at all.” Easy for him to say. The maximum casino betting limit back then was $500 on a hand of blackjack. The maximum now is $100,000 per hand. Yes, you read that right.

Also, the influence of dirty money flowing out of places like China was minuscule back then, compared with the tsunami of cash flooding B.C. over the last few years.

The public inquiry is the right thing to do. But don’t be fooled about the partisan politics of this. There’s a reason the inquiry is scheduled to report back in 2021 — the year of the next provincial election.



The money laundering inquiry is likely to raise major questions about why the federal Liberals and Conservatives and provincial Liberals did nothing about it, especially with regard to its role in sending real estate prices sky high in Vancouver.

The federal government under both Trudeau and Harper failed to  create effective measures to block money laundering and failed to prosecute those who were involved in this despite many warnings of what was happening. 

Casino insider Ross Alderson said he warned officials about potential money laundering. Now he wants to tell all to B.C.'s new public inquiry. He’s one of the most knowledgeable casino insiders in British Columbia, a whistleblower who sounded the alarm on rampant money laundering infecting the industry and the province. And now that the B.C. government has launched a public inquiry into all that dirty loot, Ross Alderson is ready to reveal what he knows.

Alderson, 48, is a former police officer who started working at the lottery corporation in 2008 as an investigator. He later became manager of investigations for online gambling, and then head of anti-money laundering for the Crown corporation in 2015. That brought him frequently to the River Rock Casino in Richmond, the biggest in B.C., where he was stunned by the large volumes of cash transactions he witnessed. ...

The reports were also given to Peter German, the former RCMP officer brought in by the new NDP government to produce last year’s bombshell Dirty Money report. But, despite sounding the alarm, Alderson said the dirty-cash train kept rolling. ...

Alderson produced an internal BCLC report in September 2015 that warned high-rolling “whale” gamblers at the River Rock were likely laundering cash derived from organized crime. And a November 2016 presentation he prepared for regulators showed the vast majority of the biggest-betting casino gamblers came from China and many were connected to the real-estate business. “The casinos were like a gateway for a lot of the other money-laundering,” he said. “I’m not surprised Peter German’s later reports revealed money-laundering in real estate and luxury car sales. It’s all connected.” ...

The Liberals were in power for 16 years until the New Democrats took over in 2017. Reports say money laundering in casinos peaked while the Liberals were in control. ...

For Alderson, that includes finding out why the previous Liberal government shut down the Integrated Illegal Gaming Enforcement Team, a police unit that warned about casino crime as far back as 2009. “When you have a policing organization writing reports about organized crime infiltrating casinos, and then it gets shut down, people should question that,” he said. “That’s something the public inquiry should look into.”



Financial crime experts say the federal and BC Liberals have been far too slow in responding to money laundering crisis in Canada. 

Experts are starting to sound like a broken record as they explain how to prevent money laundering: create a public registry that shows the true ownership of Canadian companies and requires more sectors to report large cash transactions. Those key recommendations, among others, were included in two reports on money laundering in British Columbia last week. The federal Standing Committee on Finance made similar recommendations in November. ...

In 2017, reporting by the Toronto Star and CBC showed how Canada is becoming a tax haven for the global elite in a phenomenon named “snow washing.”

People who want to hide money because it was earned through criminal activity or because they are trying to evade taxes can do so by creating a Canadian company. The directors of the company

can be nominees, such as a lawyer, a relative or another associate, meaning that public records do not show the true owner.

Organizations such as Transparency International say a public beneficial ownership registry is the best way to prevent Canada from becoming a safe haven for dirty money. The United Kingdom has had such a registry in place since 2016. ...

Amending Canada’s Business Act is the first step, Cohen said, but it shouldn’t end there. “The problem with this is while it’s a building block step, it’s not a very good prevention step, because once the notice is issued, if you’re truly looking to hide your money you can just shut down any funds from that company and move it somewhere else,” James Cohen, executive director of Transparency International Canada, said. “It’s too slow of a system."

To effectively prevent money laundering, Canada needs to go further to create a public registry — and will need co-operation from the provinces to create one, Cohen said. Carole James, British Columbia’s finance minister, has said she will lobby her provincial counterparts to create registries similar to B.C.’S groundbreaking land ownership registry.

Fuzzy ownership is only part of the problem. Peter German, the author of one of the B.C. reports, described suspicious allcash purchases in the luxury car sector. He noted the sector is not required to report large cash transactions to Fintrac, Canada’s financial intelligence agency.



The following article outlines the timeline on what has led to the BC NDP investigation into money laundering after the provincial Liberals and the federal Liberals and Conservatives have failed to deal with this problem that has been grown exponentially since the turn of the century. 




The NDP BC government investigation into money laundering is now expanding to other sectors as more infomation comes in about money being laundered through university, college and private schools, as well as through cryptocurrencies, auction houses, luxury boats and cash-based cannabis businesses, and even luxury pianos. 

B.C. has asked colleges and universities across the province to immediately stop accepting large cash payments from single students and review financial policies, days after another explosive report said such institutions may be another avenue for money laundering.

Minister for Advanced Education Melanie Mark said she sent letters to dozens of institutions on Tuesday, giving them a one-month deadline to share their existing policies for handling cash transactions with the government.

Last week, former RCMP deputy commissioner Peter German said his second report, Dirty Money Part Two, found some private and public post-secondary institutions still accept cash for tuition and other expenses.

German said his team received tips that some international students have been known to register at colleges in person and then, after paying their fees, "withdraw and receive an institutional cheque in reimbursement for their fees."

If the original cash came from the proceeds of crime, that would be a classic way of turning dirty money into funds that appear clean. ...

The report noted that a student recently appeared at an unnamed college with a duffel bag of $9,000 in cash, asking to deposit it with the college — minus a charge of $150 the student owed. German said his team also received tips about private colleges accepting cash for tuition, which, for an international student, tends to be a minimum of $7,000 to $10,000.  ...

B.C. Attorney General David Eby has said the NDP government is looking at requiring all B.C. businesses to report cash transactions over $10,000 to the federal anti-laundering watchdog known as FINTRAC. Eby said FINTRAC does not track cash transactions at post-secondary institutions, so the issue "is really a bit of a black hole." ...

Calling it the "whack-a-mole" phenomenon, German identifies cryptocurrencies, auction houses, luxury boats and cash-based cannabis businesses as vulnerable to use by money launderers. These businesses are vehicles where money launderers may attempt to clean their money, in addition to the previously identified real estate industry, casinos and luxury cars.




The federal Liberal and Conservative governments have allowed money launderers to all but escape any consequences for their illegal activity. A May 2019 report of the C. D. Howe institute concluded " 99.9 per cent of those money launderers are just never caught." This has had a staggering impact on real estate prices, especially in cities like Vancouver, which is now the second most expensive city in the world to buy real estate in terms of median real estate price to median income. 

Much of this money comes from non-democratic countries where the criminals fear their money will be taken from them from them by the autocrats. The federal Liberal and Conservative governments have the weakest money laundering laws of any developed democracy, making Canada a prime target for money laundering. 

To counter the massive money laundering, legal penalties must include significant prison sentences, otherwise the money launderers will simply see losing some of their money as the cost of doing business.  Sadly neither the federal Liberals or Conservatives have shown the slightest inclination to tackle the problem beyond a few words of pablum. 

Money laundering helps drive up the price of real estate because multimillion-dollar mansions allow large blocks of cash to be laundered in a single deal, and the advantage of having 'clean' money means paying over the asking price is no barrier. ...

And as British Columbia begins to crack down on the washing of dirty money, the author of the new report, retired corporate lawyer Kevin Comeau, says failure to change national laws just means the crime will go elsewhere in the country.

"It's highly unfair to law enforcement agencies to say that they've been ignoring it," said Comeau, a member of Transparency International Canada's working group on beneficial ownership transparency, in a telephone interview. "The problem is that they don't have the tools to address it."

Ironically, it is Canada's reliable rule of law system that attracts the money launderers. Dirty money can come from crime anywhere in the world, including Canada. But much of it is funnelled out of poor countries and autocratic regimes.

But whether the source is drug crimes or political bribery and theft, the people who claim that money don't want to keep it in those autocratic countries because a more powerful leader could simply take it.

Not only has the money been filtered through a web of corporate entities before it comes to Canada, but sometimes the cash passes through companies headquartered in notorious tax havens such as Saint Kitts and Nevis, where it is actually illegal to reveal the beneficial owner. Comeau describes that as the "rabbit hole" of hidden money.

Comeau says that despite Canada's fractured securities laws controlled by each province and territory, there are things lawmakers can do now if they are serious about making Canada less of a money laundering oasis and bringing the country up to the standards of other rule of law countries.

Canada allows nominees, companies and trusts to buy and sell property without revealing the person who is the beneficial owner. Comeau said that must change. ...

The key provision of any such laws would be that the lawyer or other agent moving money through Canada must reveal the beneficial owner of that money in a publicly searchable database. Comeau insists it is crucial that the information is not on a private database, but is available for everyone, including people who may have lost that money overseas. ...

While that conflicts with privacy laws, proponents of the changes says it is well within Canadian law in order to solve this money laundering crime. ...

To be effective the law must create offences that could include declaring money to be clean when it is not, falsely declaring beneficial ownership, and something called "unexplained wealth orders" that allow authorities to demand the source of money back to its origin.

The other essential part of the new laws must be the inclusion of imprisonment as a penalty for serious violations, because with so much money at hand, fines become meaningless. Prison time would be something else again.

"Then the law enforcement agencies would have something right at the beginning to say to the guy: 'Tell us who the beneficial owner of all this is or we're going to charge you,'" said Comeau.

"The money launderers have to bear the very real risk that the person will cut a deal with law enforcement agencies and give them the information leading back to the perpetrators of the original crime."


The ease with which foreign money can be laundered in Canada has helped make Vancouver real estate prices the second highest in the world in terms of median real estate price to median income, thereby driving much of the middle class out of the market. The Toronto real estate market has similarly been skewed through money laundering. 

Vancouver has the second highest second highest real estate prices to income ratio in the world, according to a January 2019 report.

Vancouver housing is the second least-affordable in the world after Hong Kong, according to the 15th annual Demographia International Housing Affordability Survey.

This year Vancouver bumped Sydney to be in the No. 2 spot after three years at No. 3. ...

The survey rates middle-income housing affordability using a measure called the median multiple. It captures the median house price divided by the median household income in a given market. A median multiple of 5.1, which means a home costs more than five times the average annual household income, is considered “severely unaffordable.”

Vancouver’s median multiple of 12.6 is the second worst (Hong Kong’s median is 20.9) among the 91 cities ranked. Vancouver’s median is the same as last year after Sydney’s affordability improved slightly (11.7 from 12.9.)