Suspicious activity at Great Canadian Casino sparks new questions about casino responsibilities to prevent money laundering

Hartley examines what steps casinos take to combat money laundering after a report regarding money laundering at River Rock Casino surfaces.

Earlier this year Great Canadian Gaming won the bid to host the casino at Woodbine racetrack in Toronto as well as casinos in the Toronto eastern suburb of Durham Region. The announcement, was met with mixed reaction since it beat out bids by Caesars and some other larger companies, but the fact that it is a Canadian-owned company, along with the fact they operate many racetrack casinos, seemed to put them over the top. Great Canadian Gaming owns and operates 10 casinos in British Columbia, 5 casinos in Ontario and three casinos in the Canadian Maritime provinces, as well as casinos in Washington State and Iowa, operating under the name Great American Gaming.

The Ontario Government's choice to give the bid to Great Canadian, however, is now being questioned after it was revealed that money laundering was taking place at River Rock Casino in Richmond B.C., a casino operated by Great Canadian Gaming. Political opponents to the Ontario Liberal Party believe the government knew about the money laundering and if not, they should have known. In fact, the opposition party in the Ontario government is calling for the ruling Liberal Party to revoke the deal and award the casino to a different operator.

River Rock CasinoThe report regarding the money laundering was only officially released last month, although information about the Royal Canadian Mounted Police (RCMP) investigation has been in the news for over a year. According to report, in 2015 the RCMP were informed about large cash deposits being made at the River Rock Casino in Richmond, British Columbia and they were called in to investigate if there was illegal activity occurring. The investigation clued up in 2016 and the RCMP determined that a large number of Asian "whales" were making deposits in the hundreds of thousands of dollars at the casino and wagering up to a million dollars a weekend. The bettors were almost always Chinese nationals without fixed Canadian addresses. According to the report, Asian customers would come in with large hockey bags full of money in $20 denominations and would hand them to the cashiers. In turn they were given chips to play with. After they finished gambling they would cash out the chips and would take withdrawals in larger denominations. The report was originally hidden from the media but The Vancouver Sun looked into the story under the freedom of information act and determined that the whole operation could be linked back to Paul King Jin, a Vancouver Spa owner.

According to the report, Jin concocted an elaborate scheme whereby he would help launder drug money through the use of VIP gamblers (most who were Macau natives) that would play at B.C. casinos along with a money transfer business called Silver International Investment (a company owned by Caixuan Qin and Jian Jun Zhu, although there is suspicion Jin was a silent partner too). The report concluded that Silver International Investment was effectively a bank for drug traffickers and Jin. Traffickers would bring their ill-gotten funds to Jin and Silver International who would take a 5% fee for the money laundering service and in turn would wire back the "cleaned" funds to a Chinese bank that would then send the funds to a bank in the dealer's name. Jin recruited gamblers to place bets at B.C. casinos, focusing on River Rock in Richmond where Silver International Investment was located. Jin originally did a lot of the gambling himself, but after he was blocked by the B.C. Lottery Corporation for suspicious activity he decided to use Asian VIP gamblers exclusively to do the gambling. Jin would arrange for the hockey bags full of 20s to be dropped off at casino parking lots and often in the middle of the night, to avoid detection. Since the release of the report the B.C. government has charged Silver International with money laundering as well as corruption for suspected loansharking.

No one at River Rock or Great Canadian has been charged with any crime although an audit by the B.C. Gaming Policy Enforcement Branch chastised both the company and the government since 14 individuals who were banned from being able to buy chips for cash due to suspicious activity were somehow still able to exchange cash for chips despite not providing a reasonable explanation for the origin of the cash.

Casinos are a known source for money laundering and a report earlier this year showed that the Trump Taj Mahal Casino was found to be in violation of not adhering to anti-money laundering offenses 106 times in its first year of operations. Included in this was the fact that the casino failed to obtain the names and social security numbers of gamblers who cash out more than $10,000, a FinCen requirement. The casino eventually settled the charges by paying a $10 million fine.

But the question remains as to what duty casinos have when it comes to money laundering?

Great Canadian Gaming money launderingGreat Canadian Gaming maintains that it has always followed the rules set out regarding money laundering prevention and had often exceeded due diligence when it comes to combatting the activity. And other casinos throughout the world have used the same excuse, i.e. we did what we were required to do under the law. But many believe that is just not enough, especially for a cash business. An interview of a casino worker in B.C. by Postmedia earlier this year indicated why this is the case. The worker stated that the source of funds is rarely questioned at his casino and obvious questions like how a student has hundreds of thousands of dollars to gamble, how he can own a multi-million dollar house and how he could drive a Porsche or other expensive vehicle were never questioned. The implication is the casinos do only what they are required to and rarely if ever ask common sense questions because the casinos don't want to lose the business. And a casino worker at an Ontario casino I spoke to who agreed to talk on the promise of anonymity agreed:

"I often see people who look like they can't feed themselves throw a stack of hundreds on the table. The dealer will say Cash in two thousand or something similar and after a quick glance over the pit boss always says go ahead. And these people always come back later to throw down more. I don't believe for a second it is their money."

The biggest concern with money laundering is terrorist financing and indeed it appears Silver International wired money to China, Iran, Mexico and Peru many with terrorist ties. And it's not inconceivable that some of that money could make its way to groups like ISIS or other factions looking to kill Canadians or Americans. And since the majority of the drug money is coming from Asia, it's almost certain that the drugs include the importation of fentanyl and carfentanil which are killing thousands in North America yearly. It's for that reason Raymond Baker suggested to me for years that governments should do whatever they can to block all activities that could promote money laundering because the only way to defeat terrorism is to cut off its funding.

As for Great Canadian, the Ontario provincial government continues to insist it did its due diligence when selecting that company to run the Toronto casinos and the opposition continues to call for an investigation regarding what steps the current government went through in making the decision. They also want more information regarding lobbyists that convinced the government to choose Great Canadian Gaming. Regardless, it's unlikely the contract given to Great Canadian can be cancelled at this point without a huge cost to taxpayers, nor is there any certainty that another bidder will have no money laundering issues in their history either. Unfortunately, that's just a reality of the casino business.

Read insights from Hartley Henderson every week here at OSGA and check out Hartley's RUMOR MILL!

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