The three-year investigation into money laundering in British Columbia, as laid out in an 1,831-page report, delivered three main points: “enormous” amounts of money, in the billions of dollars annually, is washed through the province; a widespread failure among governments, police and regulators to take the problem seriously allowed crime to flourish; and new tools to fight back have emerged, but a greater effort is needed to crack down.
The scale of the challenge is clear in the 101 recommendations issued on Wednesday by the Cullen Commission, run by Austin Cullen, a former B.C. Supreme Court justice. Areas in need of improvement run the gamut: casinos, real estate, mortgage brokers, banks, beneficial ownership registries, tougher rules for lawyers, luxury goods and more.
The commission started work in 2019, two years into the NDP’s first term. Several reports for that government showed money laundering was a big problem. But while the initial focus was B.C., the real problem became clear. It starts at the top, in Ottawa – and that’s the most important point in the long report.
Canada failed to grapple with money laundering, turning this country into an easy mark.
Mr. Cullen describes dirty money as an amorphous crime of convenience; the cash flows to where it is most easily washed. The methods and targets constantly evolve. Money launderers are savvy and the crooks know the rules of different jurisdictions. They exploit holes.
That’s why the “Vancouver model” became a thing. It was child’s play to wash tons of cash through local casinos. They might as well have put up neon signs that said “Launderers Welcome.” In 2018, after a modest reform – bettors had to prove the legal provenance of cash of $10,000 or more – suspicious transactions plummeted.
Internationally, Canada is a lazy laggard in the fight against money laundering. The Basel Institute on Governance puts out an annual ranking; among 110 countries, Canada is 34th – six places behind the United States. Scandinavian countries top the list.
Mr. Cullen starts by calling for “strong and decisive action” and his first target of reform is federal. “Not effective” is his two-word description of Ottawa’s work. That includes the RCMP and FinTRAC, the system that analyses financial transactions. The word “lack” appears repeatedly in the report. The RCMP had a “lack of attention” on the problem. A main reason was “a lack of resources.” As for FinTRAC, it handles a huge volume of data – exponentially more than comparable operations in the U.S. or United Kingdom – and yet produces very little of use to police. Why? Here comes that word again: “a lack of strategic vision at the federal level,” unlike in the U.S. or U.K.
Mr. Cullen, running a provincial commission, wasn’t able to make recommendations for Ottawa but he underlines that it is “vital” that problems in Ottawa are addressed if there is to be real headway made in B.C. Within the province, Mr. Cullen puts “the failure” to more aggressively act on the previous BC Liberal government. His primary recommendation is the establishment of a new B.C. anti-money-laundering commissioner and a new intelligence and investigation unit. These makes sense. A specific focus can reverse previous inattention.
Ottawa, meanwhile, inches ahead, ever so slowly. This is the situation too often in politics: big problems that are not immediately obvious – money laundering is largely unseen – are easy to ignore. In their April budget, the federal Liberals made a few moves, including promising a “comprehensive review” of Canada’s anti-money-laundering and terrorist-financing regime. On Wednesday, Ottawa said it would take the Cullen Commission’s findings into account. But Canada needs action, not another long review.
For all the delays, denials and foot-dragging, progress is happening on this file. B.C. has created a beneficial ownership registry for real estate, to stymie crime and money laundering there. Ottawa is creating the same type of registry for corporate ownership, limited to the federal level. Mr. Cullen urged B.C. to join. That call should be heard by all provinces.
How to fight money laundering is no secret. The methods are varied, but Mr. Cullen’s overall answer is simple.
The problem can only be beaten when governments, law and the police give it “the priority that it has lacked for so long.”
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