B.C. casino didn't always fulfil reporting rules for cash buy-ins, inquiry hears
The inquiry into money laundering has heard British Columbia's largest casino didn't always comply with reporting requirements on large cash buy-ins as suspicious transactions became increasingly common a decade ago.
John Karlovcec, the former director of anti-money laundering and investigations for the B.C. Lottery Corp., agreed under questioning Friday that the River Rock Casino hadn't reported two cash buy-ins of $450,000, one of which was made entirely in $20 bills that would have triggered bank scrutiny.
The former Mountie also agreed the River Rock and other casinos may have resisted anti-money laundering measures in case they offend high-rolling patrons.
But Karlovcec said he doesn't believe non-compliance with reporting rules was systemic at River Rock and he had a good relationship with those responsible for compliance and regulatory affairs at the casino.
The lottery corporation's primary focus was to make sure casinos reported suspicious cash transactions to Fintrac, Canada's financial transactions reporting centre, he said.
Karlovcec said the corporation didn't have the authority to demand a casino refuse cash or that it investigate whether cash was the proceeds of a crime.
“Were there more errors than we would have liked? In certain circumstances, yes,” he said. “But anything that was identified was addressed and reported or submitted to the federal regulator.”
The B.C. government launched the inquiry after reports linked laundered money with gaming, luxury car sales and soaring real estate prices in the province.
Kaitlyn Chewka, counsel for the B.C. government, questioned Karlovcec about another example of failure to report suspicious cash transactions at River Rock outlined in a 2011 email from a B.C. Lottery Corp. investigator.
She said the email from Ross Alderson suggested the casino wasn't reporting cash transactions under $50,000 and cash buy-ins of $49,960 and $49,980 in $20 bills had not been reported as suspicious.
Alderson's email said he felt it was “too much of a coincidence and the players must have been informed,” said Chewka.
Karlovcec agreed that using a $50,000 threshold for reporting suspicious cash buy-ins would have violated Fintrac's requirements of reporting cash over $10,000.
He said he followed up with the casino operator at the time.
He also agreed under questioning that it was suspicious that a single patron bought in at River Rock for $1.8 million, largely in small bills, over the course of just seven days.
He said the lottery corporation reported the transactions to Fintrac, B.C.'s gaming policy and enforcement branch and police, who had the authority to investigate.
The inquiry also heard the B.C. Lottery Corp. was starting to notice in 2014 there were more outstanding chips at River Rock, meaning players weren't cashing out, which was concerning because they could store a lot of value in a single $5,000 chip, for example.
Karlovcec said rules were in place to prevent players from using River Rock chips at other casino, but it was “virtually impossible” to track chips leaving the site.
This report by The Canadian Press was first published Oct. 30, 2020.