Money laundering has distorted British Columbia’s economy, fuelled the opioid crisis and overheated the real estate market, the province argued at the start of an inquiry into the criminal activity on Monday.
Jacqueline Hughes, a lawyer for the B.C., said in her opening remarks that money laundering is not a victimless crime and has significantly affected ordinary residents over the past decade.
“The Lower Mainland has, unfortunately, earned an international reputation as a haven for money laundering. This did not happen overnight or without warning signs,” she said.
“The past cannot be undone. But what government can do going forward is learn from the past and take proactive steps to make British Columbia the most difficult jurisdiction in which to launder money.”
B.C.’s NDP government called the independent provincial inquiry last year after three reports revealed that casinos and horse racing as well as the real estate and luxury car markets had become laundromats for the proceeds of crime.
Commissioner Austin Cullen is hearing opening statements this week, with Hughes the first to speak on behalf of the province’s Finance Ministry and gaming policy enforcement branch.
Hughes said the accounts of millions of dollars flowing through B.C.’s casinos in shopping bags have become well-known and the public deserves answers to its questions.
“Was there wilful blindness to what was going on in favour of income generated for public or private persons? Are there legislative barriers that prevent prosecution?” she asked.
“Most importantly, what is the true extent of money laundering in the province and what steps can we take to stop it?”
She said the government has taken steps including creating a beneficial ownership registry to prevent real estate buyers from hiding behind corporations and requiring those spending $10,000 or more at casinos to verify their source of funds.
But Hughes said there is still more work to be done and B.C. is looking forward to the inquiry’s findings.
The Canadian government is also participating in the inquiry as federal organizations, including the RCMP and the Financial Transactions and Reports Analysis Centre of Canada, or Fintrac, bear significant responsibility for fighting money laundering.
B.C. Attorney General David Eby has said federal resources remain too low to address the problem and has called on Ottawa to provide more funding for intelligence gathering and enforcement.
Judith Hoffman, a lawyer for the federal government, focused her opening remarks on Canada’s efforts to stop money laundering and the complex national regime that exists to oversee the issue.
While B.C. has received much of the attention, money laundering is a national concern, she said.
“Throughout Canada, there is widespread recognition that more must be done to combat this threat. Alongside the federal government, provincial and territorial governments have an important role to play,” she said.
The government committed more than $170 million to Fintrac, the RCMP and the Canada Revenue Agency in the 2019 budget and met with provincial officials at a summit on money laundering last June, Hoffman said.
There is “no doubt” that criminals will continue to attempt to exploit the cracks in the system but the government is working to improve the exchange of information and co-ordination among public and private entities, she said.
Fintrac is not an investigative body but instead collects intelligence and turns over leads to law enforcement, she noted.
Cullen said Fintrac has an “enormous” mandate with thousands of entities reporting to it. He asked the federal government to turn its attention, as the inquiry proceeds, to whether the agency is capable of responding to British Columbia’s concerns.
Counsel for the Law Society of B.C., which regulates lawyers in the province, told the commissioner that the body can help in the fight against money laundering.
Ludmila Herbst said lawyers may be at risk of being involved in money laundering when creating corporations, charities and trusts, and helping clients buy real estate and other assets. However, she said the law society has rules to mitigate the risk and address misconduct.
She argued it’s important to ensure that the legal profession remains independent from government. The right to solicitor-client privilege and the duty of lawyers to protect their clients’ interests must be preserved, Herbst said.
Cullen asked Hoffman about the inclusion of lawyers in the anti-money laundering regime and she said the government has created a working group with the Federation of Law Societies of Canada to address that issue.
Opening arguments are scheduled to continue through Wednesday with statements from more than a dozen participants including the B.C. Lottery Corp. and B.C. Real Estate Association.
The inquiry will reconvene in May for a money laundering overview and to quantify the extent of the problem in B.C., before main hearings are held from September through December to dig into specific industries.
This report by Laura Kane, The Canadian Press was first published Feb. 24, 2020.