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Pity the commissioner overseeing the inquiry into B.C. money laundering

Pity the commissioner overseeing the inquiry into B.C. money laundering
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RICHMOND, B.C. — Pity the commissioner overseeing the inquiry into this province’s problem with “dirty” money.

The enormity of the task before Austin Cullen, a B.C. Supreme Court associate chief justice, to investigate the scope, impact and causes of money laundering in B.C. was on full display Thursday night at the resumption of the inquiry’s public comment phase.

In a hotel conference room filled with about 100 people, speaker after speaker — armed mostly with anecdotes and personal observations — pressed the commissioner to investigate money laundering’s reach into casinos, residential construction, money transfer services, massage parlours, real estate and the underground “birth tourism” industry.

Some speakers tied the laundering of money to the housing affordability crisis, while others linked it to the opioid and overdose epidemic. They cast blame on corrupt municipal politicians, corrupt provincial politicians (daggers were mostly thrown at the previous B.C. Liberal government), under-resourced police investigators and incompetence at FINTRAC, the federal agency responsible for monitoring large cash transactions.

I really am impressed when I see the turnout

Stepping up to the podium, speaker Ken McLennan expressed surprise so many people had taken an interest in such a cumbersome mess.

“I really am impressed when I see the turnout for such an onerous issue that’s a big black eye for the history of Canada,” he said.

The year-long inquiry was spurred, in part, by a pair of scathing reports by retired RCMP deputy commissioner Peter German. His first report in 2018 described how, for years, casinos had unwittingly served as “laundromats” for the proceeds of organized crime. A second report this year noted how opaque ownership structures in the real estate market provided a “veil” to conceal money laundering and how luxury car dealers reported buyers bringing bags of money or using multiple wire transfers to purchase vehicles.

A separate provincial expert panel estimated that up to $5 billion was funnelled through B.C.’s real estate market last year alone.

German told the Post this week that while inquiries can be costly, they can find fault, which his reports did not do.

“Money laundering is the back office of organized crime,” he said. “We’ve known for a long time if you wish to attack organized crime effectively, often times going after money is the way to do it.”

The inquiry was announced by Premier John Horgan in May, saying the magnitude of the problem was “far worse than we imagined.”

So far, standing has been given to several organizations and individuals, including the B.C. Real Estate Association, the B.C. Lottery Corp., BMW Canada, and the Law Society of B.C., to participate in evidence hearings starting next year.

For now, the commission is still in an exploratory phase, seeking the public’s input to key questions: How is money laundering manifesting itself? What have been the consequences? And what are the solutions?

Despite that framework, things went off the rails during the first public meeting last month at a Vancouver hotel conference room, according to Vancouver Sun columnist Ian Mulgrew. One speaker, he wrote, went on a rant about how his idea to build skyscrapers as a way to stop urban sprawl had been rejected by crooked politicians. Another speaker, a professional poker player, said he was targeted by gangsters, including the Filipino mafia, the Vietnamese mafia, the Chinese gestapo “and believe it or not the North Korean spies.”

At the start of Thursday night’s public meeting in the Vancouver suburb of Richmond — which one speaker dubbed the “gateway” for money laundering because of all the “cars, jets casinos, mansions” — Cullen implored speakers, who were allotted a maximum of 10 minutes, to make sure their remarks “align with our mandate, which is money laundering.”

Despite the admonition, the breadth of topics covered over two hours was unwieldy.

“We suspect that some of them are financed through money laundering,” he said, without elaboration.

Among his asks: that lawmakers follow the lead of Britain by adopting legislation that would allow the courts to issue “unexplained wealth orders” that permit authorities to seize property if the owner can’t explain the source of money used to acquire it.

Police are “turning a blind eye” to the links between prostitution and money laundering, said Suzanne Jay, a representative of the Asian Women For Equality society.

She suggested that prostitution out of massage parlours, nail salons and homes was likely linked to organized crime groups.

I think City Hall should be investigated

Veteran realtor Lyn Terborg complained that until recently too many real estate transactions relied on an “honour system” and described the mandatory reporting of suspicious or large cash deals to FINTRAC a waste of time because of the “bureaucratic nightmare of incompetence” at the federal agency.

“Some of my observations are anecdotal, but they could be based on fact,” she said.

David Chen, a former Vancouver mayoral candidate, drew attention to the underground “birth tourism” industry.

“The reason why this is connected to money laundering is it’s an unregulated, unrecognized industry,” he said. “They cannot get a business licence from the city of Richmond … but their business is run primarily by cash.”

He cited a recent case out of Orange County, Calif., in which a Chinese national pleaded guilty to running a birth tourism business that charged wealthy pregnant women tens of thousands of dollars to give birth in the U.S. so their children could get American citizenship.

An earlier grand jury indictment alleged the owner had served more than 500 clients and had received $3 million in international wire transfers from China over two years.

“Chances are this model is not different” from what is occurring here, he said.

Richmond resident Ivan Pak recommended better regulation of “underground banking” networks and money transfer services. At the same time he urged caution against assuming that the transfer of large sums of money to Canada from overseas must involve money laundering.

The control of currency exports from China has forced immigrants to find alternative ways to transfer their wealth once their personal quotas have been reached, such as the use of friends and relatives, he said.

“To people living in the West they don’t understand, they think this is illegal. I think when we do investigations we should separate … we have to be careful about how we define these transactions.”

The most boisterous applause of the evening came when resident Jackie Turner recalled lining up at City Hall to pay her property taxes and seeing others pay “thousands and thousands” in cash over the counter.

“Surely the City of Richmond must’ve known that this is illegal money,” she said, without citing any proof.

“I think City Hall should be investigated.”

The city has since imposed a $10,000 limit on cash payments.

After comparing money launderers in Canada to cartels in Mexico, resident Don Flintoff said action was needed now, but suggested this whole exercise could produce a report “which may sit on somebody’s shelf in an office in Victoria and gather dust.”

An interim report is due in November 2020.

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