Cullen Commission: No Evidence of Corruption, Report Says

An 1,800-page report on money laundering in British Columbia was released Wednesday.

The amount of money laundering in British Columbia is “enormous” and needs better regulation – but there is no clear evidence that it is a root cause of housing unaffordability and there is no no evidence of corruption among the politicians and bureaucrats who oversaw the problematic casino transactions.

That’s the overall conclusion of Commissioner Austin Cullen of the BC Money Laundering Inquiry Commission in a 1,831-page report released to the public on June 15, following a two-year public inquiry. year.

The investigation was largely spurred by evidence that drug money was circulating in regulated casinos in British Columbia, which provided an important source of revenue for the provincial government.

BC regulators, the BC Lottery Commission and law enforcement “were aware of the growing money laundering crisis, but failed to intervene effectively,” Cullen concluded.

Elected officials were aware of suspicious funds entering the gambling industry, but there was no evidence of corruption, he said.

Former Prime Minister Christy Clark was aware but “failed to ensure that these funds would not be accepted”.

Despite all of their failures, “there is no reason to conclude that anyone engaged in any form of corruption related to the gaming industry or the Commission’s mandate generally,” Cullen said in his report. .

“There is no evidence that any of these individuals knowingly encouraged, facilitated or authorized money laundering for the purpose of gaining personal advantage, whether financial, political or otherwise.

“To the extent that some have speculated that money laundering in casinos is facilitated by corrupt politicians or officials, they are making guesses that are not based on evidence.”

Cullen examined the so-called “Vancouver model” in which drug money and the proceeds of crime are converted into real estate.

While money laundering can largely be seen as a factor in house prices, Cullen notes several other important factors, including supply and demand and monetary policy, contributing to an overheated market.

“I am unable to conclude that money laundering is a significant cause of housing unaffordability in the residential real estate market,” Cullen said.

It is “overly simplistic and unfunded” that “crime money from China” has flowed freely into the province’s real estate market, Cullen said.

But, the real estate sector is “highly vulnerable” to money laundering, the report notes.

Cullen could not quantify the amount of money laundering in BC or any other industry.

He found trouble with regulators, a key part of his recommendations.

Canada’s financial intelligence unit, the Financial Transactions and Reports Analysis Center (FINTRAC), does not produce enough intelligence reports for police, Cullen found. He recommends that British Columbia create a provincial money laundering intelligence and investigation unit.

A new Anti-Money Laundering (AML) Commissioner would oversee the provincial response and report to the legislature.

Cullen supports unexplained wealth orders and civil forfeiture in cases that are not tried criminally.

Money-services businesses, which transfer and exchange currency, are risky and require regulatory oversight in British Columbia, he said.

A well-enforced and publicly available corporate beneficial ownership registry is essential, Cullen said.

Cullen defended attorneys. He said that while trust accounts pose significant risks, the Law Society of BC provides effective mitigations and a reporting regime for lawyers “poses significant constitutional challenges and should not be pursued.”

Realtors have a poor track record when it comes to AML reporting and compliance. In 2015-16, real estate licensees in British Columbia submitted only seven suspicious transaction reports to FINTRAC, noted Cullen, who wants the industry to revamp oversight.

The report also touched on larger money laundering vulnerabilities, including cryptocurrencies and trade-based money laundering.

However, the report was commissioned by the province and not a review of federal regulations.