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Techniques of Tracking Money Laundering Discussed: Will Banks Enter Into the Equation?

By AWN Staff
Editorial / News Analysis

Is the money laundering that’s being conducted through British Columbia’s casinos really that difficult to detect or stop?

According to Global News and inside sources sought by AWN, money launderers enter the casino with tainted cash and use it to buy thousands of dollars’ worth of chips. Evidently, they bring in less than $10,000 in order to “fly under the radar” and avoid the automatic audit that the government conducts for any transaction of $10,000 or more.

From there, the launderer gambles for a short while—only long enough to lose a relatively minimal amount of money, say a $500 loss or perhaps a little more. Then they go to the cashier and redeem their remaining chips. They ask for a receipt for the amount redeemed and claim the money as casino winnings.  Such winnings are tax-free.

“As a dealer of cards for the first 15 years of Casino Rama, I have observed and talked to numerous casino employees about what gamblers do and what they become,” John Devine, who’s now an associate editor of AWN, recalled. “It was always a consensus from employees I conversed with, who were not addicted to gambling; they agreed that very few returning gamblers are ‘up’ money, if any. It’s very safe to say (for the sake of argument) that maybe 5% of these gamblers who play regularly are gaining money—and many not by much.”

Devine added: “Most gamblers use those plastic player’s cards to earn meal deals and other perks. It appears that the only ones who do not want a player’s card are money launderers.”

Therefore, the authorities ought to easily be able to look for gamblers coming in with a little less than $10,000 who cash in their excess chips early—so that the tainted cash with which they entered the casino can be traded for clean cash in the process of betting.

The other thing to look for, according to Devine, is if such a winner does not use a player’s card. Launderers naturally would want to forgo using a player’s card in order to avoid creating a digital record of his or her identity and gambling transactions (how many casino visits and when, how many wins, etc.).

Since the newly acquired clean cash, at least in part, very likely will be deposited in a bank under the guise of a new business or new individual bank customer, the focus of the B.C. inquiry should shift to the banks themselves. It is understood that money launderers, posing as everyday casino customers, report their gains to the Canadian Ministry of Revenue as winnings. As noted, winnings in the gaming industry are not taxed—but maybe they should be.

Image source: istock

Taxing winnings—especially in situations where launderers get rid of their tainted cash, gamble and cash in their remaining chips in early—would be a first step in discouraging the use of casinos as a “filter” to convert dirty money to clean money.

But will we hear such a suggestion from the Cullen Commission that’s been tasked with probing money laundering involving B.C. casinos? The answer remains to be seen.

When it comes to the integrity of the banks and the need to look closer at their possible role in the laundering system, take note that, during the settlement of his Aunt Eleanor Sheppard’s estate back in 1991, Mr. Devine experienced extremely dishonest handling of his Aunt’s assets, wherein two chartered banks even had the audacity to use the Freedom of Information Act—which stalled a police investigation for a year. And the documents that were finally obtained from the banks by the police were found to be forged!

This causes one to wonder if Scotiabank, the official banker of Casino Rama (since Casino Rama opened 1996 to the present)  would use the same protection if they where approached by the police regarding Penn National’s possible associations with, or knowledge of, money launderers. (Editor’s Note: Penn National is the former manager of Casino Rama but the current manager of that casino and all others throughout Canada need to participate in this probe)  Notably, Mr. Devine made Scotiabank aware of Penn National’s corrupt behaviour years ago, yet the bank went silent even though Penn National was managing Casino Rama, the bank’s client.

All told, if the Cullen Commission and the national Ministry of Revenue are serious about carrying out a thorough audit of the money laundering system, the first thing that needs to be determined is whether casinos or especially banks may resort to similar legal maneuvers and obstruct an audit. From there, if Canada’s Revenue Minister will order his/her agents to follow up on suspected launderers and ask for a general audit of players cards, they may discover that, while very few serious launderers would use player’s cards for reasons already stated, the authorities also may find that some of them did get a player’s card and created a “digital paper trail.”

Meanwhile the big media claim that we have launderers who supposedly are winning in large amounts—which, however, contradicts the 95% loss ratio of the typical gambler. How is it that those who are laundering money can have a higher winning ratio than the average gambler? Remember, the “House” always wins, since casinos are set up to where they simply cannot lose money of any significance.

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