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Liberals, lotteries need to face gambling and crime links

Sometimes you have to call people on the rubbish they speak. The B.C. Lottery Corp. scandal is one of those times. Start with Michael Graydon, the $300,000-a-year CEO.

Sometimes you have to call people on the rubbish they speak. The B.C. Lottery Corp. scandal is one of those times.

Start with Michael Graydon, the $300,000-a-year CEO. After the news broke that the Crown corporation had been fined $670,000 under federal laws aimed at combating money laundering and terrorism financing, Graydon denied any real problem.

Nothing to see here, he said on Global TV. The fines were levied because B.C. Lottery filed reports late because of computer problems and others had minor technical errors.

That wasn't true. B.C. Lottery was fined for 1,020 infractions. About 40 per cent were for late filing -- but 366 reports had errors and 227 lacked accurate information to detect criminal activity.

In eight cases, the most basic information wasn't collected when people walked out of casinos with more than $10,000. They were asked to come back with the information, a trusting approach by those charged with preventing money laundering.

B.C. Lottery was also fined for failing to introduce a program to help identify signs of money laundering.

Solicitor General Mike de Jong said he's worried about organized crime, casinos and online betting. "If some of these early reports are true, yes, it is troubling," he said.

But it's not de Jong's file. Housing Minister Rich Coleman is responsible both for increasing gambling revenue and enforcing the laws. That conflict should be ended immediately.

And if de Jong is only troubled now, he hasn't been paying attention to a string of warnings about criminal activity. The government's Gaming Policy and Enforcement Branch 2006 annual report, for example, revealed a crime explosion at casinos and mini-casinos. Investigations into offences such as money laundering and loan sharking more than doubled in a year.

Criminals like casinos. They are good places to move counterfeit money and launder the proceeds of crime. Buy $9,000 worth of chips with cash from a drug deal, make a few safe bets and leave with a casino cheque that legitimizes the money.

And desperate gamblers are good customers for loan sharks.

In 2008-9, the gaming enforcement branch launched 877 investigations into suspected counterfeiting, money laundering and loan sharking. Not a single charge was laid.

Despite the crime surge, the government last year shut down the specialized police unit created in 2004 to help fight gambling-related crime.

Coleman was next to weigh in, with a response much like Graydon's. Technical errors, minor problems, old news, the province will appeal, de Jong and everyone else who has concerns are wrong.

But the agency that levied the fines - the federal Financial Transactions and Reports Analysis Centre, or FINTRAC - said that was untrue.

Fines are only imposed for a "persistent, chronic failure to comply with the law" and when, despite intensive work with the offender, "they just don't get it." The agency had warned B.C. Lottery about problems with its anti-crime efforts in 2008.

These are serious failures. About one-fifth of the money laundering and terrorism financing cases discovered in 2008-9 took place in casinos, FINTRAC reports. Drug dealers and organized crime are the main groups using casinos to launder money.

Yet Coleman and Graydon persist in denying a real problem that almost everyone else - including the solicitor general - acknowledges.

Again, that's because they are in a conflict. Both are charged with increasing the number of gamblers in the province, the amount each one loses and the total take.

Making the effort to track transactions that could be linked to money laundering is a threat to those goals. Casinos fear that asking for information from big gamblers could drive away some of their best customers, who, for whatever reason, want to keep a low profile.

Critics have warned the Liberals have lost their way on gambling. Denying a serious problem in fighting money laundering by big-time criminals shows how far they have fallen.

Footnote: Coleman also insisted it is just a coincidence that the weekly loss limit for online gambling was increased from $120 last year to $9,999 - just $1 below the level that would require reporting transactions to FINTRAC to help prevent money laundering or activities aimed at funding terrorism. The claim is not credible.