CBC News has learned the B.C. Lottery Corp. has been under-reporting suspected money laundering at the province's casinos for years.

Documents show casino workers routinely observe dozens of suspicious financial transactions each year, but only a fraction are reported to the federal agency that tracks money laundering.

Players can feed thousands of dollars in $20 bills into slot machines and cash out after playing only once or twice, walking away with a casino cheque for the remaining amount.

CBC reporter Curt Petrovich put the technique to the test, spending an hour pumping $6,000 in $20 bills into several slot machines.

Employees at the Boulevard Casino in Coquitlam did not ask any questions when he asked for a casino cheque after cashing out without really playing.

The same technique at the Gateway Casino in Burnaby secured a cheque for more than $9,000.

The head of B.C.'s gaming policy and enforcement branch said the experiment is alarming.

Derek Sturko said it is something he will discuss with the B.C. Lottery Corp.

Derek Sturko is head of the B.C. gaming policy enforcement branch. (CBC)

"These incidents, generally speaking, they should be caught," he said.

By law, the B.C. Lottery Corp. must file reports of all incidents of suspected money laundering with the Financial Transactions and Reports Analysis Centre of Canada, or FINTRAC, the federal agency that tracks the crime. Knowingly failing to report to FINTRAC is a criminal offence.

Sturko acknowledged relatively few incidents were reported, and the federal agency has asked the province to investigate.

Documents obtained by CBC News show that in 2003, casino workers noted at least 49 incidents, but only nine suspicious transaction reports, or STRs, were passed on to FINTRAC. The documents, obtained from B.C.'s gaming policy and enforcement branch, are reports casinos must file to the provincial agency about any suspected criminal activity.

"We have laid out with them [FINTRAC], and for them, a plan of attack we are putting in place to make sure the level of compliance in British Columbia gets up to the level expected by the federal … agency," Sturko said.

A spokesperson for the B.C. Lottery Corp. said the corporation does not believe it has done anything wrong.

Until the cause of the breakdown in reporting to FINTRAC by the B.C. Lottery Corp. can be identified and fixed, Sturko said his investigators will voluntarily pass on information about suspected money laundering that they uncover.

With files from Paisley Woodward, Curt Petrovich, Eric Rankin, Robert Zimmerman