British Columbia

From loan sharks to organized crime: author of money-laundering report explains what he uncovered

"For many years, certain Lower Mainland casinos unwittingly served as laundromats for the proceeds of organized crime." That's just the beginning of Dirty Money, a scathing report authored by Peter German, a lawyer and former RCMP deputy commissioner.

Peter German tells how problem began, why it wasn't addressed and what it means for the real estate market

Peter German speaking in Vancouver, B.C. on Wednesday when his report was released. (Darryl Dyck/Canadian Press)

"For many years, certain Lower Mainland casinos unwittingly served as laundromats for the proceeds of organized crime."

That's just the beginning of a scathing report called Dirty Money authored by Peter German, a lawyer and former RCMP deputy commissioner.

German sat down with Gloria Macarenko, host of CBC's On The Coast, to talk about what he uncovered.

How long was money being laundered in B.C. casinos, without police or regulators having a sense of the scale of the problem?

Loan sharks were really there from almost the beginning — that's people willing to loan money to gamblers who run out of money.

There are almost always connections with organized crime, but they were almost family-type businesses to begin with.

By 2010, organized crime became involved in a big way.

Over the next eight years or so, we see organized crime laundering its money through the casinos in the same general style that the loan sharks did in the early years.

Concerns about money laundering came from reporters and outlets like the Vancouver Sun and the CBC. Why were media ahead of regulators and the police?

It's a credit to investigative journalism.

Unfortunately, there just wasn't much take up.

It's not to say that people didn't try  — regulators and [the Crown-owned British Columbia Lottery Corp.] in their own way, put strategies together, but I describe it as a failed strategy. It just didn't achieve the outcomes that folks hoped.

It really just got worse over time.

Who is in charge of making sure 'dirty' money isn't coming into B.C. casinos?

Therein lies one of the problems — we don't have a holistic approach.

We've got a whole lot of people in the game and, at the end of the day, there is a whole lot of paper generated but not too much comes of it.

You need to put an independent regulator in place who can deal with issues, independent of government.

Casino service providers have to be held responsible for what takes place in their casinos and you need an effective policing presence.

Report into potential money laundering at Richmond's River Rock casino to be 'reviewed" by FINTRAC, Canada's financial intelligence unit. (CBC)

In cases where large amounts of cash are showing up in casinos to be laundered, where is that money coming from?

Predominantly, the dirty money is coming from drug trafficking.

A lot of people point fingers overseas and definitely, there is an overseas component. But who is consuming the drugs?

A lot of it is consumed right here in British Columbia and Canada and then the money is laundered.

Did all of this money laundering have any connection to the real estate market in Vancouver?

There is no question that there is a connection between casinos and the real estate market in that some of the same players were buying real estate.

But it also touches potentially any sector of the economy where cash can be accepted and there isn't regulation of the cash that comes in.

This interview aired on On The Coast on June 27 and has been edited for clarity and structure. To hear the full interview, click on the audio below.

"For many years, certain Lower Mainland casinos unwittingly served as laundromats for the proceeds of organized crime." That's just the beginning of a damning report called Dirty Money put together by Peter German. 14:27

Read more from CBC British Columbia