In 2022, Canada’s gambling industry produced record returns. However, alongside the highs came unprecedented money-laundering scandals and criminal activities.
As a result, Canada’s financial watchdogs found themselves in the national crosshairs, from the country’s largest dirty money wash to a scathing 1,800-page report detailing internal incompetency.
Regardless, at least one of the top players — the Financial Transactions and Reports Analysis Centre of Canada — remains confident in its abilities. But it also reminds Canadians it is just one piece of the puzzle.
Canadian casinos must do their part
To that end, FINTRAC told PlayCanada, via email its mandate is to ensure the compliance of businesses subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
“Casinos operating in Canada have obligations under The Act. This includes establishing a compliance program, identifying clients, keeping records and reporting certain types of financial transactions to FINTRAC.”
“FINTRAC is not an investigative or enforcement agency.”
Financial intelligence agency comes under fire
FINTRAC — established in 2000 — has been around for nearly 25 years.
However, rarely is the intelligence agency of concern to the everyday person. That’s because it (often) tackles high-profile money laundering investigations outside the public’s general consciousness.
The Cullen Commission changed that.
Released in June 2022, the report — all 1,800 pages — garnered national headlines as Canada’s’ money-laundering issues came to light. According to the Commission, billions were laundered through B.C. casinos between 2008 – 2018 as federal watchdogs, including FINTRAC, stood idly by.
In short, the Commission called the federal agency “ineffective” and urged provincial governments to take matters into their own hands by establishing in-house anti-money laundering agencies.
Austin Cullen — who leads the inquiry — said at the time:
“For too long, money laundering has been kept on the sidelines. Too often, it has been largely ignored. It’s time for that to change.”
Department of Finance Canada spearheads charge against money laundering
Of course, FINTRAC does not bear all the blame despite the headlines. Nor is it the only financial watchdog in the country.
Cullen noted multiple failed checkpoints in his report, including the RCMP and local government officials.
To that end, the Department of Finance Canada leads the country’s fight against money laundering and terrorist financing.
And it is the DoF that identifies sectors or products most prone to money laundering and terrorist financing risks.
Those recommendations came through 2015’s Assessment of Inherent Risks of Money Laundering and Terrorist Financing in Canada.
And according to that report, loan sharking in Canadian casinos is a problem, but money laundering is a more serious threat.
Illegal gambling considered “high threat”
Within the report, there are four possible “threat ratings” for each sector:
- Very High Threat
- High Threat
- Medium Threat
- Low Threat
Today, authorities consider illegal gambling a high-level threat alongside crimes such as robbery and theft, identity theft and fraud, human trafficking and more.
Thus, illegal gambling and money laundering do, indeed, remain a national concern. But compared to other crimes, the prevalence remains relatively small, the assessment said.
“Organized crime is the major provider of illegal gambling opportunities in Canada, although there are some smaller operators. The illegal gambling market appears to be small in terms of the number of threat actors involved, but it is suspected to be highly profitable for those involved in it.”
“It is assumed that the OCGs (Organized Crime Groups) operating in this space have the capability to use a variety of sectors and methods to launder the proceeds of crime.”
Loan sharking jumps into National spotlight with Montreal Casino arrest
Loan sharking has also seemingly been on the rise of late in Canada.
Recently, the topic went national when a country-wide arrest warrant for a pair of fugitive murder suspects ended in an arrest at Montreal Casino. Reportedly, alongside the alleged killing, at least one of the two was also on the hook for a loan-sharking ring.
Loan-sharking a medium-level threat
However, unlike money laundering/illegal gambling, the Feds assess loan sharking as a medium threat.
“Loan sharks in Canada appear to target low-income individuals, problem gamblers, illicit drug seekers and cash-strapped entrepreneurs. Conducting loan sharking activities requires working capital, financial aptitude and a capacity to enforce debt collection.
As this is a unique skill set, loan sharking activity appears to be undertaken by a small number of the more sophisticated OCGs in Canada as well as by a small number of independent operators.”
“If a casino suspects that loan sharking activity may be related to money laundering, it has an obligation under The Act to submit a Suspicious Transaction Report to FINTRAC.”
Financial transactions reported to FINTRAC
Despite the guidelines, money laundering and loan sharking persist in Canadian casinos.
Granted, eliminating crime (of any kind) entirely is unlikely. But it’s fair to wonder where the broken link lies.
FINTRAC said, ultimately, the onus is on the casino to report suspicious activity. Only then can the intelligence agency do its job.
For instance, casinos must report certain transactions, including:
- Large cash transactions ($10,000+ in cash; or two or more transactions totalling $10,000 in 24 hours)
- Large virtual currency transactions ($10,000+ in virtual currency; or two or more transactions totalling $10,000 in 24 hours)
- Casino disbursements ($10,000+; or two or more amounts totalling $10,000 in 24 hours; not limited to cash)
- Suspicious transactions (unlike other reporting obligations, there’s no monetary threshold)
Reporting protects industries at risk
Ultimately, FINTRAC says reporting suspicious financial transactions is critical to the industry.
“With the financial transaction reporting that FINTRAC receives from casinos and other businesses subject to The Act, the Centre generates actionable financial intelligence in support of the money laundering and terrorist activity financial investigations of Canada’s law enforcement and national security agencies.”