Data Shows Quebec Casinos Remain Money Laundering Risk

Written By Jose Colorado on October 13, 2022
Dirty money still a risk for Quebec casinos_Image Old-fashioned laundromat interior with counter and mint green washing machines

Quebec casinos have a long way to go in their anti-money laundering measures.

That’s the sentiment in a new report surfaced by CBC/Radio-Canada that found government-owned casinos were easy targets for organized crime, dirty cash and more.

According to Loto-Québec documents, criminals used Quebec casinos as “their playground” for entertainment and money laundering. Over the past six years, the operator reported nearly $420 million in large cash transactions to anti-money laundering watchdogs.

Regrettably, the report comes on the heels of Canada’s largest-ever money laundering scandal in BC.

Nearly $420 million flagged over six years

Canada’s casinos, legally speaking, primarily mitigate money laundering in three ways.

Firstly, gaming establishments must report suspicious and large cash transactions of $10,000 or more to FINTRAC. The Financial Transactions and Reports Analysis Centre is the country’s financial watchdog.

From there, FINTRAC is responsible for identifying money-laundering threats and flagging them with law enforcement.

To that end, Loto-Québec made available its suspicious and large cash transactions reports between Jan.2015 – March 2021. Exact dollar amounts are unknown, however.

Regardless, the trend from 2015-2016 and 2019-2020 remained relatively consistent. Loto-Québec reported an average of $77 million yearly in large cash transactions to FINTRAC during those time frames. Broken down further, that’s 5,000 transactions a year – or 14 per day.

Suspicious transactions, however, rose by nearly 30% (2015 – 2016: 254, 2019 – 2020: 395).

Quebec previously fined +$100,000 by FINTRAC

Interpretations vary as to why suspicious transactions increased.

On the one hand, such activities may have increased organically in the French-speaking province over recent years.

Conversely, the Crown corporation could simply be better at reporting issues. Some pundits would argue it’s the latter.

After all, it is in Loto-Québec’s best interest to do so. Previously, the corporation’s anti-money measures were criticized and penalized to costly amounts.

FINTRAC, Loto-Québec clash over decade-old case

Consider that in 2011, FINTRAC fined the government agency $147,000 for a trio of violations found at Casino Montreal.

At the time, FINTRAC ruled that Loto-Québec failed to do the following during a compliance assessment:

  • Institute and document FINTRAC’s prescribed review
  • Report suspicious transactions
  • Flag disbursements of $10,000 with appropriate information

In the end, Loto-Québec refused to pay the initial fine, racking up $260,000 in legal fees — more than the actual fee — to challenge the penalty in court.

The Government of Canada website currently lists the situation as “case closed.”

Independent audit triggered over alleged criminal perks

Outside of the FINTRAC drama, in Nov.2020, Loto-Québec also received public pressure from TVA.

The French-language media outlet alleged well-known crime members received perks from Casino Montreal. Some items included free hotel rooms, meals and shows.

Those allegations triggered a $300,000 independent audit to examine Loto-Québec’s casino operations, specifically its loyalty programs.

Deloitte investigated but, in the end, found that Loto-Québec had no procedural gaps.

Regardless, the scare pushed Loto-Québec to expel members with ties to organized crime from its reward program. Personalized offers were also no longer available to those patrons.

Deloitte also implored the lottery to conduct stricter background checks on its players, including tracing their source of funds.

Quebec slow to implement audit recommendations

Today in Quebec, some of Deloitte’s recommendations remain unenforced as some changes require legislative adjustments.

Nonetheless, critics argue the slow churn keeps the French-speaking province behind the curve.

For instance, in 2017, government officials probed into BC’s money-laundering situation. There the province quickly adopted a source of funds directive for transactions of more than $10,000.

The new terms stated:

  • To exchange money for chips, players must present a withdrawal receipt (same-day) for anything above $10,000
  • Receipts must show the financial institution, account number and transaction record

The policy significantly reduced the dirty money flowing through BC casinos. However, the province’s anti-money laundering situation remains far from ideal.

Quebec tightens cash rules, but critics want more

For all of the criticisms, Quebec has become stricter in its policies.

Nowadays, anything over $3,000 triggers an immediate client identity check and source-of-funds cross-check. Previously the threshold was $10,000.

However, how the policy works in practice remains unknown. (For example: Do large transactions require a receipt?)

Without precise communication, anti-corruption watchdogs fear provincial casinos will remain easy prey for organized crime.

Just as important, will public perceptions affect law-abiding patrons?

Photo by Shutterstock, PlayCanada
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Jose Colorado

Jose Colorado is a British Columbia-based writer. He lives in Burnaby and loves sports, anime, writing, business and the occasional walk on the beach.

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