Details of the allegations
The vice president for corporate compliance in the British Columbia Lottery Corporation (BCLC), Robert Kroeker, has resigned.
The BCLC will investigate allegations that Kroeker told his staff they should “ease up” on their anti-money laundering protocols, and that they should “allow dirty money to flow into casinos.”
A short statement from the lottery corporation announced Kroeker’s departure. However, it did not go into the reasons why he left. Kroeker is a lawyer by trade and was one of the leading officials in the province for anti-money laundering. Over the years, he has been in numerous influential positions involving oversight of the region’s economy.
He was also the author of a 2011 government study looking into money laundering in casinos. There were criticisms of this report by the NDP government, claiming “it barely touched on money laundering and appears still to welcome large cash transactions at casinos, the issue that prompted the original concerns.”
Public inquiry imminent
The public inquiry into these allegations will begin in the autumn. According to Global News, testimony will probably be given by whistle-blowers alleging that the lottery corporation turned a blind eye to the issue of dirty money.
A complaint was lodged against Kroeker early this year. This was confirmed in February by the assistant deputy minister for gambling in the province, Sam MacLeod, who said investigations would take place.
The complaint said: “I have information that Robert Kroeker … instructed (his staff) to ease up on the BCLC cash conditions on players and slow down the process of targeting suspicious buy-ins.”
It goes on to speculate that pressure may have been put on the management team of the lottery corporation to allow the flow of dirty money into the casinos.
There were allegations in the summer of 2015 that significant sums of drug money were being laundered by a Chinese drug cartel, primarily in the Richmond Casino. This was allegedly done through Chinese VIP high rollers.
Recent money laundering crackdown
New anti-money laundering rules came into effect at the start of 2018 due to massive concerns about casinos being used to clean criminals’ dirty money. Under these rules, all sums of cash greater than CAD$10,000 have to be verified to ensure they come from legitimate sources. This has been successful in lowering levels of suspicious transactions.
However, casino revenues have taken a large hit. Naturally, government tax revenues have also been hit hard due to these stricter measures. There has been a “reduction of about 100 times from what the peak levels of these suspicious transactions were.” Nowadays, the preferable means of making a deposit to the casinos is through a bank draft. This makes it easy to see the source of the funds.
The report exposed methods by which criminals were laundering their money. It led to the appointment of a third-party auditor for the three casinos in the province, who was to make sure they are fully compliant with the new anti-money laundering measures.
The largest casino in the province is the Parq Vancouver casino, which opened on September 29, 2017. It had strong profits in the first three months of operation, but has been seriously struggling since the anti-money laundering measures came into effect.
In 2018, the casino had losses of nearly US$114m. The global rating agency S&P dropped its rating to a selective default level. In the first quarter of 2019, revenues fell by 12% as the casino continued to struggle.