The findings of a major probe into money laundering in B.C. are now in the hands of the B.C. government.

On June 3, Commissioner Austin Cullen submitted his report, which was written after 133 days of hearings. Cullen heard testimony from 199 witnesses and reviewed affidavit evidence from another 23 witnesses.

Back on May 13, 2019, Premier John Horgan announced the creation of the Commission of Inquiry into Money Laundering in British Columbia.

While it considered the extent of money laundering in real estate, financial institutions, and the corporate and professional sectors, much of the media focus was on the commission's examination of casinos.

The final submissions by key participants offered dramatically different conclusions.

The B.C. Lottery Corporation, for example, adamantly defended its responses to money laundering. 

It stated that in a September 2015 meeting with the then finance minister, Mike de Jong, BCLC then president and CEO Jim Lightbody and BCLC then chair Bud Smith asked for "more investigative and enforcement support".

"Mr. Smith also suggested that BCLC could reduce or eliminate high limit games in BC casinos if it was outside the Government’s risk tolerance; the Minister declined this suggestion," BCLC maintained.

In addition, the BCLC final submission criticized former senior RCMP officer Peter German's first Dirty Money report, which focused on money laundering in casinos. It was commissioned by the NDP government after it took power in 2017. When it was released the following year, it was accompanied by video of people bringing hockey bags full of cash to the River Rock Casino several years earlier.

"There is a disconnect between the sweeping nature of the report’s conclusions and the notable lack of quantitative and qualitative analysis of BCLC’s AML [anti-money-laundering] program," the BCLC corporation stated in its final submission. "BCLC was disappointed with Dr. German’s lack of engagement with BCLC on substantive issues, and believes some of the criticisms levelled against BCLC were unfair."

The submission went on to say that Cullen "is better placed than Dr. German to make an assessment as to the adequacy and effectiveness" of the BCLC's anti-money-laundering program".

"While BCLC has addressed some of Dr. German’s recommendations as requested by the Attorney General, BCLC submits that the factual findings in Dirty Money #1 should be treated with caution and not be relied on by the Commissioner unless supported by 'clear, convincing and cogent evidence'," it added.

The Crown corporation asked Cullen to find that "BCLC took reasonable precautions consistent with a risk-based approach to combat money laundering at casinos, within the scope of its mandate and the instructions given by Government and its regulators".

In addition, it requested that the commissioner conclude that "BCLC’s cash conditions program in particular, first implemented in 2014, and further developed in 2015, was a reasonable, proportionate, and effective response to the risk of money laundering, unprecedented in the Canadian casino industry."

The BCLC also questioned part of the testimony before the commission by Attorney General David Eby. This regarded a 2015 tour he took of the River Rock Casino when Eby was the opposition gaming critic.

"While Minister Eby recalled during his testimony that there was a BCLC representative present during this tour who made certain representations to him, River Rock’s daily log indicates that no one from BCLC attended," the BCLC stated. "Moreover, [former BCLC chief operating officer] Mr. [Brad] Desmarais and other BCLC representatives, both past and present, had no knowledge of the tour."

Over the years leading up to the inquiry, Eby made public comments, reported by several media outlets, about links between casino money laundering, rising real-estate values, and the overdose crisis. That perspective was treated with skepticism in the BCLC's final submission.

"BCLC casinos were closed in March 2020 (and have only reopened in July 2021), yet the real estate market remains hot, and the fentanyl crisis continues," it stated. "This calls into question allegations that casinos have driven BC’s real estate and drug crises, which in any event are not supported in evidence."

German's second Dirty Money report in 2019 focused on real estate, luxury vehicle sales, and horse racing.

That same year, the expert panel on money laundering in real estate "cautiously" estimated that "almost five percent of the value of real estate transactions in the province result from money laundering investment".

"Successfully reducing money laundering investment in BC real estate should have a modest but observable impact on housing affordability," the expert panel stated.

The B.C. Real Estate Association stated in its final submission that Cullen should "give little if any credence" to this estimate. It resulted from observations on money laundering by panel member Brigitte Unger, a professor at the University of Utrecht in the Netherlands.

According to the BCREA, a fellow panel member, UBC real-estate expert Tsur Somerville, "did not support unqualified reliance on the quantification evidence of Professor Unger".

"In spite of media reports of unqualified speculative quantifications attempting to explain billions of dollars a year being laundered through real estate, the BCREA has not been made aware of widespread fines, prosecutions or other sanctions against realtors who have committed money laundering offences," the BCREA stated.

Former BCLC president and CEO Jim Lightbody's closing statement turned the spotlight on key B.C. Liberal and B.C. NDP politicians. 

It noted that on August 24, 2015, Lightbody wrote to de Jong "and encouraged him to create a dedicated law enforcement gaming unit focused on identifying and eliminating proceeds of crime entering into BC gaming facilities, among other things".

That resulted in a September 15, 2015 briefing by Lightbody and then BCLC chair Bud Smith to then Gaming Policy Enforcement Branch manager John Mazure and then associate deputy minister of finance Cheryl Wenezenki-Yolland, among others.

"BCLC briefed the Minister about money laundering and stressed that the government must take action to protect both the public and the integrity of gaming," Lightbody's submission continued. "Mr. Smith raised the question of whether the government should consider if it wanted to exit the high-limit table business: Minister de Jong did not express any interest."

Lightbody also maintained that BCLC "was subject to many inaccurate, misleading, and often sensationalized media reports, many of which created erroneous impressions about the gaming industry among the citizens of British Columbia".

"Despite the significant decreases in suspicious cash entering BC casinos from 2015 to 2017, this intense media scrutiny continued through fall 2017. It was further exacerbated by the inaccurate statements of BCLC’s new Minister, Minister Eby, to the media," Lightbody's final submission alleged. "BCLC established a practice to provide Minister Eby with information notes setting out BCLC’s perspective on each report, to arm him with the facts necessary to respond to inaccurate reporting.

"BCLC hoped to give the Minister more confidence in its AML [anti-money-laundering] practices and the opportunity to defend BCLC publicly. These information notes did not have the desired impact."

Instead, Lightbody's submission claimed that the minister "persisted in making statements that BCLC was willfully blind or looking the other way that were 'simply wrong.' These contributed to an inaccurate public narrative about money laundering in BC casinos and about BCLC that took a significant toll on BCLC staff: it was demoralizing, particularly in the compliance group but also corporate wide."

Moreover, the submission declared that it was “devastating" for BCLC's senior leadership. 

"I’ve never been more frustrated in my life not to be able to stand up and defend them publicly," Lightbody testified. "And that is something that I’ll always carry with me and I have to live with."

His final submission noted that the "toll was so significant that Mr. Lightbody raised this to Assistant Deputy Minister Scott, Deputy Minister Fyfe, and ultimately to Minister Eby. Unfortunately, nothing changed."

Lightbody's submission insisted that well before the NDP took power in 2017—and before German's report was released—the BCLC, under Lightbody's leadership, "acted in a proactive and comprehensive way".

"In February 2019, Mr. Lightbody presented to Minister Eby the results of an audit of cheques at River Rock Casino by Ernst and Young ('EY') which revealed that BCLC’s AML strategies effectively mitigated the 'traditional' and 'Vancouver Model' typologies of money laundering and BCLC was working to address the 'retail' typology," the submission noted. "BCLC, in consultation with GPEB, is now moving towards known play, an initiative that commenced prior to Mr. Lightbody’s medical leave, to address the 'retail' typology of money laundering.

"Again, this is a novel initiative within the Canadian gaming industry and internationally," it continued. "Through moving to an 'account based' casino environment, it will reduce the amount of criminality in BC gaming facilities."

The B.C. government's closing submission to Cullen claimed that the BCLC did not "adopt a source of funds assessment to all incoming cash" prior to 2018. The province alleged that this was due to "an inappropriate concern about revenue consequences" on the part of the lottery corporation.

Lightbody replied that there was "no merit to the allegation that BCLC under Mr. Lightbody prioritized revenue over other AML measures".

In fact, he noted, cash buy-ins of $50,000 or more in B.C. casinos took in almost $318 million in 2014 [the year he became CEO], but by 2017 this figure had fallen to $70 million.

Meanwhile, the B.C. Civil Liberties Association's final submission raised concerns about allocating more police resources to address money laundering in casinos. It insisted that just one person inside the facility would be sufficient to refuse "bricks of cash from entering".

It stated that if the B.C. government is serious about tackling money laundering, it must address the root cause: "our failed model of drug prohibition".

"Organizations such as the BCCSU [British Columbia Centre on Substance Use], with a mandate to develop and help implement evidence-based approaches to substance use and addiction, should not be ignored in the fight against money laundering," the BCCLA advised.

In addition, it expressed concern "about the disproportionate focus on Asian people in public rhetoric about money laundering" in B.C., as well as the harm this can do to Asian communities.

"While we understand the need to battle corruption, there is an undue focus on China, and the term 'Chinese money laundering', used by many witnesses at this commission, is deeply problematic," the BCCLA stated. "We must be careful to avoid language that conflates Chinese people with the Chinese government.

"The BCCLA urges the Commissioner to adopt an ethno-agnostic lens in making findings and recommendations about money laundering in BC," the BCCLA added. "The country of origin of laundered funds should not be identified except where it is relevant."

Under cross-examination by the BCCLA at one of the hearings, Eby stated that he regretted his role in a 2015 study of real-estate purchases in a small area of Vancouver's West Side. The study, prepared by Andy Yan, focused on nonanglicized Chinese names rather than the citizenship or residency status of the buyers.