Loto-Québec reports almost $420 million in big cash transactions in six years

Loto-Québec reports almost $420 million in big cash transactions in six years

According to data obtained by CBC/Radio-Canada from Loto-Québec, the latter has reported almost $420 million in large cash transactions to Canada’s money laundering watchdog over the past six years.

Casinos are often used as playgrounds for criminals, who see them as both a place of entertainment and a place [où] they launder their money explains Matt McGuire, internationally recognized anti-money laundering expert.

Although it is impossible to determine the share of legal traffic in relation to illegal traffic, the expert believes that it is almost certainly that some of the money used in casinos is linked to organized crime networks, which profit from illegal activities such as drug and human trafficking.

Ordinary people have very little money on them. A large amount of cash is an indicator. »

Quote from Matt McGuire, internationally renowned anti-money laundering expert

By law, Canadian casinos are required to report suspicious transactions and large cash transactions of $10,000 or more to the Financial Transactions and Reports Analysis Center of Canada (FINTRAC).

The organization’s mandate is to identify money laundering threats and forward information to law enforcement. A casino that does not comply with this regulatory requirement is subject to heavy fines.

No more suspicious transactions reported

CBC News is struggling to gain access to transaction reports submitted by Loto-Québec to FINTRAC since October 2017. These reports may contain details about the profession of casino users, the source of funds or reasons for the origin of the suspicion.

Loto-Québec provided CBC/Radio-Canada with the number of suspicious transactions and large cash transactions it reported quarterly to FINTRAC from January 2015 to March 2021. However, the monetary value of the suspicious transactions and other details were not available.

From fiscal year 2015-2016 to fiscal year 2019-2020, Loto-Québec reported to FINTRAC an average of $77 million per year in large cash transactions. This equates to around 5,000 surgeries a year or 14 a day, a number that has remained relatively constant. Reports of suspicious transactions increased from 254 in 2015-2016 to 395 in 2019-2020.

Matt McGuire, internationally renowned anti-money laundering expert.

Matt McGuire, internationally renowned anti-money laundering expert

Photo: Radio-Canada / courtesy of CBC

Matt McGuire isn’t surprised that Loto-Quebec is reporting more suspicious transactions, since the Crown corporation has been stricter since it was fined for not following the law a few years ago. Indeed, in February 2020, Loto-Québec was fined $147,000 in administrative fines for three violations found during a 2012 compliance audit at Casino de Montréal.

FINTRAC accused Loto-Québec of failing to report suspicious transactions and failing to provide specific details about the profession of a customer who made cash transactions over $10,000.

As first reported Montreal JournalLoto-Québec refused to pay the original fine and spent $260,000 in legal fees to challenge it.

Independent audit

In November 2020, Loto-Québec’s practices were called into question after a TVA investigation revealed that known members of organized crime benefited from privileges such as free access to hotel rooms, meals and shows at the Casino de Montréal.

Following the airing of the report, Quebec Finance Minister Eric Girard, to whom Loto-Québec reports, announced that an independent audit would examine the casino’s operations, particularly with regard to loyalty programs. Documents show the government paid Deloitte nearly $300,000 to conduct the audit.

The results of the audit, published in the summer of 2021, concluded that there were no deficiencies in Loto-Québec’s procedures. However, Deloitte made 39 recommendations, including:

  • increase the powers of Loto-Québec by allowing it to deny access to criminals;
  • to more strictly verify the identity of players and the source of funds;
  • improve the exchange of information between the police force and Loto-Québec;
  • cancel membership in the loyalty programs of members of organized crime.

As a result of the audit, people linked to organized crime were excluded from Loto-Québec’s loyalty program; they no longer receive personalized offers.

A spokesperson for the Department of Finance told CBC that some of Deloitte’s recommendations required legislative changes, which are still being studied in collaboration with Loto-Québec.

Loto-Québec declined CBC’s request for an interview with its president and CEO Jean-François Bergeron. However, in the fall of 2021, the latter said on TVA Nouvelles that it wants to limit the use of cash in its gaming facilities. Instead, players’ bets and winnings would be recorded on the card provided to them. A pilot project on this topic was supposed to be launched this fall.

According to Matt McGuire, using a single card would help the Crown corporation spot suspicious transactions.

Each of the operations is then recognizable and traceable. It’s every forensic accountant’s dream. »

Quote from Matt McGuire, internationally renowned anti-money laundering expert

Why wait?

Some wonder why the government is taking so long to implement Deloitte’s recommendations.

Shortly after British Columbia launched an investigation into money laundering at its casinos in late 2017, the BC Lottery Corporation adopted guidelines on where funds come from. (new window) for cash transactions over $10,000.

Before a player can exchange his money for chips, he must provide the casino with a receipt for the day showing the financial institution from which the money was withdrawn, in addition to the account number and transaction number. This measure significantly reduced the volume of illicit funds circulating in institutions.

In Quebec, the Crown corporation now verifies the customer’s identity and source of funds when a transaction exceeds $3,000. The threshold was previously $10,000.

When CBC asked Loto-Québec for more information on how the policy works, including whether the customer must show a receipt, a spokesperson for the corporation told them to file an access to information request.

This lack of transparency worries Pat Poitevin, executive director of the Canadian Center of Excellence in Anti-Corruption (CCEAC), a non-profit organization based in Ottawa.

The Crown corporation needs to be even more rigorous in its anti-money laundering and fraud compliance measures, Mr Poitevin underlines. It sets the tone for private industry.

While he thinks it’s a good idea to lower the transaction threshold to $3,000 for identity verification, he believes that if customers only have to verbally explain where their money is — saying, for example, it’s an inheritance — in vain . Organized crime groups are good at finding breaches.

Mr. Poitevin believes that Loto-Québec must inform taxpayers about what it is doing to detect, prevent and reduce threats. This would increase public confidence and deter organized crime.

It’s one thing to have measurements, but if you don’t communicate them, people will still assume it[un casino appartenant à l’État] is easy prey for exploitation he concludes.

With information from Paul-Émile d’Entremont

Leave a Comment

Your email address will not be published. Required fields are marked *