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Writer's pictureCodex Compliance

Back to Vancouver - Triads and Tribulations.

Updated: Jun 7, 2020

I’m not actually back in Vancouver, though the thought does please me. What doesn’t please me is seeing Vancouver, British Columbia, Canada, in the money laundering news again. Though the presence of money laundering stories in the Canadian news has been as regular as the flow of cartel money through Canadian banks accounts, I haven’t been paying as much attention to the British Columbia situation as I was a few months ago. There was a lull in actual movement and traction after the buzz around part 2 of the Peter German money laundering reports released in May this year. This is probably due to the preparations for a public enquiry (1), for which an update was released last month. It’s only taken them a decade to put it together, no rush, but I suppose the reports were the true trigger, it’s going to be another drawn out spectacle whereby lots of names and numbers are mentioned, and fingers pointed but I’m at loss as to when they will actually do something about it.


It's that Chinese money / Image: Eric Prouzet @ Unsplash

The real reason I’m back in Canada is drugs, cocaine, heroine, methamphetamine, crystal meth, fentanyl and the like. A comprehensive Reuters Special Investigation (2) brought the land of the maple leaf back onto my radar, ready for me to torpedo it, as they remain submerged under a mountain of bureaucracy and nonsense that sees the fight against financial crime continue to fail to come up for air. The triad story involves a Canadian citizen who was referred to as the El Chapo of Asia. This is a guy who was found guilty of conspiracy to import heroin into America, did six of his nine year sentence at a federal facility in Ohio (tried in NYS). Once freed in 2006, he returned to Canada, seemingly undeterred he picked up where he left off, ready to become the El Chapo of Asia even though he was meant to be on supervised release for four years... He is now on the loose, treading carefully, efficient and organised, while making mountains of cash and avoiding detection, though various agencies from Australia, Taiwan and Thailand have had some success against his organisation, they can't make a dent in this estimated $17billion a year outfit.


Not only was the nexus to the Triads brought to my attention but the Mexican organised crime links resurfaced at the end of last month after a Mexican national with PEP nexus was denied entry to Canada (Vancouver) for misrepresentation on his entry application. He was also suspected of moving money to Switzerland via Vancouver from Mexico.


Canada continually failing, over and over again in its duties to fight drug trafficking, investigate and stop dirty money infiltrating and ballooning its bloated and toxic provincial economies.

Nothing new there then, Canada continually failing, over and over again in its duties to fight drug trafficking, investigate and stop dirty money infiltrating and ballooning its bloated and toxic provincial economies. But that stuff was a while ago and since the recent uproar, the reports and pending public enquiry, surely things have improved, they couldn’t get any worse could they?


BC AG David Eby needs to get on his bike / Image: Unsplash

At the end of September the B.C. Attorney General, David Eby, was in the papers again with some shockingly typical Canadian AFC nonsense. Sidenote, I actually emailed his office when I was in Canada, offering my assistance, and only took 3 months to get back to me, obviously he didn’t / doesn’t need my help, they are doing so well after all. Not to slight the man, he is doing his best, he’s always the first to come out to the papers and say how terrible things are, it’s not entirely clear what he’s doing about those things. He must realise he is failing and flailing, and that the whole situation is an absolute omnishambles.

“I still can’t say with any certainty that the issue that Peter German identified back in March, which was that there was a total absence of dedicated RCMP officers working on the anti-money laundering file — literally none — that that’s been addressed.”

In that same article it came to light that there was a continued lack of action from within the Royal Canadian Mounted Police (RCMP) and I quote Mr Eby from a Vancouver Star article (3) that, “I still can’t say with any certainty that the issue that Peter German identified back in March, which was that there was a total absence of dedicated RCMP officers working on the anti-money laundering file — literally none — that that’s been addressed.” This is pretty outrageous even by B.C. standards, and Eby though making excuses, seems genuinely flabbergasted, he actually states he doesn’t know why RCMP didn’t action changes, he says though, that funding has been increased and discussions have been ongoing, but as usual there has been zero action, and it’s literally zero in this case. He should know, he should be on top of it - but it seems he just a mouthpiece for the struggle and ineptitude of regional and federal government.


The reports by Peter German and his associates released in 2018 and 2019 (links below) cover a wide range of money laundering weaknesses and expose numerous real incidents in which the B.C. economic/business infrastructure has been used to clean proceeds of crime. The reports were comprehensive, clear and caused a furore, finally it was not just a news story but commissioned reports, something had to be done and it looked like these reports would be a changing of the guard. Unfortunately as per Mr Ebys' comment above, the RCMP have literally taken no action to divert resources to the money laundering problem. I dread to think how Mr German is feeling about all this. The upcoming public inquiry will be interesting though I don't know their remit at this point (because I haven't been bothered to look).


In other news, an article in the Vancouver Sun (4) detailed a high profile money laundering lawsuit, brought against an ethnic Chinese couple in 2017 (no gang links mentioned), being dropped due to logistical errors, operating failures and a seeming lack of interest - after an initial sterling effort to get a solid case built. The couples' company Silver International is said to have laundered CAD220 million per year. And those criminals even got some of their seized assets back, C$2million in cash, thank you very much! This was a B.C. case being tried at the Federal level, it was dropped in November last year and though some details were released in the article, no concrete reason for the abandonment has been given. Other related cases are in process, one having secured a conviction, that and 2 others relate to drug trafficking and there is evidence they laundered their cash through Silver. It boggles the mind how the case was dropped, it all smells a bit fishy, oh B.C., oh Canada, oh corruption...


I remember an article in which the author (apologies I can’t remember the source) makes a case for micro-jurisdictions being given high risk status - recognised areas of higher financial crime risk separate to country jurisdictions. For instance, specific border regions in the Middle East / Asia should be flagged not just as high risk but special risk/blacklisted for transactions and any CDD nexus. What I think should happen is that when banks and supranational organisations (Basel/FATF) are doing their risk methodology and rating countries, they should take this kind of thing into account. Vancouver as a city is a perfect example of a high risk local eco-system, lax controls, numerous challenges and plethora of proven illegal activity relating to financial crime. As the province of BC governs the city it should be the target of the micro-jurisdiction risk rating.


Oh Canada, oh bloody hell Canada / Image by Sebastiaan Stam via Unsplash

B.C. has to be a high risk jurisdiction on merit, it is one of the dirtiest money laundering regions on the planet, but Canada is most likely designated a low risk country on every banks and organisations that has a country risk list, due to its robust (on paper) regulation, even though FINTRAC is a joke as I have mentioned previously, levying no fines or penalties of note in its entire history. If I was conducting a KYC on a Vancouver resident with even the faintest hint of a red flag, say they lived on the same street as an MSB or they once walked past a casino, there would be an immediate case for EDD! I would take a risk based approach and evidence my causes for concern, and there are no shortage those, are there ay?!


A bit strong you might think but in my eyes Canada is a high risk country for money laundering regardless of what someones list might say. I wonder how the Canadian government would react to an increase in their risk rating across the finance industry. Maybe it would force real action. Recent blacklists by the EU (5) have met with serious concern and backlash, the Saudi Arabian designation on the the blacklist was not taken lightly and later the list was set to be rejigged with the inclusion of a grey-list for those deemed less risky but still non-compliant. Then a few months later and strangely enough the Saudis were made full members of FATF - not sure what the conditions for membership are but logically a robust AML framework should be a given. If the EU Commission and FATF disagree then I just don't know what is going on - differing views are good but in this environment it leads me to think something untoward is going on. Anyway the problem with the risk rating methodology is that it is based on the strength of controls not implementation or enforcement of those controls. There needs to be another list, anyone want to sort that out for me?!


So, it's business as usual in British Columbia and Canada on the whole, calling all criminals, it's bau, keep doing what you do! I don't expect quick results but I did expect some material action to have taken place on the front line by now. The trials and tribulations continue, I grow weary as the saga continues...


Al.


 
 

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