June 13, 2024 By Mike
The Vancouver Model: The Secrets Behind Casino Money Laundering
One of the most effective money-laundering methods emerged many years ago and is still active today. The strategic process allows criminals to launder millions of Canadian dollars rapidly. Unfortunately, despite its ongoing activity, authorities appear to be neglecting the so-called Vancouver Model for money laundering through gambling, which we’ll describe further in the upcoming lines.
What Exactly Is The Vancouver Model?
Simply put, the Vancouver Model is a money-laundering scheme that involves converting large amounts of money into casino chips and then back into cash. This system has been in place for many years and continues to be active. Not only do Chinese high-rollers use it to gamble massive amounts of money, but drug dealers also rely on it to clean funds obtained through illegal activity. Furthermore, this system is immensely effective in removing tax, as gambling winnings are non-taxable in Canada unless the gambler is a professional.
One of the main reasons for its existence is that Chinese citizens are restricted from taking more than $50,000 out of their country at once. To circumvent this stringent regulation, citizens make deals with local criminals and transfer money into their bank accounts. When travelers arrive in Vancouver, they receive their money in cash from the criminals’ associates. They then go to a casino to convert this cash into chips, place several small bets, and request the conversion of their chips back into cash. In this way, substantial amounts of money are laundered or cleaned through gambling.
The Main Issues Associated with the Vancouver Model
While some may argue that money laundering is not a serious crime because it doesn’t involve direct victims, the truth is quite different. According to the latest statistics, real estate prices in Canada have increased drastically. This is because those who launder money often invest it in real estate, further increasing the issue of housing affordability.
Additionally, the criminals who earn profit from providing cash delivery services use the money to purchase and distribute drugs, significantly worsening the opioid crisis in Canada, which has been a severe issue in the country ever since 2016. Based on available data, it has caused over 14,000 deaths in just several years.
Apart from Canada, China is also impacted by the Vancouver money-laundering model. Since this is a regular practice among gamblers and criminals, millions leave the country illegally every year. Approximately $800 billion have been transported from China to Canada in less than a decade, which leads to economic instability and significant loss of tax revenue.
The Safety of Gambling Environment in Canada
While Canadian gambling laws differ by provinces, all of them aim at ensuring safe gambling and preventing criminal activities like money laundering. It’s quite challenging for operators to obtain a license, as they have to meet a myriad of requirements. Failure in any aspect results in certification refusal. This indicates that the gambling environment within the country is quite secure.
Nevertheless, the money laundering issue seems to be on the rise. Back in 2018, the laundering Cullen Commission, established by British Columbia, stated that more than $7 billion was laundered within a period of only one year. While this practice is almost impossible at online casinos, it’s quite common at land-based establishments, as gamblers are rarely required to provide documentation for their funds source.
Safeguarding Against Financial Crime in B.C. Casinos
The gambling authorities provide security by enforcing strict anti-money laundering laws, which prohibit gamblers from using large amounts of illegally obtained money. The main objective of these measures is to protect the integrity of the gambling industry and prevent it from being used as a tool for laundering funds earned illegally. To deal with this arising issue, regulators implement several AML measures, including:
- Full identification of all customers
- Reporting large amounts of money being deposited or wagered
- Monitoring any suspicious activity among clients
Although all commercial gambling in British Columbia is managed by the local gambling regulator BCLC, this money-laundering model remains active. According to a report, officials have been informed about this criminal activity, but since it still occurs at land-based casinos, it appears the warnings have been ignored. This may be because the Government receives significant tax revenue from casino operators.
Moreover, while it seems that Canada takes this problem quite seriously, considering that the Government has invested over $300 billion to strengthen the AML, it’s undeniable that the Vancouver Model still persists within the country. Implementing more stringent measures, such as investigating suspicious bank activity and requiring Source of Funds information whenever large cash conversions take place at casinos, could lead to better outcomes.
The 30% increase in real estate prices back in 2016 signifies the challenges ordinary citizens have to face. Many can’t afford to buy homes, as the cost keeps growing every following year. Many were unaware of the Vancouver Model for money laundering, but in the last couple of years, B.C. residents have begun to recognize its severe implications on their everyday lives. Whether this detrimental practice will persist in the Canadian province remains to be seen.