Peter German, the author of two provincial government-commissioned reports on money laundering, has dismissed the notion he himself was responsible for a perceived lack of oversight on financial crime during his tenure in the top brass of the RCMP in B.C. from 2007 until 2012.
German testified over the past two days at the Commission of Inquiry into Money Laundering in B.C. and dispelled several criticisms of his reports, titled Dirty Money.
German specifically denied he was even aware of the 2009 disbandment of the Illegal Gaming Enforcement Team (IGET) while he was assistant commissioner for the Lower Mainland RCMP between 2007 and 2011.
German said the RCMP is split into three divisions – federal, provincial and municipal – and he was only in charge of the municipal division, until he became RCMP deputy commissioner for Western and Northern Canada in 2011, through 2012. IGET’s controversial disbandment was done at the provincial level, he said.
German left the RCMP for Correctional Services Canada. The inquiry has heard of a major reshuffling of federal and provincial units that left an enforcement gap in illegal gambling from 2013 to 2015.
German, who is also a lawyer, then formed a consulting company in 2015, and B.C. Attorney General David Eby appointed him as an independent reviewer of money laundering in September 2017. German hired several former RCMP members to conduct the review, which was critical of the RCMP, B.C. Lottery Corporation (BCLC) and Gaming Policy and Enforcement Branch,, among others.
German denied he and Eby delayed anti-money laundering (AML) measures planned by BCLC in order to have them occur after his first report was published in March 2018. He denied broad suggestions in the public realm that his scathing reports pursued a political narrative for the NDP against the former BC Liberal government.
The reports, said German, were not investigations but rather broad assessments of what is or may be occurring in B.C. To that end, some of his interview subjects were offered anonymity. Such cover, argued lawyer Jan Brongers for the Canadian government, incentivized more subjective views and hearsay on the issues.
“I suppose, that’s hypothetical,” said German, who also criticized Canada’s financial reporting system, called FINTRAC, for not liaising data to the RCMP.
The inquiry is mandated to assess provincial regulations related to money laundering. Eby called the inquiry due to apparent evidence of money laundering in B.C. casinos. However, actual evidence of it, and whether officials ought to have known, has been a matter of contention for Commissioner Austin Cullen to sift through.
The RCMP has produced few money laundering convictions over the past decade, the inquiry has heard. And the one major investigation into casinos, dubbed E-Pirate, fell through on a procedural error in November 2018. E-Pirate alleged Chinese and Mexican transnational organized criminals used local, illicit drug cash to fund Chinese gamblers, and perhaps others skirting China’s capital controls, via local, unregulated underground banks.
German’s report concludes it is difficult to quantify money laundering and determine whether suspicious money is the proceeds of crime. But it also asserts money laundering from China plays a key role in B.C.
But is money transferred via those unregulated underground banks from China necessarily proceeds of crime?
Lawyer David Butcher, representing BCLC’s COO Brad Desmarais, has questioned witnesses about the economic conditions in southern China, where illicit drug precursors (fentanyl) come from, according to U.S. authorities, in particular. Butcher suggests money coming from the region may not necessarily be of criminal origins, despite it being funnelled to Canada via underground banks (or modern versions of traditional Asian “informal money transfer systems”).
German has asserted any money laundering in casinos has been a “drop in the bucket” in B.C., although no RCMP investigation has led to such proof (there is an ongoing investigation called E-Nationalize that has yet to produce charges).
German opined to the inquiry of how Canada’s “small ‘L’ liberal” justice system makes it difficult to investigate and prosecute financial crime.
“Our problem right now is getting organized criminals and money launderers into the court,” he told Cullen, who must assess provincial regulations to money laundering as opposed to those of the federal government.
German recommends beneficial ownership registries, stricter mortgage rules and limitations on lawyers’ trust accounts and unexplained wealth orders – all of which conflict with charter rights without proper checks and balances and are being considered at provincial and federal levels (while being adopted globally).
Cullen could chart a course for such AML regulations in his findings, expected this December.
The commissioner has heard from different inquiry interveners on matters such as beneficial ownership registries for property and companies. The B.C. Civil Liberties Association generally probes witnesses along the lines of privacy considerations whereas a group such as Transparency International Canada points to the need for greater transparency in the financial sector to expose money laundering and tax evasion.
Meanwhile, German also fielded questions from BCLC lawyer Bill Smart.
German rejected criticism that he did not adequately consult with BCLC officials for Dirty Money.
A common defense put forth by Smart has been that BCLC officials could not have known routine cash drop-offs of $20 bills, bundled in elastic bands, was proceeds of crime without an assessment from law enforcement.
German himself said he couldn’t establish, on a balance of probabilities, that it was proceeds of crime.
“Hindsight always, or usually, 20/20,” said Smart.
German has also faced criticism for not recommending cash caps on buy-ins at BCLC facilities, when BCLC officials were prepared to do so.
“It’s about source of funds, knowing where the money’s coming from,” he explained.
“Why would you put a cap on legitimate money that’s being gambled?” he asked rhetorically. And so, “let's tighten up on where the money’s coming from.”
German said for his report he toured Las Vegas casinos and found they do not have cash caps but more robust sourcing of cash and wealth.
