The British Columbia Lottery Corporation has been fined $1,075,000 by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) for three violations of money-laundering rules. The Crown corporation said that it is appealing the decision.
Following a compliance examination, FINTRAC found that the corporation had failed to report suspicious transactions, failed to develop and apply policies for high-risk clients, and did not take special measures for those high-risk clients. The federal agency issued the fine on July 17.
“FINTRAC works with businesses to help them understand and comply with their obligations under the Act. We are also firm in ensuring that businesses continue to do their part and we will take appropriate actions when they are needed,” FINTRAC Director and CEO Sarah Paquet said in an Aug. 28 statement.
The British Columbia Lottery Corporation (BCLC), based in Kamloops, oversees all legal gambling products within the province, which includes lottery tickets, casinos, and online gambling.
Money laundering operations through the province’s casinos were the subject of a public inquiry from 2020 to 2022. The inquiry heard evidence of Chinese regime-linked criminal organizations laundering proceeds of drug operations through B.C. casinos and real estate market.
FINTRAC Findings
FINTRAC found the corporation did not submit two suspicious transaction reports when there were “reasonable grounds” to suspect they were related to money laundering or the financing of terrorist activities. After further examination, FINTRAC identified gaps in BCLC’s enhanced due diligence review process.BCLC also failed to develop and apply written compliance policies and procedures and keep them up to date, particularly when it came to high-risk clients, FINTRAC Sid. The corporation also did not document in its policies and procedures how it determined if a patron is high-risk, and how it differentiates between low- and high-risk patrons, the agency said.
FINTRAC also found the corporation failed to identify a high-risk patron and apply enhanced due diligence measures. FINTRAC said that due to the patron’s “rate of play and the volume of funds,” the BCLC should have identified the person as high-risk and applied the measures.
FINTRAC said all three violations were in the “serious” category, and thus were accompanied by financial penalties.
The BCLC said in an Aug. 27 statement that it is appealing FINTRAC’s decision before the Federal Court. The corporation said the notice outlining the violations “do not include allegations of any criminal offence,” and the BCLC completed a “thorough review” of the findings and provided information counter to FINTRAC’s conclusions.
“However, the Director and Chief Executive Officer for FINTRAC upheld the decision,” the BCLC said, adding that it is “confident in its position that it has fully complied with all its legal and regulatory obligations.”
