The Hongcouver
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BC casinos court China's high-rollers, but it's realtors who gamble with money launderers

Expert Christine Duhaime says the luxury real estate market in Vancouver poses a bigger laundering challenge than baccarat tables

PUBLISHED : Wednesday, 04 March, 2015, 5:58am
UPDATED : Tuesday, 23 February, 2016, 11:49am

When the head of British Columbia’s Lottery Corporation went on the record last month with the crown corporation’s strategy of targeting mainly-Chinese high rollers, playing up to C$100,000 (HK$625,000) per hand, all sorts of alarm bells went off in my head.

BCLC chief executive Jim Lightbody, in an interview with the Victoria Times Colonist, said it was not uncommon for such players to enter a game with C$200,000, walking into the casino with “bags full of money for their buy-ins”.

Surely, I thought, such a strategy posed a significant risk of courting money launderers seeking to disguise ill-gotten gains, or others illegally dodging China’s US$50,000 (HK$388,000) annual  cash-export limit? And surely Macau – which is currently undergoing a major upheaval as China cracks down on corruption and dodgy capital flight – presents a salutary lesson about the perils of such a strategy?

I turned to anti-money laundering expert Christine Duhaime, a barrister whose practice specialises in such matters and offers advice to governments, corporations (including casinos) and wealthy individuals alike.

It turns out that Duhaime thinks I’m worrying about the wrong kind of casino: It’s the luxury real estate market in Metro Vancouver and Toronto that she’s concerned about.

Duhaime said high-rollers in Canadian casinos (unlike Macau) presented “no real risks” of money laundering. “Casinos in Canada are the most regulated business sector in the country. Casinos have vetted high rollers in advance in terms of identity and those clients are well-known to them,” she said.

And China’s US$50,000 annual export limit could be legitimately circumvented by gamblers with non-mainland-Chinese income streams - in Hong Kong or elsewhere - or by those who applied for a permit with Chinese regulators to exceed the limit.

“Common reasons a person is authorised to do so include relocation to Canada for immigration, or studying in Canada. In addition, places like the Shanghai Free Trade Zone allow for unrestricted movement of funds,” said Duhaime.

This doesn’t sit perfectly with the BCLC’s response to my inquiries that its Chinese high-roller strategy “centres mainly on tourists and visitors to the country who are here often for business and family visits”.

And it should be pointed out that not everyone is confident about the BCLC’s approach, with former crown prosecutor Sandy Garossino (who now advocates against the expansion of gambling operations in BC) suggesting to the Times Colonist that the corporation was “playing with fire”.

Nevertheless, it seems there are plenty of ways that a rich Chinese gambler might be able to stroll into a BC casino with a bulging satchel of cash, without this presenting a prima facie case of wrongdoing under Canadian or Chinese law.

For its part, the BCLC told me it was confident in the rigour of its “comprehensive anti-money laundering program” which it said included conducting due diligence on players and reporting all large cash transactions in its casinos. It added that it was aware of China’s cash-export limits.

“If the casino is comfortable with the client, it follows anti-money laundering law procedures and the person can gamble,” said Duhaime.

Which brings us back to the uncomfortable question of the luxury real estate market.

“With respect to houses in Vancouver, Richmond, and Toronto, that is a different story,” said Duhaime.

“People from mainland China routinely buy houses for millions of dollars in cash in Canada and those transactions may be problematic for money laundering. Real estate agents in Canada apply very relaxed anti-money laundering standards on real estate sales."

Duhaime said that real estate agents have the same anti-money laundering obligations as casinos "but do not apply the same level of stringent controls".

“If there is a place where a crackdown is needed, it is with real estate purchases," she said.

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The Hongcouver blog is devoted to the hybrid culture of its namesake cities: Hong Kong and Vancouver. All story ideas and comments are welcome. Connect with me by email ian.young@scmp.com or on Twitter, @ianjamesyoung70.